Abstract In this paper we study how neighbourhood‐related spillovers affect location choices of manufacturing firms at a local level. A spatial Dirichlet‐multinomial regression model is applied to 90,000 new establishments of the S panish M editerranean A xis. Empirical findings show that spatial spillovers play an important role, together with traditional explanatory factors, in driving decisions of companies. Their size and scope depends on two main issues, the specific characteristics of the manufacturing industry the firm belongs to, and the accessibility of the urban environment where the firm is located.