Facility Location Planning: 3 Factors to Consider During the Site Selection Process

According to commercial real estate services company JLL, nearly 96% of existing industrial space is currently in use, and the United States may need an additional 1 billion square feet of new space by 2025 to keep up with demand. While the increased demand may make many companies want to immediately jump into action, it is vital to have a strategic plan in place to ensure the new building is flexible enough to meet your company's current and future needs.
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Here are three critical factors to consider during the site selection process:

1: Labor Rates and Availability

With labor availability declining, wages for warehouse workers are rising. Companies are offering higher pay and better benefits to attract talent.

Before finalizing a site, research the local labor market, including wage rates, workforce availability, and competing organizations. Consider whether automated solutions could help offset staffing shortages or reduce costs.

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2: Transportation Costs and Challenges

Driver shortages and capacity constraints are causing rising transportation costs and delays. Evaluate the site’s proximity to major highways, airports, railways, and ports, as well as its alignment with your transportation strategy.

For example, closeness to your existing retail footprint can significantly reduce delivery times and costs, enhancing overall efficiency.

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3: Lead Times and Costs

Rising material and labor shortages are creating construction delays and higher costs across the industry. Depending on the solution, lead times for material handling equipment can exceed six months.

Review vendor contracts carefully and finalize agreements early to mitigate delays. Advance planning can help ensure your facility is ready to meet demand on schedule.

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A version of this article originally appeared in SupplyChainBrain.