Learning can sometimes be painful. One painful lesson I learned this month is that not everyone thinks the same as I do. It was one of those “duh” moments that sticks with us. (more…)
Posts Tagged ‘real estate’
Whittaker Associates hosted another great webinar this quarter for economic development and real estate professionals! (more…)
While the future may not be knowable, it is certainly thinkable. As a leader, it is important for you to recognize the trends that will be impacting you and those you serve and know how you can prepare to benefit from these changes. (more…)
by Pete Julius
Why develop them, what are the obstacles and how do you create them?
Recently, we were hired by two separate economic development organizations to present on how to build partnerships between economic developers and local real estate brokers. It has been an increasingly popular trend. Since our presentations, we have had numerous inquiries on how to set up this type of partnership. We have worked in both economic development and real estate for a little more than 10 years. Our presentations were derived from our experience and conversations with 15 professionals within the economic development and real estate fields. This article will focus on explaining the importance and need behind developing this type of partnership, and identifying some of the major obstacles and how to overcome them.
The main reason for developing this type of partnership is that both economic developers and local real estate brokers target the same audience-corporate real estate executives. In addition, economic developers and brokers attend the same conferences, such as Corenet Global and Industrial Asset Management Council (IAMC), in hopes of luring the same prospects to their local community. If you are targeting the same audience and attending the same conference, why not market the local community together? Doesn’t it make sense? Wouldn’t it be nice to be able to save marketing dollars and resources by working together? It sounds good. But if it is such a great idea, why are there not more mutually beneficial economic development and local real estate partnerships?
Major obstacles deter economic developers and local real estate brokers from establishing mutually beneficial relationships. First, there is a major lack of understanding of each other’s business and core competencies. Economic developers and local brokers must understand each other’s business to identify synergies. One of an economic developer’s main goals is to improve the community by generating quality jobs. The goal of brokers is to sell or lease property, which is the end game of an economic developer’s job. In addition, economic development organizations are typically bureaucratic, while local real estate firms are not. Second, there is a tendency to fear that someone is going to run off with the other’s prospect. This is a natural instinct, but each partner must learn to trust the other. Trust is the key to the success of any partnership and must exist to alleviate this fear. Third, understanding how economic developers and brokers are compensated or rewarded is critical. Economic developers are rewarded differently than real estate brokers. Economic developers are typically measured by the number of jobs generated or by an increase in the local tax base. Their reward is then based on the attainment of these objectives. Brokers, as most of you know, are rewarded with a commission on the sale or lease of property. These are two very different reward systems that often cause conflicts. Now, how do you get around these obstacles to form mutually beneficial partnerships?
The very first, vital element in any successful partnership is that each partner must be willing to engage in such a relationship and see the value of the partnership. In addition, each partner must benefit from the partnership. This precedes the need to understand each other’s business, which is the next step in establishing a working relationship. Once there is an understanding of each other’s business, the new partners can identify synergies and areas of expertise. From this they learn how to efficiently and effectively work together and identify what resources and information can be shared. This process will also help build trust. Trust will help to form a very strong partnership by diminishing fears and assisting in the development of a strong foundation. Trust can be gained by identifying and addressing areas of conflict early in the formation of the partnership. Periodic meetings and an exchange of staff members for some period of time will assist in accomplishing all of these objectives. In addition, getting local brokers to sit on economic development boards and persuading them to help fund local economic development efforts are also very beneficial steps to making this type of partnership work. These partnerships can be built on previous working relationships or started from scratch with a small, mutual project.
There is no standardized procedure for establishing economic development-local broker relationships. Review the case studies to generate ideas for establishing your own partnership.
• Society of Office and Industrial Realtors ( www.sior.com )
• International Economic Development Council ( www.ideconline.org )
National Association of Industrial & Office Properties (NAIOP) ( www.naiop.org )
Marketing The Right Site Can Attract Distribution Centers To A Community
When deciding to build a distribution center, companies expect to reach key markets efficiently and hire an appropriate workforce in a community that will embrace their operations. They also want to maximize profitability and reduce operating costs. Economic development agencies can leverage their resources to provide sites with the right features, including efficient infrastructure, proximity to clients and suppliers, and appropriate community and site characteristics that support the companies’ goals and objectives.
