Are you facing the decision or optimization of your business location? The right success factors determine growth and competitiveness. Discover which criteria will make the difference in 2025 and beyond and how to avoid pitfalls.
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The topic briefly and concisely
A robust infrastructure (transport, digital, energy) is the foundation of every successful business location; only 56% of rural locations have broadband.
The availability of qualified professionals and an attractive local educational infrastructure are crucial, as a 32.1% decrease in the working-age population is expected in some regions by 2040.
Efficient administrative processes are important; 83% of companies view lengthy approval procedures as a risk.
Choosing the optimal business location is one of the most strategic decisions for any company. But which factors are truly crucial for success? In the face of rising costs, skilled labour shortages, and the necessity of digital transformation, investors and owners need to conduct precise analyses. This article highlights the critical success factors for business locations in Germany, ranging from infrastructure to soft location factors, and demonstrates how to make data-driven decisions for sustainable value development. A neutral assessment, such as that offered by Auctoa, can provide valuable support in this process.
The harsh reality: Infrastructure as the foundation of every business location
An excellent infrastructure is non-negotiable. It forms the backbone of every successful business location. Only 56 percent of business locations in rural areas have broadband access, which massively hinders digital processes. Transport connections – road, rail, and waterways – are essential for efficient logistics processes, especially for companies in complex supply chains. A study by the IHK Darmstadt shows that while the majority of companies are satisfied with their transport connections, a quarter still see room for improvement. Mecklenburg-Vorpommern, for instance, emphasises the importance of its ports and the Baltic motorway for strengthening the economic location. The needs-based infrastructure is thus a central lever. The analysis of the existing infrastructure is already crucial at the company foundation stage. Without basic services in these areas, business activities are often only possible to a limited extent. The challenges in energy infrastructure, including the connection to future hydrogen networks, are also critical. A careful examination of these factors is therefore indispensable.
Availability of specialists: The race for talent
Qualified personnel is a crucial competitive factor. Especially in rural areas, it is often difficult to find and retain skilled workers. Companies rely on attractive educational infrastructures in the region, as young people frequently move away due to a lack of modern educational opportunities. A study in the Burgenland district, which expects a population decline of 20.3% and a decrease in the working-age population by 32.1% by 2040, underscores the urgency. The IHK Mittlerer Niederrhein highlights that the attractiveness of the workplace, including childcare and leisure facilities, is becoming increasingly important. The property market analysis must necessarily take this aspect into account. The recruitment of skilled workers is a decisive factor for companies. The availability of qualified personnel is cited by companies as an important criterion for choosing a location. [3] The political and economic stability of a region also influences its attractiveness to workers.
Administrative hurdles and planning law: Paving the way
Lengthy approval procedures and a high density of regulations are often roadblocks for the development of commercial sites. 83 percent of companies see this as a structural risk for Germany's economic location. An IHK survey found that only 28 percent of companies are satisfied with the support from the local administration, although 63 percent consider it important. For successful commercial land development, cooperative administration is essential. The designation of commercial and residential construction areas must be less bureaucratic. The study “Transformation Paths” by BCG and IW identifies bureaucracy as one of the burdens for Germany as a location. The following aspects are relevant here:
Acceleration of approval procedures for construction projects.
Transparent and reliable land-use planning.
Reduction of bureaucratic requirements wherever possible.
Active support by municipal economic promotions.
Digital administrative services to simplify processes.
Clear contact persons in administrations for business concerns.
Efficient administration can significantly enhance the attractiveness of a location.
Cost structures in focus: More than just rent and lease
Costs are a central factor when choosing a business location. This includes not only land and rental prices, but also energy costs, taxes, and levies. The BCG study "Transformation Paths" identifies long-term high energy prices and high taxes as burdens for Germany as a location. The costs for a business registration alone can vary between 10 and 65 euros depending on the municipality. [4] The comprehensive consideration of all costs is essential for a valid location decision. A detailed property evaluation helps uncover hidden costs. The development of land and rental prices, especially in urban areas, can lead to the displacement of businesses. [5] An analysis by Germany Trade & Invest (GTAI) shows that foreign companies cite cost structure and potential cost reductions as important decision criteria. [3] A forward-looking financial strategy for commercial spaces is therefore crucial.
Development potential and space availability: Creating room for growth
Companies want to grow – ideally at their existing location. A survey by the IHK Darmstadt shows that 63 percent of the participating companies would like to grow at their current location. However, 60 percent are dissatisfied with their local development potential. The availability of suitable land is thus a critical success factor. The reactivation and qualification of existing commercial areas are becoming more important to promote land conservation. [3] The IHK Mittlerer Niederrhein points out that land potential is often only available to a limited extent and requires a rethink, for example, through multi-storey car parks or building extensions. The assessment of building land potential is an important step in this process. The demand for large contiguous plots along motorways is generally high. The following measures can improve land availability:
Systematic recording of brownfield sites and vacancies.
Development of concepts for densification and reuse.
Inter-municipal cooperation in designating new commercial areas.
Promotion of multi-storey commercial buildings.
Use of hereditary building rights models to mobilize land.
Creation of flexible development plans that allow for later adjustments.
A proactive land policy is crucial for the future viability of commercial locations.
