New ‘State of Site Selection’ study cites ongoing scarcities and geopolitical forces as factors that are impacting facility location decisions
The third edition of a primary research study, The State of Site Selection, identifies the top trends impacting facility location decisions globally. The report is a joint release of the Site Selectors Guild (the Guild), the only association of the world’s foremost professional site selection consultants, and Development Counsellors International (DCI), the leader in travel, economic development and talent attraction marketing.
The first edition of this report was released in March 2020, just days before the COVID-19 shutdown. The second edition was released in September 2022, which identified a surplus of office space and a shortage of industrial sites, in part due to the impacts of the pandemic.
“There has always been one certainty in our industry, and that is that our clients abhor risk. As their advisors, it is imperative that we understand the impact of exogenous global trends and how they impact the decision-making process to mitigate as much risk as possible for our clients and the economic development organizations we partner with all in the context of the factors most important to our clients as they consider their deployment and optimization strategies,” said Larry Gigerich, board chair of the Site Selectors Guild and executive managing director at Ginovus.
Key findings from the 2024 report include:
- The State of Real Estate, Sites and Buildings: The demand for development-ready industrial sites with sufficient infrastructure capacity has never been higher due to an abundance of industrial investments spurred by the rise of megaprojects and federal policies. The scarcity of these sites, coupled with access to capital, is impacting project timelines and the viability of projects.
- The State of Utilities and Infrastructure: The strain on electric grids in the U.S. has intensified due to a significant uptick in manufacturing investments for energy-intensive industries, such as data centers, electric vehicles and semiconductors. To meet energy demands for large industrial projects, the U.S. must increase electricity generation by around 50%, which doesn’t include demand from an electrified automobile fleet.
- The State of Natural, Manmade and Geopolitical Risk: The definition of risk has evolved to encompass manmade hazards (crime, terrorism and war), extreme weather and geopolitical upheaval. Guild members say that each of these risks impacts investment decisions or poses threats to already vulnerable electric grids, the supply chain, and the ability to recruit and retain talent.
- The State of the Workforce: A critical shortage of construction and manufacturing workers could derail President Biden’s industrial agenda. Immigration policies and insufficient worker training and retraining programs continue to compound workforce shortages. Amid layoffs, the “great resignation” and “quiet quitting”, there is a rebalancing of the white-collar workforce.
- The State of Economic Development and Placemaking: The intersection of economic development and community development is becoming more noticeable as communities grapple with housing and childcare shortages, factors increasingly weighted more heavily in location decisions.
Access the full report here.
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Since 2020, North Carolina has announced more than 67,000 new jobs and $42.3 billion of capital investment, according to the N.C. Department of Commerce. During that same period, ElectriCities has tracked significant growth in North Carolina public power communities, including more than 8,500 new jobs and investment of more than $3.4 billion. We sat down with three North Carolina-based industrial site consultants to get their take on what’s driving the state’s recent investment boom and what they’re hearing from clients about continued economic expansion.
Our experts may not agree on the best barbecue style (more on that later), but there’s consensus about what makes North Carolina a top state for business. Factors like the state’s central location, educated and ready workforce, favorable tax climate, and low cost of doing business top the list.
“I don’t think you can overstate being centrally located on the East Coast and how important that is to an industrial user who’s thinking about how they maximize their reach to their customer base,” said Steven Pearce, Vice President of Infrastructure and Economic Development at McGuireWoods Consulting.
Jenae Valentine, Location Analysis and Incentives Manager with Maxis Advisors, said population migration and quality of life are important drivers for many of her clients, as these factors are positive indicators of growth.
“North Carolina has so many assets and resources that have been developed over decades — all the ingredients are here.”
— Benton Blaine, Managing Director,
Cushman & Wakefield
Benton Blaine, Managing Director at Cushman & Wakefield, touted the state’s great interstate system and robust electrical infrastructure. “North Carolina has so many assets and resources that have been developed over decades—all the ingredients are here,” he said.
While projects related to EVs and batteries, including manufacturing, material processing, and recycling, are ongoing and still being sited, all three experts expressed concern about what may happen once the influx of federal funding stops.
“I don’t have a crystal ball, but I think we’ll see fewer and smaller EV and battery projects when federal dollars aren’t there to support them,” Pearce said.
Blaine said he expects to see a more diversified market, including lower-tier suppliers in EV, as well as manufacturing projects in solar, transformers, food, and life science.
When it comes to electric service, top considerations are reliability and cost, our experts said. Clients also want to know the source of their electricity and how much of the mix is renewable.
Valentine said, “My clients want to understand an electric provider’s ability to meet their ramp-up schedule so that when they’re ready to become fully operational, they’ll have the power needed to support their manufacturing operations.”
Knowing power is available is trickier these days.
“Up until 2019, my largest project was 11 megawatts, and that was a big project. Now I have a 150, a 100, an 80, two 60s, and a 40,” Blaine said. “We’re talking about projects that need to use a measurable portion of an entire power plant.”
Part of the fun of site selection in North Carolina is watching trend lines to forecast continued industrial growth.
Along with watching what he calls the natural progression of the EV supply chain, Blaine hopes we’ll see incentives for workforce training that supports current and future technology.
Pearce is watching the impact of the uncertainty that often comes with election years and current geopolitical movement. Since higher interest rates impact investment, he’s hopeful they’ll drop this year. He’s also watching population growth—or lack of it, based on recent data.
Along with all that, Valentine said she’s keeping an eye on construction costs, industrial lease rates, industrial vacancy, and job reports.
Whatever the future brings, it’s clear that each of these industrial site selection consultants appreciates what our state has to offer and that each enjoys calling North Carolina home.
They do not, however, enjoy the same style of North Carolina barbecue. Blaine and Valentine share an affinity for Lexington-style, while Pearce prefers Eastern-style. When it comes to the ’cue, let’s just agree to disagree.