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Episode 7 – The Importance of Pad Ready Sites in Economic Development

Site Selectors Guild
Episode 7 - The Importance of Pad Ready Sites in Economic Development
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Rick Weddle: Welcome to Site Selection Matters, where we take a close look at the art and science of site selection decision-making. I’m your host, Rick Weddell, president of Site Selectors Guild. In each episode, we introduce you to leaders in the world of corporate site selection and economic development. We speak with members of the Guild, our economic development partners, and corporate decision-makers to provide you with deep insight into the best and next practices in our profession. In this episode, we have as our guest, Jay Garner, president of Garner Economics. Jay is a leader in the field of economic development generally, and corporate site selection, specifically. Garner Economics offers location advisory services, analytical research, industry targeting strategic planning, and organizational assessments to companies, communities, and organizations globally. Based in Atlanta, Georgia, Garner economics also has representative offices in Europe, in Berlin, in Asia, in Seoul, in North Carolina. Today, Jay will talk with us about the importance of ready sites in the field of economic development in corporate site location. Join me as we welcome Jay Garner to Site Selection Matters. Jay, today we hear a lot about site readiness or pad-ready sites as a first step to a community or a region becoming more competitive in the battle for new industry and good-paying jobs. Is that just a cliche or talk, or is it really a precondition for success in economic development?

Jay Garner: Rick, I’m not sure it’s a precondition. But speed to market is extremely important when most business sectors are trying to derive a profit sooner than later. So, they’ve gotta beat their competition. They’ve got to be engaged. They have to be in operation. And the only way that you can do that is by decreasing the timeline on when a project starts from its embryonic phases to actual operation. So, obviously, if a community has, say, a speculative building or an existing building that is functional or a site, that’s shovel ready, pad ready, anything that can speed up the construction component timeline, then that is a very positive thing for a community to undertake.

Rick: Okay. I get it speed to market, it seems like no one has any time for anything anymore, speed to market. How long does one of these searches take? I mean, when you’re talking about speed to market, they’re talking…You really wanna be ready pretty quickly.

Jay: Yeah, that’s a great question. You know, you and I have been around this business for a long time. I got into it in 1980. And for a lot of the anecdotal, I don’t think there was the kind of data analysis back then that we have now. And obviously, there was no internet. But just anecdotally, when we would talk to companies, construction firms, the very few site location firms that were out there at that time, the average time it took from when a company started to look until the time they made an announcement was around 18 to 20 months. So today, there’s a lot more data that shows from the time a company starts to be public about its search, until a time they make an announcement, it can be anywhere between six months to nine months, sometimes longer, sometimes shorter. You know, I mean, case in point, Amazon HQ2 took right about 14 months for a multi-billion-dollar project. Some of these large automotive facilities like Toyota, Mazda, and Toyota by itself, Volkswagen took less than 12 months. So, you know, there’s two words you can rely on in the world of economic development. And they are it depends. So, we’re not quite sure. But honestly, the shorter, the better on a lot of these projects. And everything is being accelerated because of competition. GIS has made life a lot easier. The ability to extract data from so many online sources and the Internet has made it shorter. I think a good rule of thumb is six to nine months.

Rick: It depends.

Jay: It depends.

Rick: It depends. You know, the point is, I think speed matters, and everything’s getting faster, and everybody wants everything real-time if they can. It seems like one thing that doesn’t depend that is a truism. Is that old saying, “You can’t sell from an empty wagon.” That may be truer today than ever before. I get it that a community must have property on which a new company can either locate or build its building. Let’s unpack that a little bit more in detail. You mentioned pad-ready as a concept. Help us understand, what does pad ready mean?

Jay: Yeah, I wanna go back to your comment about, “You can’t sell from an empty wagon.” So, there’s four words that we use all the time. It’s part of our mantra. No product, no project, which means you can’t sell from an empty wagon. So, if a community doesn’t have product, meaning sites that meet the criteria of what we would consider a shovel ready site, or a building, or the infrastructure that exists, or all of the quality of place amenities that are needed for that particular business sector, then they’re not gonna be successful. Okay? So, dirt does not make a site. I’ll say that again. Dirt does not make a site. So, what determines a site is is it under control? Does it have the infrastructure to play such as water, sewer, natural gas, broadband, the road infrastructure? Those are the things that determine a site. And on top of that, the person or the entity that controls the dirt, controls the site, also controls the project. So, you can have a wonderful community, you know, ranked by all these different entities. It’s one of the best places in the world to live. But if you don’t have the site, the shovel ready site, the pad-ready site, the product, remember no product, no project, then you’re not going to attract the investment.

Rick: So, I guess that means also you gotta control that site because if you can’t control it or if the owner won’t sell it, you’re out of luck.

Jay: Go back to what I said earlier, the person or the entity that controls the site controls the project.

Rick: Good point. So, Jay, whose job is it to get this done? Would this normally be something the private sector or a private developer would do or is it a community role? Whose job is it?

Jay: You know, it’s everybody’s role. And I say it that way for this reason. If a community has a professional economic development entity of staff, then, you know, and let’s say that that economic development group does not own land or buildings because several ED groups do. But let’s say they don’t, well, then the ED group’s functional role is to serve as a catalyst and a facilitator to make it happen. And so, typically, what you’ll see in a smaller community, you’ll have a municipally owned industrial park. You may even have a municipally owned speculative shell building. And it’s because the private sector in a smaller community typically can’t afford the risk. In a larger community, you’ll normally see the private sector, who will take the risk based on the economic vitality and the dynamism of that region, of that community to lead that charge on product development, but always the economic development group. And I say that loosely because if a community doesn’t have an economic development group, then it’s the public sector through, say, the county or municipality. Of course, if you’re in Louisiana, it’s not a county. It’s a parish. It’s their responsibility then to serve as that catalyst and that facilitator, the impetus to make it happen.

