Consultants Forum Advertise
Subscribe
Close

  • Free for qualified executives and consultants to industry

  • Receive quarterly issues of Area Development Magazine and special market report and directory issues

Subscribe Now
Renew

Area Development - Site Selection, Facility Planning and Workforce Development

Companies Are Recalibrating Their Priorities

In recent years many companies have been propelled to recalibrate priorities for their location strategies and resulting real estate footprints. The top site selection factors for occupiers today include the following:

Q1 2023
• Availability of skilled labor — As demonstrated in this survey, skilled labor availability is still paramount, ranking #3 among the site selection factors. This factor is reinforced by CBRE’s U.S. Industrial & Logistics Occupier Survey issued in October 2022, stating that 61 percent of respondents report that labor availability is a major impediment for the growth of their business. The fact that occupiers are improving conditions for workers and looking to increase automation means they are expecting leaner operations with more skilled labor.

• ICT/broadband — ICT/broadband is now a major site selection factor, jumping from #26 in 2021 to #6 in 2022. This is presumably a reflection of hybrid working, which has seen a huge increase in popularity recently. According to CBRE, by some measures a majority of Americans have the option of hybrid work, and over 70 percent of employees plan to expand their hybrid working options over the next three years.

• Energy costs — With energy costs ranked as #8, many businesses are seeking ways to offset ongoing operating expenses. Economic incentives are just one avenue companies can pursue to help alleviate these costs, especially during a period of rising inflation and changing market dynamics. In particular, many companies are poised to benefit from federal tax credits enacted as part of the 2022 Inflation Reduction Act (IRA), which allocated $369 billion for clean energy infrastructure to bring U.S. carbon emissions down 40 percent by 2030. Part of this transition will be facilitated with tax incentives to help investors reduce their utility costs in the coming years by investing in renewable energy infrastructure and improving energy storage.

Major federal bills recently signed into law are spurring robust and rapid movement in the private sector. • Construction costs — As demonstrated in this survey, construction costs are now a stronger site selection consideration, jumping from #19 in 2021 to #10 this year. The current period of elevated inflation presents particular challenges for the construction sector. While margins can vary significantly across projects in different sectors and locations, CBRE expects rising construction spending this year to support higher margins as contractors try to recoup higher input costs absorbed in 2022. Taken together, we expect total construction cost escalation in 2023 to be slightly higher than the historical norm but well below that of 2022.
RELATED TOPICS AND ARTICLES

Share

Exclusive Research