Choosing The Right Location

Gerald J. Merola
Amusement Entertainment Management, LLC
profitwizz@aol.com

One of the biggest questions that always arises from a new client relates to the selection of a location for their planned entertainment venue. It's been universally known that "location, location, location" seems to be the standard for almost every use of real estate, and entertainment is no exception. But how can a facility developer determine what's optimum? Purchasing or leasing prime real estate can be very costly and place a tremendous burden on a facility's cash flow. Alternatively, selecting a parcel of land off the beaten track can result in poor guest attendance and an inability to achieve the desired performance targets. To aid in the process of securing a site, here are some variables to keep in mind:

Select A Politically Friendly Area

In many areas of the country, free space has been greatly diminished in recent years as a result of increased land and building development. This increase in development has placed substantial burdens on roadways, fire and police departments, city services, and regional utilities. If you're looking to develop a site within a region that has undergone a great deal of expansion, expect to wrestle with several developmental challenges. These may include requirements such as left or right hand turn lanes on existing roadways, additional traffic signals, groundwater control systems, buffer landscaping, and additional utility infrastructures. Oftentimes, many of these items have not been included in a facility's overall development budget, as most arise as a result of planning board or municipal variance requirements. It's important to meet regularly with township officials BEFORE making an application for development. This can prove extremely helpful in identifying the region's "hot buttons" that will likely surface during a review of your project. For instance, has the local government been stressing reclamation of natural land areas and protection of natural resources? If so, your development plan must answer many key questions relating to contamination of groundwater, elimination of natural vegetation and trees during construction, and impact of the resulting building's appearance against the natural landscape. Sound like too much to bear? Well, in reality, a carefully selected team of professionals, including a local attorney, local engineering firm, and an entertainment consultant can combine their expertise to blend the needs of the township with those of the project developers.

Having attended and observed many township board meetings over the years, the key ingredient to success continues to revolve around two items: 1) doing your homework well in advance, and 2) establishing relationships with board members and city officials through careful selection of your support team. Everyone is human, and as such, tend to respond more favorably when a positive relationship has been established. I've seen many planning board votes run neck-and-neck, only to be decided by a final member's decision. Did the development team make the effort to insure that this individual was sufficiently advised of the benefits of our client's project? If so, chances are the project application will meet with success. If not, years of hard work have been unnecessarily lost.

How, though, can you establish relationships with board members and city officials in regions that you may not currently have a presence? The trick, as I see it, is to solicit their assistance and expertise during the development phase. By incorporating the interpretations of these individuals (how they see the laws or ordinances), the approval process can be somewhat streamlined. For instance, while it is perfectly acceptable to let your engineering firm develop a fire sprinkler plan, it may prove more worthwhile to first enlist the comments of the local fire inspector. When it comes time for a "sign off" by the fire marshall, that individual will have already recognized the design, and is essentially signing off on his or her own work. Following this process also insures that decision makers correctly evaluate the components of a project; I have observed cases where post-meeting discussions with planning board members revealed vary levels of confusion and interpretation.

Take Advantage of Existing Consumer "Draws"

Unless you're building a mega-complex or theme park, chances are that you'll want to use the strong draw factor of other retailers and consumer venues to bolster your facility's own attendance. For instance, it might be beneficial to place the planned entertainment facility adjacent to the new multi-plex cinema in town or within the retail hub common to most regions of the country. "Anchor" tenants can create a very sizable draw to an area, and if the demographic makeup of its patrons are similar to your own targets, the result can be an increase in your market penetration beyond an entertainment facility's typical distance limits. Aligning entertainment will other major retailers or hubs can offer substantially greater exposure than a stand-alone venue might achieve, with a potentially smaller marketing budget. Conversely, a stand-alone facility that requires substantial parking requirements or plans to utilize exterior attractions, may be more suitable outside of the core retail area, particularly when city approvals are factored in to the decision process.

When choosing between a "what's hot" and "what's not" location, consider what your planned facility has to offer. Will it include a multi-attraction format that area patrons perceive as a "destination" whereby they might spend two or three hours, or is the format more conducive to a one or one-and-a-half-hour stay? Shorter-stay facilities might achieve greater success if they are positioned alongside other retail offerings, as the consumer is more apt to travel to the site for multiple purposes. If we're asking consumers to drive too far or "out of their way", it might be far easier for mom or dad to simply put off the trip, or worse, go elsewhere. The more convenient the location, the more likely we can increase visitation frequency and insure satisfaction of our guest.

Be Careful of Obstacles

Sometimes, a prospective site is not always how it appears. What is currently bare land today may be developed land tomorrow. It's imperative that the township's land use maps be carefully examined to determine the permitted uses of adjacent parcels. Future development could potentially block lines of site to your facility or incorporate non-retail uses that might detract from the entertainment environment you strive to create. The beautiful stream or brook that borders the rear of your preferred site may later become your biggest headache. In one instance, an entertainment developer found that his groundwater plan had to not only conform to the state's requirements, but those of the adjoining state. Why? Well, there are little-known regulations in some states that control the flow of water from adjoining states, and therefore permit such neighboring states to issue requirements on projects outside of their immediate jurisdiction. Early detection of these types of issues can eliminate lost time and capital in having to alter and re-introduce construction plans.

Once you've done your homework and are ready to commit to a land purchase or lease, consider a few remaining issues.

The Single Most Important Decision

In prior columns, I've discussed topics ranging from facility layouts to attractions selection. While all of these variables are critically important to the facility's ultimate success, their impact cannot be achieved without first identifying a proper venue. Finding the careful balance between land cost and location is a multi-step process, and one that requires time, patience, and a willingness to perform a substantial amount of research.

When it comes to real estate, don't be afraid to call in the pros. There's nothing more disturbing than holding up your investors and your project due to unforeseen site-related delays. Like a famous brand manufacturer of automotive products says, "you can pay now, or pay later." Translation: make the investment in planning and research now to minimize the likelihood of problems later.