The Finance Function Gets Smarter

Local talent. That was the primary metric, as it turned out, that Amazon was using when it was searching for its second headquarters. It was decidedly not, as many originally thought, using the typical site selection factors that a large firm turns to when evaluating different locations.

Amazon’s criteria for this investment is the perfect illustration of the changing way companies approach investment in commercial real estate—that is, they are taking into account new sources of data as they evaluate various choices, according to K.C. Conway, chief economist at the CCIM Institute. So too are some lenders as they underwrite properties, he notes.

One example: “the industry still values industrial CRE on a price per square foot basis but the way companies are investing and determining value is on a cubic foot basis,” Conway says. Warehouses are getting taller, in other words, and a cubic foot basis is more appropriate.