What Site Selectors are Saying: The Future of Office Space, Incentives, Reshoring, and Virtual Site Visits
Last week on a Site Selectors Guild webinar, several of the nation’s top site selectors shared their perspectives on the future of office projects and other topics in a post-COVID world. EDCUtah’s business development team compiled the following summary to share with our investors, and we added some commentary.
The main take away is that companies are beginning to look at locations holistically, adding new criteria to what was once a process highly focused on the cost of doing business in a given market. Corporate executives are closely watching a location’s ability to respond to natural disasters and pandemic as they have learned how disruptive these events can be to their business operations. Below is a complete list of what companies are beginning to take into consideration when choosing a location.
- Labor Demographics
- Age, ethnicity, and race
- Utilities and Infrastructure
- Stability and redundance
- Business Climate
- How has the community balanced health and economic restrictions
- Business Continuity
- Natural disaster risk
- Hospital capacity
- Connectivity issues
- Hub sensitivity (with COVID-19 disruptions to air travel, companies are concerned about their ability to fly in and out of a location)
- New funding sources
As this list demonstrates, companies are learning from the early days of the pandemic and applying those lessons to their site selection decisions to mitigate business interruptions in future disasters.
Another key takeaway from the discussion focuses on the changes to incentives being offered by states. There are some areas of the country that are offering more incentives and other areas that have cut back their incentive programs. One site selector remarked that a number of new funding options have been made available but that states and communities need to be better about communicating these options to site selectors.
When asked about any trends in people-based incentive, another site selector on the panel had the following to say:
-These types of incentives are focused on attracting people to your market rather than companies. The market started seeing these types of incentives about ten years ago.
-Some communities across the country offer incentives to help people pay back their student loans.
-Many of these incentive programs are tied to having people working in a specific location. With much of the country’s workforce still working from home during the pandemic, this has caused issues with these types of incentives.
At EDCUtah, we believe that these “people based” incentives should be evaluated due to many of our communities’ high quality of life, relatively low cost of living, broadband access/speed, and proximity to major air transportation options.
The panel also discussed the current reshoring situation and where they suspect it will go moving forward. The federal government is expected to continue supporting reshoring for manufacturing and production.
The areas we are most likely to see reshoring happen in the coming months are as follows:
-Servers and supporting computer equipment
-R&D and support functions brought to office
-Space expansion and exploration
-Biotech and pharma
This comports with what EDCUtah has seen in its pipeline, with a massive uptick in our manufacturing projects, many of which are tied to the industries mentioned by our Site Selector partners.
When asked about how communities can adapt to this new environment and compete for some of these reshoring efforts, specifically on what have been deemed critical industries (cleaning supplies, paper products, etc.) the panel had the following to say:
-Many communities have not looked at situational data and they should. It is beneficial for community leaders to understand where their community’s vulnerabilities and weakness are.
-One of the site selectors recommends going to existing industries in their area, looking at their policies, and help those already there.
-Another of the site selectors on the panel explained that many of the projects coming out of the critical industries at the moment are fairly complex and that they require a workforce with advanced skills to keep them running, depending on what they are producing. The federal government can play a role by looking at how to address the lack of skilled labor in many areas.
Overall, there has been a drastic decrease in inquiries for office expansions or relocations, likely a result of the pandemic; however they are expecting a massive uptick in inquiries for office operations in the last six months of 2021.
Finally, the site selectors provided an update on how site visits are currently being conducted. In-person site visits are beginning to be held again in some parts of the country and there is a push throughout the industry to host more in-person meetings. The site selectors have seen virtual site visits take place with various success, but the general sentiment is that there are numerous kinks in the system to work out. Despite the issues that come with virtual site visits, overall most economic development groups have done a good job adapting to this new reality.
One site selector noted that it is bluntly obvious when someone has experience with site visits or not. Further the administrative logistics of coordinating a virtual site visit are extensive and people need to look at the trades off of virtual versus an in-person site visit. They also noted that we now have to contend with potentially unreliable internet connections and other technology issues. Finally, this site selector pointed out that it is incredibly difficult to convey a potential site virtually; they have not had good experiences with this portion of virtual site visits.
The third site selector on the panel echoed the first site selector’s comments on the mixed success of virtual site visits. They suggested using video conferencing to rely less on PowerPoint than you would during in-person meetings to make the presentation more personable and humanized.
A key takeaway here: practice, be prepared, and make sure technical issues don’t get in the way of delivering your message.
To conclude the discussion the site selectors noted that the situation remains incredibly fluid and they are impressed with how clients and economic development professionals have adapted to the changes over time. Some of the trends discussed may disappear with the release of an effective vaccine, but others may be here to stay. We will have to wait and see.
COVID-19 has significantly changed what companies are considering when choosing a new location, as well as how they go about engaging in the relocation process and their interactions with potential locations. Questions? Please reach out to our Business Development team at https://edcutah.org/about-us.