Fueled by billions in government incentives for transitioning to new transportation and energy technologies as well as concerns over national security and distribution issues, there is a manufacturing plant explosion sweeping across the U.S. According to the U.S. Census Bureau, construction related to manufacturing has experienced almost a 40% increase in the last year after being nearly completely stagnant since 2015 (Reuters.com).
What’s causing this factory boom, you might ask? There are several contributing factors.
First, the U.S. government is offering hefty incentives to high technology fields like electric vehicle batteries and semiconductors. We’re talking billions of dollars in an effort to phase out combustible engine vehicles by the mid 2030s and provide the foundation for the technologies needed to defend our country.
The COVID-19 Pandemic also made it clear to many manufacturing companies that relying on plants overseas can cause serious shipping and distribution delays resulting in obsolete inventory and lost revenue. These companies have decided that the speed and flexibility in production and distribution that comes with reshoring their factories outweighs any additional costs they may incur by having the plants stateside. At the same time, post-pandemic consumers are placing more confidence in the label “Made in the USA.”
But, all this new construction is hitting a brick wall. Building a billion dollar production facility requires real estate. And not just any land. The specs for these facilities, are required to be somewhere between 1,000 and 2,000 acres, near a commercial airport, clean energy ready, low-cost, and with skilled laborers nearby. When multiple of these facilities need to be built, each with its own aggressive timelines and specifications, it causes a real estate problem. It’s not that our country has any shortage of land, but there just aren’t that many places to put down these mega production plants. In fact, the ones that were available have been snatched up with maybe only a few exceptions (wjs.com).
So, what can we do as community developers and real estate agents to accommodate this factory boom? We definitely want to make room for these facilities because they bring jobs to our communities-making use of skilled manufacturers and training unskilled workers as well as boosting the success of already existing businesses in the surrounding area. I think we might be able to take a lesson from the state of Alabama.
In response to the need for development of industry-ready sites, Alabama has created a “Game Plan” called the SEED (Site Evaluation and Economic Development Strategy) Act to secure multi-billion dollar projects for the state (Yellowhammernews.com). This act provides economic incentives for preparing available industrial sites in the form of cost-sharing grants. If we want to compete with other states, Missouri’s community developers, real estate agents, and local government officials need to work together to identify viable real estate, evaluate and assess it, and make quick, necessary improvements to make it development ready. Economic development begins and ends at the local level and manufacturers are choosing the land that is AVAILABLE. So, let’s do the hard work, the research, the planning and develop a strategy for funding to make land AVAILABLE for development in Missouri!
Rick Meyer
Meyer & Company Real Estate & Auctions
314-565-7824
636-462-5555 ext. 111