Disruptive factors continue to push companies to mitigate risk in location decisions and build more resilient operating models. Read on for a preview of what Guild members predict for site selection projects in the year ahead.
A Slowdown in Megaprojects
Guild members predict that the number of megaprojects will slow in 2025 as many have been underway and public policy changes and the reallocation of governmental spending to other priorities will require companies to shoulder more risk.
What does that mean for site development? Communities that have not foresaken standard site development in favor of focusing on megasites will reap the rewards, and some megasites will likely be converted into industrial parks.
Geopolitical Issues Will Continue to Impact Location Decisions
Port closures, civil unrest, war. Geopolitical conflict is impacting companies’ ability to operate, and risk mitigation is anticipated to dominate conversations and the decision-making calculus in the year ahead as companies evaluate locations more carefully.
Policy Impacts and an Increase in U.S. Manufacturing
Steep new tariffs could spike inflation and raise costs for parts, materials, machinery and equipment imported by U.S. companies, ultimately dampening growth. On the other hand, tariffs could stimulate more manufacturing and tech FDI into the U.S., thus creating more site selection projects as foreign companies seek to produce in the U.S. to avoid tariffs.
Consider the automotive industry. All U.S. automotive production plants use suppliers in Mexico, with vehicles produced at VW’s facility in Chattanooga, Tennessee having $4,500 USD in parts from Mexican suppliers, as one example of the reliance on foreign suppliers. If 25% tariffs are imposed, companies will be forced to create or expand presence in new locations, which could include growth in the U.S. supplier base.
Additional Trends Expected to Continue
- China will continue to decline as the world’s factory
- NIMBYism will continue to gain strength until economic growth falters
- Labor shortages in the U.S. will be exacerbated if mass deportation is carried out, raising labor costs across industries that employ high percentages of immigrants such as construction, food production and meat processing, and other manufacturing and service sectors