Location surrounding a magnificent residence (6)
I believe the answer is:
palace
'magnificent residence' is the definition.
(magnificent or grand building)
'location surrounding a' is the wordplay.
'location' becomes 'place' (a location is a place).
'surrounding' means one lot of letters goes inside another.
'place' enclosing 'a' is 'PALACE'.
(Other definitions for palace that I've seen before include "Impressive residence of a ruler" , "imposing building" , "Castle" , "See 23" , "Regal mansion" .)