How Companies Choose a Site for New Headquarters

headquarters

Over the years, numerous national- and international- corporations have decided to make Williamson County home, opening regional or even national headquarters here.

Schneider Electric USA and CKE Restaurant Holdings are two of the latest on this list, which includes Nissan North America, Mars Petcare, Tractor Supply Company, Verizon Wireless and Community Health Systems.

Williamson County beat out competing sites from around the country to bring all these companies here for a variety of reasons.

The ultimate decision to bring a company to a location comes at the end of an often years-long process of site selection, one that starts with the decision to expand, relocate or otherwise open a new office.

Idea in hand, many companies follow the same format, with the person or team spearheading the project usually hiring an outside site-selection consultant.

The consultant will have a good pulse on the whole environment – the real estate situation, the other ongoing developments, and the cost-benefit analysis of one site versus another.

“When it comes to site selection, either the developer has an idea in mind for a project and a general real estate market they want to be in, and they say, ‘Help us find a piece of property that looks like it would be suitable to this type of development,'” Brian Wright, Principle Town Planning and Urban Design Collaborative, LLC (TPUDC).

“Or we have a client who has several already found pieces of property, who says, ‘Look at these and let us know what you think. Does it look like a good fit? Could you do a preliminary plan on the properties and see which has the best yield per square foot?’ And we report back.”

With offices in Nashville, Baltimore and Rosemary Beach, Florida, TPUDC counts sites selection among its services. It has worked with developers on projects throughout the country.

The site selector’s first purpose is to understand the developer’s goals, Wright said. How many employees will work at the site? How many square feet are needed for the purpose of the project? How important are certain factors in relation to those goals?

An array of factors can change from project to project that makes one site more suitable than another. For example, a box retail store has a different set of criteria than a Fortune 500 company seeking a regional headquarters.

Certain baseline factors must be met, according to Wright. For instance something like safety might be almost considered a given need in many projects. A site can check every other box, but if the persons potentially occupying the space do not perceive the location to be in a safe area then a site is unsuitable.

“For companies looking to locate a headquarters or major office presence, they prioritize a skilled and educated workforce, quality of life factors, and an airport/road network that will connect them to other critical markets,” Elizabeth West McCreary, Williamson, Inc., vice president of economic development, said. “There are other factors that companies consider, but fortunately Williamson County typically fares well with the major data points.”

Cost, talent in the workforce and an acceptable construction schedule are all also factors commonly mentioned as important.

Companies do not want to settle for a location. The process of bringing Schneider Electric USA here, according to the county, started more than four years ago.

After determining its role and specific task, the site developer reports back to the team at the company with a recommendation or a list of options. From there, site selection firms can often become involved in the development process, which involves negotiations and talks with the landowner, local officials and chamber of commerce. During the Schneider Electric USA talks earlier this summer between the company’s representatives and county leadership several sites were considered suitable and in competition with each other.

Conventional wisdom cites the reason companies ultimately choose Tennessee, or specifically Williamson County, as the county’s and Tennessee’s low property tax rates and lack of state income tax, and overall business-friendly atmosphere.

In some cases, such as for Ramsay Solutions and Lee Co., in 2015, and Schneider Electric, this summer, the county did grease the skids by offering tax incentives.

The Ramsay Solutions and Schneider Electric deals both shave a bit more than $2 million in taxes off the companies’ tabs over 10 years. However, in the context of a half-billion dollars of expected revenue in the coming year, the per-year losses amount to less than one-hundredth of a percent of the county’s budget.

The companies, moreover, do not get these rebates for free. Ramsay’s agreement hinges on the company bringing 400 employees and investing $40 million dollars locally by 2023. Likewise, Schneider Electric’s side of the bargain bring up to 1,200 jobs here over 10 years.

Despite Tennessee’s ninth-lowest median property tax rate in the country, and no state income tax, its corporate tax rate- 6.5 percent- is fair to middling, from the perspective of a corporate bottom line, at 26th-lowest nationally. Out of 95 Tennessee counties, 30 set property tax rates lower than 2015 Williamson County’s rate.

Of the 10 fastest growing counties in the state, Williamson County set the second lowest base rate behind Bedford at $2.27, and had the lowest maximum rate, at $3.46 in Franklin Special School District.

So while tax rates factor into the decision, more subtle and deeper reasons bring a company to Williamson County rather than other locations. One quality above all is both systems within Williamson County.

“The more companies I talk to, the more convinced I am that our school systems are the driving force behind business relocations and expansions to Williamson County,” Matt Largen, Williamson, Inc., CEO, said. “In fact, at a recent economic development conference one of the site location consultants on a panel said that his clients are even asking to tour elementary schools as part of the community evaluation process.  Our schools systems are an economic asset to the entire Nashville region.  Savannah, Georgia, has a deep-water port, Jackson, Tennessee, has Interstate 40 and Williamson County has Williamson County Schools and Franklin Special School District. Our asset is less tangible than other communities, but does not mean it is any less real.”

Companies also look to the future during site selection. That may seem obvious, but long-term outlook must be considered.

Will the area it is moving to continue to be a promising place to locate?

“Being in a high growth area, with about 70 people relocating and about 20 babies born in the region daily, helps assure companies that they will have access to a growing workforce and customer base,” Largen said. “Both international and domestic companies have found Williamson County to be a great place to be, and more often than not, a company’s country origin does not factor into its location decision as much as workforce, access to customers, and other business-related priorities.”

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