The environment matters: Soft location factors and quality of life
Alongside hard facts like costs and infrastructure, soft location factors are becoming increasingly important. According to IHK Darmstadt, 61 percent of companies consider the attractiveness of the surroundings important. An attractive environment serves as a "business card" and helps in addressing customers and employees. Networking with other local businesses is seen as relevant by 42 percent of companies. Quality of life, including culture, leisure opportunities, and environmental factors, influences location choice. [3] IHK Mittlerer Niederrhein emphasizes that aspects such as childcare facilities, dining options, and green areas for breaks are significant for attracting employees. A comprehensive location analysis should take these factors into account. Proximity to research institutions and universities can also be a plus point. A positive image and a welcoming culture are also important success factors not to be underestimated.
erfolgsfaktoren-gewerbestandort
Digitisation is a megatrend presenting new challenges for commercial locations. A powerful digital infrastructure is a fundamental requirement. Only 56 per cent of rural commercial locations have broadband. Comprehensive digital processes and Industry 4.0 are not guaranteed without this. The energy supply must not only be reliable but also future-proof, keyword hydrogen. The BCG study sees great opportunities for Germany in green and digital technologies, with an expected global market of over 15 trillion euros annually by 2030. The right purchasing decision for commercial properties must take these aspects into account. Adapting to climate change, such as through heat and heavy rain protection, is an important issue for 64 per cent of companies. Investment in future-proof digital and energy infrastructure is therefore a critical success factor for any commercial location.
Conclusion: Strategically develop the ideal business location
What are the key hard success factors for a business location?
The key hard success factors include excellent transport connections (road, rail, water), a powerful digital infrastructure (broadband), reliable and future-proof energy supply, the availability of suitable sites and development potential, as well as moderate costs (rent, energy, taxes).
Which soft location factors are relevant for commercial properties?
Relevant soft location factors include the availability of skilled labour, the attractiveness of the environment (quality of life, culture, leisure), good networking opportunities with other companies, the quality of local educational institutions, and support from local government and economic development agencies. [1,3,5,3]
How does bureaucracy affect the attractiveness of business locations?
Lengthy approval processes, complex regulations, and lack of support from administrations can significantly reduce the attractiveness of a business location. 83% of companies see this as a risk. Fast, transparent, and unbureaucratic processes are therefore an important location advantage.
Why is the availability of skilled workers so critical?
Skilled workers are the cornerstone of many companies. A lack of qualified personnel can hinder growth and innovation. Regions with good educational infrastructure and high quality of life have an advantage in attracting and retaining talent, which is becoming increasingly important in light of demographic changes (e.g., an expected decrease of 32.1% in the working-age population in some areas).
Does sustainability play a role in choosing a business location?
Yes, sustainability is gaining importance. This includes future-oriented energy supply (e.g., connection to hydrogen networks), climate-adapted neighbourhood development (protection against heat and heavy rainfall, considered important by 64% of companies), and the promotion of green technologies.
How can Auctoa assist in evaluating business locations?
Auctoa offers quick, data-driven, and neutral property evaluations. With our digital assistant and tools like the ImmoGPT chat, we help you analyse the complex success factors of a business location thoroughly and make objective decisions for your investment or location optimization.
Additional useful links
The Federal Statistical Office offers comprehensive information on construction and real estate price indices in Germany.
An interactive graphic from the Federal Statistical Office visualises the index of commercial rents in Germany.
The Deutsche Bundesbank provides information on the indicator system for the commercial real estate market.
A report from the Federal Ministry for Economic Affairs and Climate Action highlights growth and competitiveness of Germany as a business location.
The Cologne Institute for Economic Research offers a current report on location factors and investments in Germany.
The Association of German Chambers of Industry and Commerce (DIHK) analyses the risk of displacement for Germany as an industrial location.
A CBRE report demonstrates the financial benefits of sustainability in commercial real estate.
FAQ
What are the key hard success factors for a commercial location?
Key hard success factors include excellent transport connections (road, rail, water), a high-performance digital infrastructure (broadband), a secure and future-proof energy supply, the availability of suitable land and development potential, as well as moderate costs (rent, energy, taxes).
Which soft location factors are relevant for commercial properties?
Relevant soft location factors include the availability of qualified labour, the attractiveness of the environment (quality of life, culture, leisure), good networking opportunities with other businesses, the quality of local educational institutions, and support from local government and economic development. [1,3,5,3]
How does bureaucracy affect the attractiveness of business locations?
Lengthy approval procedures, complex regulations, and a lack of support from administrations can significantly reduce the attractiveness of a business location. 83% of companies see this as a risk. Therefore, fast, transparent, and unbureaucratic processes are an important locational advantage.
Why is the availability of skilled workers so critical?
Professionals are the backbone of many companies. A shortage of skilled personnel can hinder growth and innovation. Regions with good educational infrastructure and a high quality of life have advantages in attracting and retaining talent, which is becoming increasingly important in light of demographic changes (e.g. an expected decline of 32.1% in the working-age population in some areas).
Does sustainability play a role in choosing the business location?
Yes, sustainability is becoming more significant. This includes a future-proof energy supply (e.g., connection to hydrogen networks), climate-adapted urban development (protection against heat and heavy rain, considered important by 64% of companies), and the promotion of green technologies.
How can Auctoa assist in evaluating commercial locations?
Auctoa provides fast, data-driven, and impartial property evaluations. With our digital assistant and tools like the ImmoGPT chat, we support you in comprehensively analyzing the complex success factors of a commercial location and making objective decisions for your investment or site optimization.
