Research released today from the Site Selectors Guild reveals new site selection consultant perspectives on international corporate investments of more than $1 billion known as megaprojects. There is strong consensus among site selectors that megaproject investment activity will remain constant or increase in the next five years, North America will see the highest growth in these types of projects, and the automotive and electric vehicle (EV) batteries industry will yield more megaprojects than any other industry. The research also highlights the most important factors in megaproject location decisions.
“A corporate megaproject is a large-scale investment project that is many orders-of-magnitude larger than typical economic development projects,” said Gregg Wassmansdorf, Chair of the Site Selectors Guild and Senior Managing Director, Global Strategy & Consulting at Newmark. “Megaprojects take multiple years to plan and build and can be transformational for communities and regions. Our latest research sheds lights on what Guild members are seeing as they work around the globe with corporations considering these types of projects.”
Following are the top findings of this research, conducted via an online survey of Site Selectors Guild members in April 2022.
More Megaprojects Are on the Horizon
Megaprojects have been on the rise in recent years, exemplified by high-profile announcements by Intel in the Columbus, Ohio region; Tesla in Austin, Texas; Amazon HQ2 in Arlington, Virginia; and so many others in numerous countries around the world. Fifty-four percent of Guild member respondents believe the frequency of megaprojects will increase in the foreseeable future, 36% say megaprojects will remain constant and 10% say they will decrease.
Megaprojects typically share the following characteristics:
- An investment of more than $1 billion;
- The creation of hundreds to thousands of direct, indirect, and induced jobs;
- Considerable site and/or building requirements – for example, more than a million square feet of facility and/or hundreds of acres of land; and
- Large-scale utility and infrastructure requirements.
North America is a Megaproject Hotspot
When asked to select the world regions likely to see the highest growth of megaprojects in the future, 100% of Guild members selected North America, 64% selected Asia and 43% selected Europe.
While suitable sites, accessible and affordable energy, market size, workforce and incentives all play a role in the predicted dominance of North America in capturing megaprojects, a stable geopolitical environment and reduced supply chain risk are also top considerations. In light of increased political tensions in other world regions, such as the Russian invasion of Ukraine, and ongoing COVID-19 disruptions and restrictions, companies are looking for lower risk environments that will offer a comparatively stable and safe operating environment and minimize production and supply chain disruptions.
When asked if megaprojects are typically internationally competitive projects, responses were mixed, with 43% saying megaprojects are less likely to be internationally competitive, 26% saying they are more likely to be internationally competitive and 29% saying they are not more or less likely to be internationally competitive.
Automotive and EV Batteries Industry Sees Greatest Megaproject Growth
When asked to select industry sectors that are likely to see megaprojects, 98% of Guild members selected automotive and EV batteries, followed by chemicals and petrochemicals (55%), data centers (45%), computer hardware manufacturing (43%), life sciences (36%) and aerospace and defense (33%).
Workforce, Sites and Infrastructure are Megaproject Must-Haves
For projects of this magnitude and strategic importance, decision-making rises to the highest corporate levels. Nearly 80% of site selectors say the Board of Directors or the Chairman/CEO/President is the ultimate corporate decision maker when it comes to megaprojects.
In terms of the non-negotiable location criteria when siting a megaproject, site selectors selected these top factors:
- Availability of a skilled workforce (69%)
- Sufficient acreage or facility (67%)
- Utility infrastructure (40%)
- Competitive state and local incentives (31%)
- Overall operating costs (21%)
Consultants note it can take three to 10 years for states and regions to lay the groundwork to be able to successfully attract a megaproject. Additionally, site selectors emphasized that the long-term impacts of the initial project and also from resulting supplier investments and job creation can be transformative to a region’s economy.
About the Site Selectors Guild
The Site Selectors Guild is the only association of the world’s foremost professional site selection consultants. Guild members provide location strategy to corporations across the globe and for every industry, sector, and function. Founded in 2010, the Site Selectors Guild is dedicated to advancing the profession of international corporate site selection by promoting integrity, objectivity and professional development. Members are peer-nominated, vetted, and must demonstrate significant professional location advisory experience. In the past three years alone, Guild members facilitated the announced creation of approximately 165,000 jobs and $90 billion in announced capital investment. Guild membership is the highest standard in the site selection industry. For more information, visit siteselectorsguild.com or follow @siteselectguild on Twitter.
Nick Reshan, DCI