Does location really matter with most CRE decisions?

This subject may sound a little blasphemous at first but hear me out. If we don’t question core positions of the profession occasionally we are going to be surprised when someone else does.

Theoretically location is a competitive advantage to a business. It establishes a base of operations for what they do for hiring, finding customers, growing internal skills. Yet at the same time most medium to large businesses end up diversifying to multiple markets. Similarly you can find all kinds of successful businesses in the oddest of geographies.

So what actually makes location important? Is it the ability to hire certain talent in certain volumes? Sure, 1,500 person call centers need to be careful where they go. But at a macro level there are probably 5 consensus good MSAs and 3x that many sub markets in those MSAs.

What about a 250 to 500 person office? Even in the most specialized industries there are easily 15 to 35 MSAs with 3 to 5x as many submarkets. Each with a proven ability to support it based on existing businesses.

Cost is important in location but in reality there are maybe 4 MSA pricing tiers and then inventory on the ground decided what you actually pay. RE Cost really shouldn’t decide where you want to be other than which building to go to.

What about labor costs? Sure, that varies by market but again it isn’t as extreme as most paint it. Unless you need A LOT of talent you can find your place in the labor market. It should be looked at but for the most part isn’t going to really influence your decision.

Even customers really shouldn’t influence location (not counting existing customers who if they are location dependent you already have covered). Customers happen to be everywhere. And with the internet you can get to them from anywhere.

None of this is to imply that individual location decisions aren’t important. This is to say that usually they aren’t really location decisions, they are really business operation decisions. The location just happens to be part of it.