Billion-Dollar Manufacturing Investments Run Into Real Estate Problems
Twenty industrial projects with investments over $1B were announced last year in the U.S., but there are fewer than two dozen sites available across the country that can appropriately accommodate them.
That math could add up to a real problem.
Volkswagen had a tough time picking out a site for its $2B manufacturing plant for off-road brand Scout Motors last year even though it had 74 parcels to choose from, Reuters reported.
The company ran into problems at various locations, including a six-year timeline to build a necessary rail link at one site. Eventually, Scout settled for a 1,600-acre spot in South Carolina that was about 400 acres smaller than what it wanted, according to Reuters.
Scout’s placement represents the decisions and sacrifices numerous companies have had to make when picking a site for a new manufacturing plant. Since 2004, about half of the "megasite" projects, typically defined as 1,000 acres or more, have launched in the past five years, according to fDi Markets.
Global Locations Strategies out of Greenville, South Carolina, uses fDi Markets data to track demand for large spaces. The data shows there were 20 industrial projects announced last year with investments over $1B that could create at least 1,000 jobs. That is up from 15 the year before and fewer than 10 annually for the decade prior, according to Reuters.
Gregg Wassmansdorf, a senior managing director of global strategy consulting with Newmark Group, told Reuters he estimates there are fewer than 24 true megasites still available across the country “at widely varying stages of development.”
"Every company, of course, wants shovel-ready megasites," Christopher Chung, CEO of the Economic Development Partnership of North Carolina, told Reuters. "But those are more or less pretty picked over with a couple of exceptions here or there."
More sites can be added to the inventory, but they don’t last long, Global Locations Strategies founding principal Didi Caldwell previously told Bisnow.
“These days, just as fast as you can get [sites] ready, they're being snapped up,” Caldwell said. "I don't see it abating at all."
Georgia has been working to acquire megasites within the state, since those owned by state authorities are more appealing to corporate prospects hoping to avoid protracted public negotiations with local governments or private landlords.
Georgia hopes acquiring the sites will help it compete against its neighbors in the Southeast. Caldwell cited a $2.5B project that instead went to Alabama since Georgia was already in talks with Hyundai Motor Group about coming to Savannah. But as of July 2022, Georgia only had one site to offer.
Reuters interviewed 25 economic development groups, state and local officials, utilities and companies to confirm the scarcity issue, it reported.
The Biden administration has worked to push manufacturing developments in the U.S., and corporations have announced dozens of projects since the passage of the Inflation Reduction Act and the CHIPS and Science Act last year, Reuters reported.
An unnamed White House official told Reuters there is no reason to worry yet.
"Folks are finding places to build," the person said. "I don't think I've heard of one company abandoning plans to go forward because they're not able to find a site."
