Apr 12, 2013

Defining Due Diligence in Site Selection

By Don Catalano



Site selection is, in and of itself, a due diligence process. Instead of just randomly picking a site, negotiating a lease and moving in, you and your team carefully analyze the market, its demographics, the location and the business terms that the landlord is offering. While the initial parts of the process are technically due diligence, the most important part starts when you have identified a potential site.

Once you choose a potential site, the due diligence process has multiple steps:

Confirm your market assumptions.

When you chose the site, you probably relied on publicly available demographics data, aerial or satellite imagery and combined market survey information. As a part of your due diligence, obtain additional data to ensure that the surrounding market is everything that you expect.

Identify the cost of doing business.

Every community has different laws that can impact what it will cost you to do business there. For example, you may have to purchase a business license, offer certain employee benefits, or match competitive local wages. If you're not familiar with the area and its particulars, you could end up with an expensive surprise should you skip this step of your site selection due diligence.

Confirm the property's zoning, parking and access.

Depending on the type of business you run, you may need conditional use permits or zoning variances to occupy the building that your site selection process identified. To meet the requirements of the zoning code, you might also need to have a certain number of parking spaces. Finally, it's also a good idea to confirm the property's access and to see if there are any road construction projects planned that might change it in the future.

Review environmental surveys.

While many tenants skip this step, many businesses would benefit from this. If you occupy a site that has environmental contamination, it could impact the health of your employees or customers or, if it becomes known, it could harm your brand. Should the property need to go through remediation, your tenancy could be interrupted as well.

Visit the site.

A site visit is a crucial part of the site selection due diligence process. It gives you the opportunity to experience the traffic flows, access issues and surrounding area for your self. You can also clearly gauge the condition of the property as well as the type of people that do business there both as tenants and as customers.


View our other great Commercial Site Selection articles:

Simplifying Site Selection with Technology

Technology's Role In Site Selection

Site Selection is the Key


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Don Catalano

Don Catalano