We were leaving anyway.So they say, but it turns out few L.A. business do more than talk Recent fears that California businesses are reconsidering the California Dream should be taken seriously if the results of this year's Ernst & Young/California Real Estate Journal survey are any indication. The study attempts to go beyond the headlines into the minds of major power players in these matters -- corporate real estate executives whose job it is to plan for corporate growth years in advance. This year, among other questions, the study asked point blank: Are you, the corporate real estate executive, either thinking of or, in fact, acting on plans to move your business out of state? The initial answer is astounding a·stound tr.v. a·stound·ed, a·stound·ing, a·stounds To astonish and bewilder. See Synonyms at surprise. [From Middle English astoned, past participle of astonen, : 93 percent of key corporate real estate executives who responded to the survey said they have thought about leaving California. Other questions asked where the executives planned to move and why, what factors are causing them to consider a move from California, and what are the key attractions of other locations. The survey also asked which quality of life issues were considered most important and whether the companies had any plans for downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing or expanding and whether they planned to build or lease -- regardless of whether they stay in California or move. Cost concerns Most of those surveyed represented corporations that have had facilities in the state an average of eight years. Not surprisingly, cost was the chief concern, with nearly 70 percent of the respondents describing cost as very important. Two quality-of-life concerns -- commute TO COMMUTE. To substitute one punishment in the place of another. For example, if a man be sentenced to be hung, the executive may, in some states, commute his punishment to that of imprisonment. and amenities/environment--tied as the second most important factors in making a corporate relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. decision. In fact, another quality-of-life issue -- cost-of-living -- also finished as one of the 10 most important considerations. Occupancy cost Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal per square foot was the most important cost factor, with employee cost-of-living placing a surprising seventh out of 18 factors affecting relocation decisions. Thus, despite the concern that high housing prices are driving businesses out of California, business managers did not rank housing costs and conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. labor costs as a paramount concern. Commute time Commute time ranked as the second most significant factor affecting relocations. San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden and Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , with average commute times of 56 and 54 minutes, compare favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. with Sun Belt cities such as Atlanta (154 minutes), Phoenix (48 minutes) and Dallas (53 minutes), according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. data published by Mellon/NcNahan Real Estate Advisors Inc. Clearly these results show the decision to relocate is at best complicated and is based upon many factors of differing importance depending upon the size, type and management philosophy of the company. Forget the North-South debate East and West are more important for corporate decision-makers. California's "hot spots hot spots acute moist dermatitis. " won't be along the coast for businesses thinking about relocating, according to survey respondents. In fact, the top five areas predicted to be California "hot spots" were Sacramento, Vacaville, the Central Valley, the Inland Empire In·land Empire A region of the northwest United States between the Cascade Range and the Rocky Mountains, comprising eastern Washington, eastern Oregon, northern Idaho, and western Montana. Farming, lumbering, and mining are important to the area. and Contra Costa Contra Costa can refer to:
Why weren't the big coastal cities, such as Los Angeles and San Francisco, selected? A large number of respondents wrote in that it was because of their high taxes and payroll costs. The exodus of businesses moving from North to South has faded and a new delineation is occurring, splitting the coast and the inland valleys California's Inland Valley is a region that inlcudes parts of San Bernadino, and Riverside counties. As the name implies, the Inland Valley is situated on the inland side of the Santa Ana Mountains in southern California. There are few geographic boundaries to define the area. . Shrinking gap Sacramento and the Central Valley were predicted to become the destination for established companies within California. Comparatively low housing prices, reasonable occupancy costs, and a pro-business attitude appear to be the attractions in Sacramento. Combined with a population expected to grow at a rate of 14.7 percent in the 1990s, twice the national average of 7.7 percent, and employment growth of 28 percent vs. 17 percent nationwide, Sacramento appears to be poised for further growth. San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. County (North) and Sonoma County also ranked high as favored location sites. The urban centers are not predicted to be hot spots for relocation in the 1990s, although lower interest rates, falling housing prices and office rents may stem the tide Stem The Tide An attempt to stop a prevailing trend. Sometimes referred to as "stop the bleeding." Notes: If a stock is continually falling, stemming the tide would be an attempt to halt the free fall and change its direction. See also: Reversal, Trend as the cost gap between the coastal cities and the inland areas narrows. A recent Ernst & Young study indicated that housing costs are favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. in Sacramento as compared to other California cities. When compared with competing relocation markets outside of California, Sacramento did not fare as well. Although Sacramento (usually considered a prime distribution center) was selected as California's leading "hot spot," being located in a distribution center was selected as the least important factor when making a corporate relocation decision. The competition If not California, where? The most attractive markets for corporate relocation were, in order: Nevada, Washington, Texas, the Midwest, Colorado and Oregon (tie), the interior southeast, and Utah. Ranked last were the southeast coast and the Northeast. Strong write-in selections were Arizona and Idaho. The decision to relocate out of California is often driven by the availability of labor and the skill level of the labor pool. Manufacturing, distribution and service industries are likely to favor Nevada with good transportation, available low cost land and a skilled labor pool. Washington, with an established high technology labor force, is attractive for Silicon Valley companies. Developments such as the Technology Corridor, north of Seattle, are actively soliciting Silicon Valley company relocations. Tax