Site Selection Process
Our Economic Development department often receives questions asking why a specific business isn’t located in North Richland Hills. It’s important to understand what goes into the site selection process and determines why a business will locate in one place over another. There are numerous factors that determine where a business chooses to locate or relocate.
Defined as the statistical characteristics of human populations, demographics are used to identify target markets. Businesses identify markets that contain a desired amount of their target demographic. This typically includes age, income, gender, education, household composition, daytime population, and others. In most cases the business will know their target demographic and will only consider areas of their concentration. Not only will they use demographics, they will want to know if the market is changing (growing, declining, aging, redeveloping, etc.).
While a business identifies markets that contain their target demographic, two factors are used to determine if there are enough customers, competitive supply and market demand. The first, competitive supply, determines the amount of similar offerings provided and available from existing business. This can come in the form of a cuisine (pizza), product (bicycles) and/or a service (nail salons). The second factor, market demand, determines the capacity for customers to support business. While an area may have strong demand, the level of supply may already be met, and therefore does not allow for an additional ‘like’ business to succeed. Conversely while an area may have little to no supply, the customer demand may not yet be at a level to support an additional business. This is quite common on the edge of suburban areas, or areas that lack either daytime or evening populations. So while a potential target market has been identified, the demand will need to exceed the current supply before looking for a location.
Once target markets are identified that pass the market analysis, numerous elements come into play for the selection and/or elimination specific locations. The most common are traffic counts (how many cars drive by?), site accessibility (how easy is it to get in and out?), and site visibility (can you see the location from the street?). Other factors not seen from the naked eye, but just as important, are utilities and zoning. For new construction, a business will need water, sewer, drainage, electric, gas, and other utilities. The absence of some or all of these may rule out a location. Meantime, the business will need to focus on locations that fall within the correct zoning classification. While a location checks all the aforementioned factors, it may not reside in a zoning classification that permits their use. Zoning ensures placement of compatible land uses while protecting adjacent property owner rights and land values. If the zoning is does not permit the use, the business can appeal to the City and community; however, in most cases the location is eliminated by the business doing the search. Most sites do not satisfy all the different location criteria, it merely depends upon what elements are missing and whether they can be conveniently mitigated (extending a water line, adding a driveway).
Once a location or locations pass the market and location analysis, the business will look to determine which locations they can afford either to rent, purchase, or in some cases build. The land price or rental rate is typically the first factor considered. The second factor is whether the property owner is willing to sell or lease. Sometimes property owners are willing to sell or lease their property; however, most either want to only sell or only lease. In the same vein, businesses either prefer leasing or purchasing, but typically not both. There has to be a match in deal structure. Other items that come into the feasibility of a location include deed restrictions (previous owner restricting a use as a condition to the sale), duration of lease or loan (some like them long, some like them short), access to capital (investor or lender willingness to participate), co-tenancy clauses (a Chili’s will not want an Applebee’s locating next door), etc. While these items can be negotiated, all of them come at a financial cost. Therefore while a great location may be a great location, it may or may not work financially unless the existing property owner and business can come to an agreement that meets both their financial objectives.
Success of Complementary Businesses
The target area has been identified, the market is ripe, the location not only satisfies the site requirements, but it’s also available at the right cost. What else comes into play? The success of the surrounding businesses can weigh heavily on the final location decision. Locating a business is a significant decision, in some cases a multi-million dollar decision with a decades long commitment. A rising tide lifts all ships, and the same goes with the success of a business. They want their decision and commitment to be part of rising tide where adjacent businesses are successful. Of course elements like quality, value, service, and experience come into play, but the success of a business relies heavily upon the community and their level of support. While a favorite business may be in the next town over, if the community commits to support their local business, that favorite business may notice and be compelled to move or expand into the community.
North Richland Hills is a dynamic and attractive City. A central location, strong traffic volumes, and abundant points of access reach a large customer base and labor pool. We have an existing and robust infrastructure network that businesses and developers can tap into. Our development standards are quality, but not excessive, and allow a property or investment to retain its value over time. The City’s development review process is consistent and less time consuming than other cities where staff is hands on, offering creative solutions to connect private sector efforts with City goals.
The City offers a diverse demographic base that is above regional and national averages as it pertains to education and disposable income with strong schools, a community college, and proximity to numerous higher education options. Highly rated, our public safety services result in low crime rates, rapid response times, and discounts on annual insurance premiums.
The City has a full service Economic Development department dedicated to the business community with an award winning experienced staff, equipped with real-time city information, real estate data, and market intelligence at no cost.
To learn more about Economic Development Department, why it exists and what it does, please refer to Why NRH Economic Development?