Companies Gravitate To Sites Within Easy Reach Of Delivery Points
Considering that the primary expense associated with the logistics of a site is transportation (such as fuel prices, driver costs and truck maintenance), communities should promote sites with highly accessible transportation routes, said Craig Morgan, group manager of the Real Estate Services Group at Carter & Burgess.
“If you’re a community located on the intersection of two interstates, that’s going to be much more desirable than if you’re a community 20 miles off the interstate,” he said. “Communities need good transportation routes to major markets to support a distribution center effectively.”
Companies choose sites that optimize the distribution network, which includes existing and planned distribution centers and points of delivery. In a business where on-time delivery is crucial, proximity to clients and suppliers through alternate transportation routes such as highways, rail or air can save time and money.
Match Community Assets To Company Needs
Determining which industries to pursue can be made clear by conducting a community assessment, which outlines features attractive to particular industries. The best fit for a community is a growing industry that matches the community’s transportation routes and available workforce, said Deane Foote, senior project manager of the Real Estate & Economic Development Group at Carter & Burgess. He recommends that a community ask two key questions: “What companies would enhance existing industries? What kinds of suppliers and customers are in place?”
One economic development group, the Northwest Commission in Northwest Pennsylvania, is using a cost-comparison study performed by Carter & Burgess to target foreign and domestic companies. The report spells out the advantages of certain industries doing business in the region when taking into account labor and real estate costs, tax rates and incentives.
The results, just completed in July, were sent to 15 international representatives who market the Commonwealth of Pennsylvania to companies in Canada, Europe and Asia. Already, the data has generated inquiries, said Jack Allston, executive director of the Northwest Commission.
“You can see the advantages of being located here rather than elsewhere,” he said.
Since a reliable and skilled labor force is the foremost community characteristic companies seek, the majority of communities need to complete a prevailing-wage rates and benefits survey. “All communities need a strong database on their labor force to include wages, benefits and availability as well as a quality analysis, which was completed for us by Carter & Burgess,” Allston noted.
“Performing a cost-comparison study is the easiest way for us to assess a community and help our clients decide what they should expect to pay for their labor,” Morgan said.
Often, incentives such as tax abatements and infrastructure grants are tied to companies meeting or exceeding community wage averages.
Working out other incentives in advance can help attract new industry, too. Because time is of the essence for building a distribution center, Morgan calls fast-track permitting “a remarkable tool.” The procedure allows companies to deal with one person who delivers permit approval requests to all jurisdictions, from the planning and building departments to the fire chief. “It’s a great asset for communities to have in place,” he said.
Perception Can Make Or Break A Project
Morgan has found that educating communities about the impact a large operation might have is an important step to reversing resistance to such a change. He likes to have community leaders speak to officials in communities where the target company has successfully located other operations.
“What we like to see is a community that is pro-business, that wants us there,” he said. Quelling misperceptions and rumor and demonstrating alternatives in advance can help.
The most common concern raised by citizens when building a new distribution center is the likelihood of increased traffic and truck noise in the area. That’s a change which can be mitigated by locating off an interstate and away from residential areas.
Another perception is that distribution centers create low-wage and low-benefit jobs. In many instances this is not the case. It’s the job of the economic development organization to help the community understand the positive impact of proposed operations. “It’s an education process that may take some time,” Foote said.
Market Sites Ripe For Construction
“Some communities have planned industrial parks with water, sewer and power in place. If not, companies expect communities to show they can provide these services to a site in a short period of time,” Foote said. Increasingly, companies are also requiring sites to have fiber optics to receive and transfer data. “With all the new technologies available, inventory systems are set up so that as soon as an item is bought from a store, it’s automatically ordered from a distribution center,” Morgan said.
Communities can tap into federal Community Development Block and Economic Development Administration grants to fund infrastructure for facilities that will create a certain number of jobs.