Rick: You know, Jay, this sounds like you said, they can’t afford the risk sometime. But this is serious business. And site preparation is also an expensive proposition. I guess who would normally pay for this might be the community, you know, small community, the city government, the county government, something like that. How do you deal with the I mean, you know, the criticism that, well, is that a corporate subsidy? When actually it’s really an investment in job creation. How do you deal with that?

Jay: That’s a great point. It is an investment. And that’s the reason why you have some states…And I’m the Pied Piper of the Texas economic development model, where Texas for example, in 1979, their legislature said, “We think local communities can do a better job and economic development than us the state telling you how to do your work. So, we’re going to give municipalities in Texas that meet the criteria, an option to have a public vote on a half-cent sales tax for economic development.” And so now you have I think about 680 municipalities in Texas, that have voted in through their constitutional charter, a sales tax for economic development. They have a function. They have to call it type A or type B. Type B is a very liberal type of charter that will allow you to use sales tax monies for a number of items that are indirectly or directly related to economic development. So, you can develop things like industrial parks, an office park, spec buildings, things of that nature under that Texas model. They recognize that it is indeed an investment. They’re trying to attract private investment. And what they’re doing in their communities is nurturing the environment for that to occur. Now, a number of communities have copied that model outside of Texas. There really hasn’t been many states that have. Nebraska has a little bit of a related type of initiative. West Virginia has one now called whole mall. But most of the copying has been on a local level. For example, Topeka, Kansas has one, Bartlesville Oklahoma has another one. And, you know, Florence, Alabama has something similar. And you can find these throughout the country. A hundred percent of them were created so that those communities can develop the product and nurture private investment, induce, attract private investment to locate there.

Rick: I guess it’s pretty easy for the governor or the legislative leadership in Texas or a state like that, that makes such a sweeping commitment to its communities to get ready to say, “We’re business-friendly.”

Jay: Yeah, it really…And the fact that it’s been around since 1979, I tell my Texas economic development friends, if that legislate for who created that came up with that idea is still around, hug that person every day.

Rick: Good idea. Good idea. Let’s turn to some other…I think you stipulate the point. It sounds like you can’t sell from an empty wagon, no product, no project. Clearly getting ready makes a lot of sense. But you said it’s not necessarily the only precondition. What other factors come into play? There’s gotta be more to a community’s competitive position than a piece of property or an available building. After they get these things ready, what comes next?

Jay: Well, I’m not sure about after getting ready, but when they’re working on the same parallel track, and that would be talent. And that’s another, you know, truthism, I call them, you know, or I guess my team calls them Jisms, because I’ve coined these over the years, and that talent is the new currency. And it’s very much seen now. And it’s because, as you well know, we’ve gone through a number of different economic cycles in the years that we have been in the economic development business. But this one is very profound for a number of reasons. One, in my lifetime, it’s the hottest economic market I’ve ever been engaged in. Two, it’s our second full employment cycle. The first one in the years that I have been working, which has been 39 years now was in the 1999, 2000 when we were in that .com, bubble phase. We’re basically at a full employment cycle now. Now here’s the difference. Now, we have all of these aging baby boomers. I’m one of them. And as a result of that, many of those retired baby boomers are not getting back into the workforce. And so, you have Generation X, Y, millennials, and Z that are now creating and comprising the majority of the workforce. The difference is that we’re also becoming a more aged country now. So, when I first got into the business, the average age in the United States was 36. Now we’re at close to 38. So, we’ve aged a couple of years because we’re having fewer babies. And also, I wouldn’t call it less migration or immigration, but it’s more subdued. So, as a result of that, it’s very challenging now to find a skilled workforce in almost any community. So now you have talent wars, which is why I call it talent is the new currency, Tulsa, Oklahoma, for example, has a program now that’s getting a tremendous amount of attention called Tulsa Remote, where they’re incentivizing with large dollars, people to move to Tulsa, who can be basically mobile entrepreneurs. They can live anywhere and work from their location. And that’s helping to build the talent pipeline. So, you’ve got to have the product but don’t forget, talent is a product too, which is why talent is that new currency.

Rick: So, in a world where more and more workers, especially in technology and software, and those, can really be remote workers and work from unattached to any particular building or facility. That could be a really interesting thing. You know, I made a date myself, also, you said, we’re at full employment. Actually, when I went through school, Jay, the economist told us that you couldn’t get unemployment this low. That it was impossible, that there was a natural churn that existed in the market. So, talent is the new currency. And it sounds like communities need to invest in their talent, so they’ll have money in the bank, really for economic growth going forward. What an interesting thing. You know, Jay, you’ve given us a lot to think about in our discussion this morning. What a great, and interesting, and provocative conversation. But that’s all the time we have today. So, let me say thanks to you, Jay, for talking with us on this episode of “Site Selection Matters.”

Jay: Thank you, Rick. And thanks for all you do with Site Selectors Guild.

Rick: Thanks for listening to this episode of Site Selection Matters. And a special thanks to Jay Garner, the Garner Economics for helping us understand just how important it is for a community to do all the right things to get ready and be more competitive for new corporate facilities and, of course, new job creation. What an informative discussion that leaves us with a lot to think about. Again, I’m Rick Weddell, President of the Site Selectors Guild. We hope you’ll subscribe to the Site Selection Matters podcast on Apple Podcast, on Stitcher, on Spotify, or wherever you listen to your podcast. We look forward to bringing you some great discussions in the year ahead. Until next time, good day.