In this four-piece blog series we’ll discuss important linkages to consider when analyzing your target market for an investment. Linkages are essentially how a property connects with the surrounding environment (market) in a given market area and can be very important factors. In a soft market where tenants will have the leverage, they will look for buildings in locations that have prime linkages to attract talent and lower costs. So if you own a building with a poor linkage factor, then you could end up with a vacant building during a downturn.
In this first part of the series, let’s look at important linkages for an office user and how you would analyze that asset type. When companies are looking for office space there are different factors that may influence their decision and those could be endemic to their particular use, however in general office users prefer access to the following linkages:
- Access to an educated workforce
- Site accessibility including public transportation
- Proximity to office support services such as attorneys, office supplies, accountants, etc.
- Retail services to support workforce
Access to an educated workforce means that the surrounding demographics support what is typically a white-collar labor pool. Companies will do demographic searches ensuring that the local economy has a significant population with college degrees and are in the age range of their target employees.
Site accessibility means having ease of transport to and from the office by means of automobile or public transportation. In more rural areas where public transportation may not be as prevalent, then highway access and proximity to the employee base are important. Office users want to have employees get to work quickly and easily.
Proximity to office support services may not always be a large driving factor, but can be significant for some office users. In this digital age, proximity is becoming less of a factor, yet in more secondary and tertiary markets, access to support can be the difference between picking a building or not.
Retail services to support the workforce is more or less self-explanatory. Drawing quality talent to an office location means having services nearby that can efficiently service their employees. Travelling long distances for lunch or dry cleaning can have a negative impact in a building search.
There are typically several important factors included in an office search for a user, but the above are some of the largest that you should consider before purchasing an office investment. Having key linkages to the community may mean the difference between maximizing rents and having a vacant building.
What do you think are other important location linkages?