Let it grow Why companies expand
By Sara Widness | June 25,2013
Expansion in the business world means many things. Most often, people think of expansion in terms of a larger physical plant to accommodate increased industrial and sales output.
The reasons that may prompt a business to expand — which can mean changing geographic locations — may include location, changes in technology and industry, a skilled work force, housing availability, and energy costs. For example, several decades ago Vermont’s textile industry relocated to the South in search of lower energy costs.
In southern Vermont, Bennington has positioned itself as a hub to receive and service the growing carbon composites industry, said Peter Odierna of the Bennington County Industrial Corporation. For instance, K&E Plastics plans to move its Albany, NY center to the Morse Industrial Park, where it will expand into 35,000 square feet.
In Rutland, Jamie Stewart, executive director of the Rutland Economic Development Corporation, has been watching the growth and expansion at General Electric (NYSE: GE) and Ellison Surface Technology. Also in Rutland, the Vermont Farmers Food Center will house an expansion of the Vermont Food Bank.
And, a push by Green Mountain Power (NYSE: GMP) to make Rutland the Solar Capital of New England inspired Marlene and Philip Allen, owners of Same Sun of Vermont, Inc., to open a second store in Rutland this spring.
One Chittenden County Realtor is working with three clients who currently lease space for their businesses. One is looking to buy; the other two are looking for newer facilities in anticipation of business expansions ranging from 20 percent to 50 percent.
“We’re also affiliated with a development company, and we’re seeing more demand for additional retail space,” said Benjamin D. Avery, director of the commercial group of KW Commercial of Colchester.
Legislation also can prompt expansion. “Obamacare and the advent of the single-payer health system in Vermont are flipping the health industry, to a degree, upside down,” said Tony Blake, a principal of V/T Commercial in Burlington.
“A couple of fairly sizable national firms have contracted with the state to manage some of the changes in the health industry over the next three to five years. This includes call centers, software providers, and support people,” Avery said. “There are two proposals out for contracts with the state: one for 30,000 square feet, and the other for 15,000 square feet.” Collectively, these centers would create jobs for around 350 people.
At the same time, software support for the medical industry is expanding “significantly,” he said, with some firms requiring up to 10,000 square feet. The good news: These firms would employ more skilled labor at higher-paying jobs.
Dealer.com, a Burlington company that provides marketing services to an estimated 40 percent of the U.S. auto industry, is growing rapidly, said Avery. Meanwhile, MyWebGrocer.com, serving over 130 national retailers, has bought the Champlain Mill and “will probably end up occupying the entire building,” he said.
“These industries are growing exponentially. The challenge is finding a skilled work force.”
The locavore movement also is affecting expansions and job growth, he said, noting that Agri-Mark, the dairy cooperative serving a Northeast region from Maine to upstate New York, planned to move its headquarters to the Warren/Waitsfield area.
“What that will bring over a period of the next three years or so will be 125 well-paying jobs to an area that really needs it,” he said. “A spin-off will be that other types of industries will want to be around it.”
Planned Parenthood of Northern New England originally located its executive office in a suburban location. When a new director with an urban background was appointed, that person felt the group needed to rebrand itself in a way that resounded more with a more youthful market, said Yves Bradley, vice president for commercial brokerage for Pomerleau Real Estate in Burlington.
“What that meant was rebranding not only their health care facility and moving to a more urban location, but rebranding their offices and moving them again to a more urban location — a far more urban, cutting-edge field for both the clinic and corporate offices,” said Bradley.
On South Champlain Street in Burlington, Bradley said the Vermont Energy Investment Corporation, which started with just two people, has seen continuous growth and a creative approach to expanding its workspace.
“They wanted larger space with expansion possibilities, but without a warren of offices and meeting rooms. They wanted the ability to have open workspace where no one in the company had a private office,” said Bradley.
“Because light was critical to its expansion, the group took 50,000 square feet on one floor and 15,000 on the floor beneath, cut a large hole in the top floor, and built a stairway out of reclaimed floor boards, creating a vaulted space that’s about 35 feet from top to bottom,” Bradley said.
Job growth in Vermont is “pretty much across all sectors,” said Lawrence Miller, secretary for Vermont’s Agency of Commerce and Community Development. “Right now, Vermont has the third-lowest unemployment rate in the country, and is adding jobs a little bit faster than most places.”
Wages are also improving, he said. “Vermont may have been the only state last year to see income growth — better than anyone else — of around 4 percent. All of those indicators suggest that we have stable, appropriate growth, and a reasonably strong environment.”
When companies in the Upper Valley decide whether to expand, those decisions are based on such ancillary issues as the availability of adequate affordable housing for staff in core communities, said Bruce Waters of Lang McLaughry Spera in West Lebanon, NH. Quality employment for dual-income families is also an issue.
“Where I see activity and increase in the size of companies is what I refer to as organic growth,” Waters said, referring to a company started by an entrepreneur — perhaps in a barn, a house or small office.
“As the business plan starts to grow, they are able to recruit one person here, one person there, among people already living in the market,” he said. There’s often commensurate growth in space needs that may result in the company buying a property.
Companies thinking about growing here, he said, consider location and the amenities available for their associates. Many favor downtown Lebanon, NH, White River Junction, VT and Hanover, NH, where there’s public transportation, multiple dining choices, and perhaps even the ability to walk to a health club or gymnasium.