It may be difficult to believe, but not long ago, people would jump in their cars and drive from one place to another without real-time updates on the best route from a handheld device. “The way” to a parent's house may not have been the fastest, but it could've seemed quickest or was more enjoyable.
These days, any number of apps can save time by avoiding construction or unforeseen delays. That efficiency is undoubtedly a good thing, despite “In my day…” protests from any luddites. And so it goes with site selection for industrial/warehouse properties that heavily depend on the supply chain and regular delivery routes. By doing so, you can maximize efficiency by minimizing driving time and fuel consumption, something that can directly benefit the bottom line.
Blaze Cambruzzi, CCIM, partner with TRUE Commercial Real Estate in Lancaster, Pa., relies on Site To Do Business as a tool to compare different potential sites for his clients.
It's tempting to jump right into modeling and leveraging technological tools. But you must come to understand your client — by speaking with them about needs and wants. At that point, you are better positioned to know what data will need to be gathered and analyzed.
“We take responsibility to uncover the true questions that need to be answered and then apply structure and analysis to develop hypotheses,” Cambruzzi says. “It really is a blend of scientific method and social engagement, and we go back and forth. The goal is not a perfect answer but rather education and knowledge, so we are able to identify and mitigate risk while creating opportunity.”
“Having this ability, to create and test dynamic models, is a great resource for our clients,” he says. “We can analyze different sites with different variables to optimize efficiency.”
For a hypothetical case study that closely resembles a deal Cambruzzi recently worked on, a supplier needed to locate a warehouse/distribution center in Pennsylvania outside the Philadelphia and Baltimore metro areas. For a logistical comparison of supply routes, Cambruzzi wanted to see how long it would take two trucks to visit seven locations, spending fewer than 60 minutes at each location. He included five potential sites for the location of the warehouse — in Carlisle, Lancaster, York, Lebanon, and Reading.
As you can see in the table, the time and distance for the delivery vehicles at each potential site varied significantly. Lebanon totaled 462.26 miles and 945.28 minutes for two trucks hitting seven locations, while York required 531.5 miles and 1,003.7 minutes, increases of 15 percent in distance and 6.2 percent in time.
“These numbers become even more significant when you factor in the need to make these supply runs 30, 40, or 100 times a year,” Cambruzzi says. “The efficiency gains in time and fuel are consequential. In fact, the difference in the highest and lowest travel times amongst the sites here yielded a savings of nearly 100 hours per year, based on 100 trips.
“Moreover, this analysis is often the forgotten critical step in evaluating true occupancy cost. For example, the most efficient site may also be the most expensive. Without a quantitative analysis like this, you may fail to realize the best economic answer.”
Site To Do Business offers interactive mapping that helps analyze logistical concerns with potential sites.
In this case, at first glance, Carlisle, York, or Lancaster might appear to be the ideal location, simply because they are in higher profile markets. But Lebanon and Reading showed increased value after analysis. “Without this process, we allow ourselves to make a quantitative decision through qualitative practices, which is a bad idea,” Cambruzzi says.
“This type of analysis is just one more benefit to bring to the table when working with a client in site selection. Will these logistical models be the single factor in the decision? No, but the ability to present dynamic information is crucial in painting the whole picture of a specific location.”
For more on this topic, check out Site to Do Business for commercial real estate professionals.