Americas
Europe
Middle East
Key factors for identifying and pursuing transformational mega projects
In 2009, Tennessee acquired a 4,100-acre property, now known as the Memphis Regional Megasite, and over the course of more than a decade, the state and its partners invested nearly $200 million in infrastructure improvements at the six-square-mile site. Despite substantial marketing efforts and significant enhancements, the site sat vacant due to concerns over the available workforce and the ability to meet the infrastructure demands of a large industrial user.
The future of western Tennessee changed in the fall of 2021 when Ford announced BlueOval, a campus designed to assemble its F-series electric pick-up vehicles and batteries. Over $5.6 billion in investment, along with 6,000 new jobs, is now planned for the Memphis Regional Megasite. A decade of preparation and persistence finally paid off.
As megaprojects like BlueOval have grown in frequency, the story of the Memphis Regional Megasite is playing out across the U.S. Properties previously passed over are now being selected for major, transformative projects. Recent success stories include the South Alabama Megasite and the Greensboro-Randolph Megasite in North Carolina, each over ten years in the making. This trend is likely to continue. In a recent survey by the Site Selectors Guild, 54% of the Guild membership indicated that megaprojects will increase over the next five years.
If megaprojects are to continue to increase, where will they go?
Many U.S. states have begun setting aside unprecedented funding to identify and improve megasites. Kentucky has approved $200 million dollars for site development, with $100 million targeted specifically for megasites; Virginia has budgeted $150 million for site development, with megasites to receive $100 million of that funding. Numerous other states have proposed similar financial commitments to compete for these large megaprojects, with funds likely to be made available in the next one-to-two years.
While there are still properties yet to be selected by a major user, the decreasing supply of available sites combined with the increased state funding will likely lead to a new generation of megasites. The stakes are high for state and local decision-makers to identify the right locations, and invest in the appropriate infrastructure, that will lead to a transformational project for their region.
What factors will position a next-generation megasite for success?
Prioritization of workforce and skilled labor: The next wave of megasites is more likely to prioritize access to labor and skilled talent, even if it comes at higher premium for infrastructure and site acquisition. As of June 2022, there are over five million more jobs available in the U.S. than there are people to fill them, and companies are acutely aware of how much of their success is dependent on accessing an adequately skilled workforce. States competing for attention are increasingly likely to create a proactive workforce plan targeted for that specific region. Others may plan to incorporate an onsite training facility in partnership with the local technical college. Investment in detailed labor studies are also expected to be as commonplace as environmental due diligence studies.
Extensive electrical infrastructure and capacity: While megasites access to all utilities, electrical infrastructure, capacity and timing have become more of a priority with recent megaprojects. Projects within industries such as metals, EV batteries and semiconductors have electrical demands that are in the hundreds of megawatts. In addition to meeting the extensive consumption demands and fast-pace project timelines, many companies in these industries also expect the option to procure renewable energy from the electrical provider.
Planning for the appropriate site size: Megaprojects are increasing in size. Intel secured nearly 2,000 acres for a semiconductor facility; Toyota acquired approximately 1,800 acres for their battery production and Novellis, Inc. took control of 3,000 acres for an aluminum production facility. The next wave of megasites are likely to be at minimum 2,000 acres. Communities will strongly benefit in the site selection process by owning the land outright or controlling the property through long-term options.
It can take three to 10 years to develop the framework and properly lay the groundwork for attracting a megaproject that could change the economic trajectory and prosperity of a community. Is your region ready to attract the next generation of megasite?
Sources:
Senior Managing Director
Perspectives is a collection of stories and commentary from the point of view of our people, about capabilities, expertise, and insights on the ever-changing world of commercial real estate. Views and opinions expressed belong to the authors and contributors of each post.
For more information, read about website terms of use.