suggestions The top three most favorable areas selected for relocation -- Nevada, Washington and Texas (until recently) -- are all without state income taxes. Although Texas recently enacted a business tax, the income tax savings in all three states is attractive to those thinking of relocating. The California corporate income tax rate of 9.3 percent clearly puts our state at a disadvantage with corporations seeking to reduce costs. California's real estate taxes also are a disadvantage. A majority of respondents said that their company expects to add an average of eight employees during the next three years. In fact, only 5 percent of those surveyed expect to see a decrease in their employee head count (by an average of only four employees) over the same period of time, perhaps indicating that corporate employee levels have been suitably adjusted and we may be climbing out of the recession. Optimism appears to be surfacing among survey respondents. California businesses expect personnel increases rather than decreases by a ratio of 13 to 1. In a recent study on employment growth in California, corporate relocations accounted for a loss of 70,000 jobs. While this would appear to be a significant number of jobs, in relation to projected employment increases of 1.8 million to 2.5 million jobs in the 1990s, as projected by the Center for Real Estate at the University of California at Berkeley (body, education) University of California at Berkeley - (UCB) See also Berzerkley, BSD. http://berkeley.edu/. Note to British and Commonwealth readers: that's /berk'lee/, not /bark'lee/ as in British Received Pronunciation. , it is clear that corporate relocations have not historically contributed to significant job loss. However, with 93 percent of respondents indicating an interest in relocating, job loss could increase as business attempts to counteract a sluggish economy Sluggish Economy A state in the economy in which the growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts. by reducing costs. Future expansion Surprisingly, respondents will meet future expansion needs by building new facilities rather than leasing existing space, despite the glut glut pronounced as rut, slut Vox populi An excess of a service or skilled labor in a particular area. See Physician glut. of real estate and low rental rates. Joint ventures with developers are the favored strategy for obtaining new space. In the Silicon Valley, this has recently proved true with joint ventures announced between Apple Computer and Sobrato Development. Custom designed facilities which streamline the manufacturing or research process will be in demand. Little indication was given that future space needs will be met by retrofitting existing properties. Industrial space demand Through 1995, say respondents, industrial office park space will be the type of real estate in greatest demand for corporate relocation--ahead of downtown office space and warehouse facilities. Future space needs of corporate respondents indicate that industrial office space will be in significant demand through 1995, followed by the demand for central business district space. Thus, despite the current high vacancies in office space, apparently, there is some light at the end of the tunnel "End of the Tunnel" is the thirteenth episode of the television series Prison Break, written by series creator Paul Scheuring and directed by Sanford Bookstaver. It was first broadcast on November 28, 2005. . We are already seeing some evidence of this as businesses are beginning to take more space than they currently need, taking advantage of low lease rates. In another recent study, except for apartment properties, industrial and warehouse properties were projected to have the greatest price and rent increases through 1995, averaging 3.2 percent annual value increases. Central business district office properties are projected to decrease in value. Among the factors considered in selecting corporate location were: amenities, capacity to accommodate suppliers, proximity to customers and suppliers, prestige of location, rent concessions, proximity to senior management personnel, cost of living, favorable local government regulation, assistance or attitude toward business, supply of technical/skilled labor, financing, universities, distance from parent company or distribution centers. Michael Evans Michael (or Mike) Evans may refer to: In religion:
advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal , Ernst & Young Factors considered in selecting corporate relocation, from most important to least important: 1. Total cost per square foot. 2. Commute / Amenities (tie). 3. Ability to accommodate growth. 4. Proximity to suppliers/customers. 5. Prestige/recognition of location. 6. Rent concessions, including rent holidays. 7. Proximity to key management personnel/Cost of living (tie). 8. Favorable local government regulation, assistance or attitude toward business. 9. Deferred rate increases. 10. Proximity to supply of technical/skilled labor. 11. Local area tax rate. 12. Need for special purpose facility. 13. Proximity to financing sources. 14. Proximity to university or other institution. 15. Proximity to parent company or corporate office. 16. Proximity to distribution center. Responses to other survey questions: Has your company considered moving operations outside of California?
Yes or Maybe 93%
No 7%
When do you anticipate future expansion or relocation?
Immediately 3%
Within 1 year 7%
1-3 years 23%
Over 3 years 44%
None currently anticipated 23% What change do you currently expect in your current employee headcount over the next three years?
Increase 69%
Decrease 5%
No change 26%
What role will your company play in obtaining and maintaining the real estate to meet its expansion or relocation needs? Joint venture project with developer 34% Contract for a build-to-suit property 23% Purchase of a
spec building 23%
Triple net lease rental 10%
Lease 8%
Sale leaseback 2%
What type of real estate will be in the greatest demand through 1995 to meet corporate relocation or expansion needs?
Industrial 39%
CBD office 28%
Warehouse facilities 19%
Suburban office 8%
Campus environment 6%
Ranking of "hot spots" in California through 1995 for corporate relocation: -- Sacramento -- Vacaville -- Fairfield -- Central Valley -- Inland Empire -- Contra Costa County -- San Diego County (north) -- Santa Clara Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. County (except San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. ) -- Sonoma County -- Alameda Alameda (ăləmē`də, –mā`də), city (1990 pop. 76,459), Alameda co., W central Calif., on an island just off the eastern shore of San Francisco Bay; settled 1850, inc. as a city 1884. County (except Oakland) -- Orange County (South) -- San Francisco -- Orange County (North) -- San Jose -- Ventura County -- San Diego County (South) -- Los Angeles (downtown) -- Napa County -- San Fernando Valley San Fernando Valley Valley, southern California, U.S. Northwest of central Los Angeles, the valley is bounded by the San Gabriel, Santa Susana, and Santa Monica mountains and the Simi Hills. (except Warner Center) -- West Los Angeles
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