Some companies will give special consideration to certified sites, which have been designated by the state as already having completed the entitlement process, with major environmental studies completed and mitigated if required. When there is a virtual tie between sites, other incentives, including tax abatements and free or discounted land, can lure a company.
“Marketing efforts will help direct a company to certain sites, particularly if they’re starting a Web search,” Foote said.
With communities increasingly aware of the growing distribution industry, competition for these operations will only grow more fierce. A community that understands the site- selection criteria that companies require to meet bottom line goals will distinguish its real estate gems from the rest.
This is the first of a three-part narrative of my experience of going to India to attend the Global CoreNet function to he held in Mumbai, India March 22-24.
So, why would I travel half-way around the world to India to hear a keynote speaker from Ann Arbor, Michigan, talk about China? Curiosity and a desire to learn is my short answer. I am curious to see first hand what is happening in India relative to the much-talked-about outsourcing of jobs and I hope to learn about another part of the world – I’m thinking globally.
In West Michigan, we have had a 20% decline in manufacturing employment in the past three years while at the same time experiencing a 60% increase in productivity. During a tour of a local auto-parts plant recently I was amazed at their “lights-out” goal of operating a portion their manufacturing facility unattended. Eighty-five percent of this facility’s employees are degreed engineers specializing in automation. I suspect that our decline in manufacturing employment is a combination of out-sourcing and the dramatic increases in productivity as pointed out in the cover story of the March 22, 2004 issue of Business Week, “Where are the Jobs?”
By checking the weather in Mumbai on the Internet, I’ve learned that the forecast during my stay is 99 degrees during the day and 71 degrees in the evening for the next ten days! My search for summer-weight all-cotton clothing has begun in earnest (no small task in the late winter season here).
The soreness in my arms from the inoculations for typhoid, polio, tetanus, hepatitis A&B and the medication for malaria has made me realize what an amazing country we live in. There are places in the world that have not benefited from the advances in medicine and health care as much as we have. Our public health has been something I’ve always taken for granted.
In preparation for my journey I read guide books on India to get a glimpse of their culture and customs. While having lunch at a local restaurant recently, I noticed a group of eleven young men I presumed to be Indians or perhaps Pakistani. I asked them where they were from. It turned out that they were, in fact, from India. They are engineers working at a local auto-parts company. After a brief conversation on travel tips I went on my way to continue my packing.
To be continued…
By Kate Baxter
For those of you who have not heard of it, IAMC (Industrial Asset Management Council) has been formed in the wake of Corenet getting just too big. On September 7-10 I attended my third IAMC conference. This was only the third conference for this organization, and each one gets better. We have been following IAMC from its inception in our search for educational, networked organizations in which our clients participate.
As you may know, Corenet has become home to high cost suites, with organizations spending big bucks to get attendees to visit their event. Often, the crowd centers at the booth with the most free giveaways. Corenet is an example of a great place to network, if you are a machine. With attendance in the thousands, it is hard to bump into the same person twice. So creating a relationship, or even just being remembered, can be a feat.
IAMC is set up quite differently, and has created a few interesting rules to avoid becoming another Corenet. The number of corporate members to service providers is capped. Networking functions are set up at IAMC so everyone is at the same function, not segregated in little groups. All three conferences provided wonderful opportunities to meet people, get to know them and their organizations, and then bump into them again the next day. Dinner is still up to each individual, but there are gatherings set up before and after that everyone can attend. Each day, lunch is provided, so you don’t have people coming and going at different times. Everyone is at IAMC to network, friendly and ready to meet new people, so there is not the “seat saving” I have noted at other conferences.
Recreating the Beast? The IAMC board likely feels some pressure not to recreate the beast, a.k.a. Corenet. The feedback I have heard so far about IAMC is that the numbers need to remain capped. If there is a waiting list, so be it–half the appeal is that the ratio will be favorable for all. If that goes, so may many members.
The bottom line is that you can actually meet and talk to more people at IAMC, you don’t have to pay big bucks to do it, and pretty much everyone you meet is willing to talk. IAMC has the market right now on a conference that is entertaining, educational, and still perfect for business.