Opinion: Why you should narrow your next business location to certified sites
The following is an opinion piece from Subash Alias, CEO of Missouri Partnership, a public-private economic development organization. It does not necessarily reflect the views of SPN. Business expansions are an exciting prospect, but they can also be intimidating. Major setbacks and delays during business expansion can cost a fortune. If your company needs assurance that…
Business expansions are an exciting prospect, but they can also be intimidating. Major setbacks and delays during business expansion can cost a fortune. If your company needs assurance that the process will go smoothly, it’s a good idea to limit your search to certified locations.
Certified sites are extremely valuable to companies that need large amounts of land. They also expedite the building process because the due diligence necessary in industrial site development is already done. With a certified, shovel-ready site, you can start construction on the first day instead of spending time and money on things like soil tests and accessing utilities.
Mitigating Business Expansion Risks
A business expansion comes with plenty of unknowns, so it’s important to reduce risk wherever possible. You don’t want to invest in a location that ends up not meeting your needs. Having a location “certified” virtually eliminates your risk by providing critical information upfront, such as the availability of utilities, access to transportation infrastructure, room for additional growth, and more.
Site certification will look different from one state to the next, but Missouri’s Certified Sites program can give you an idea of what to expect. In Missouri, sites must be 25 acres with mostly clear and level ground, zoned for business use except for retail, have a water main of at least 6 inches, and include a three-phase, 12 kV electric infrastructure.
It becomes easier to select a site when you know that your critical business expansion needs are already met. If you’re not sure what a location has to offer until you purchase it, you could encounter the following two major hurdles in industrial site development:
1. Unknown Ground Status
In some states, the industrial certification process for a site includes geological testing that can inform the buyer of potential contamination, the presence of protected species or historical artifacts, or issues with soil compaction and suitability for construction. If a site isn’t certified, it’s a good idea to perform a Phase I Environmental Site Assessment (ESA) to look into any issues. Depending on the size of a site, a Phase I ESA will cost you between $1,500 and $5,000.
Once a purchase is made, any remediation costs will naturally be the landowner’s responsibility. These can be expensive and difficult to navigate, often resulting in business expansion delays. If a protected species is living on the property, for instance, construction might be delayed until the animal’s mating or hibernation season has ended — if you’re allowed to build at all. Historical artifacts could also slow or halt proceedings until the state historic preservation office can determine whether development is acceptable. If you’ve already purchased the land, selling it could pose significant challenges thanks to the newly discovered development obstacles.
2. Unknown Utility Capacities
Extending gas, electric, water, or sewer lines to a site can cost millions of dollars and take years of work. That’s why many states require utility availability to be included in the certification process. It’s also critical to be aware of any utility easements that might prevent construction in an area. Moving power or gas lines is expensive and difficult, and utility companies might be unwilling to do so.
When Aurora Organic Dairy was moving to Columbia, Missouri, the company selected a huge site for milk production that was certified and ready to meet its significant infrastructure requirements. Without running into any obstacles related to industrial site development, the company quickly got production up and running and brought more than 100 new jobs to the region.
Not every state will have an official site certification program with shovel-ready sites, so it’s important to consider what’s available when selecting a business expansion location. You want to know what costs you’ll incur before ever breaking ground. Due diligence can be time-consuming and expensive, but it’s well worth the upfront cost to avoid potential pitfalls down the road.
Subash Alias is the CEO of Missouri Partnership, a public-private economic development organization available to assist businesses with their next expansion or relocation. Missouri Partnership is an expert resource to support companies’ site selection needs when the time is right to grow.
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