Site Selectors GuildIncreased activity in warehousing/distribution and production ispredicted for a post COVID-19 world.

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SAN FRANCISCO—An uptick in on-shoring especially in thepharmaceutical and life science industries, increased activity inwarehousing/distribution and production post COVID-19, and adwindling demand for office real estate as remote work continueswere among findings of a survey on the impact of COVID-19 releasedby the Site Selectors Guild. Conducted in partnership withDevelopment Counsellors International, the online survey of Guildmembers aims to inform both corporate decision makers and economicdevelopment organizations on how site selection trends areshifting.

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"Our hope is that this new research will help corporate clientsand economic development organizations understand and plan in thiseconomic calamity," said Jay Garner, Site Selectors Guild boardchair and president of Garner Economics LLC.

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Top findings of the research:

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The shift in global manufacturing and supply chainstrategy is a bright spot for North America. Guild memberspredict COVID-19 will accelerate the regionalization of supplychains, with 81% of respondents saying COVID-19 will have a majorimpact on global supply chain strategies.

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Members pointed out that the previous focus on the lowest costscenario, which led to growth in China and Southeast Asia, will nowbecome more balanced as companies look to reduce risk. This couldbenefit North American locations as more companies look to locateproduction facilities close to the customers they serve andincrease redundancy. Many Guild members predict an uptick inon-shoring to the United States, Canada and Mexico–especially inthe pharma and life sciences industries.

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Warehousing and production will be the most activefunctions post COVID-19. Decisions on the relocation orexpansion of other functions such as R&D and national/regionalheadquarters are less likely to have as much activity.

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"Warehousing/distribution centers will indeed growsignificantly," Garner tells GlobeSt.com. "As the supply chainpositions more towards a North American regionalization from otherparts of the world, i.e. China, so will the demand for largedistribution space. But there will also be an increase inproduction activity in the pharma, medical supplies and medicalequipment sectors, prompting an increased demand in industrialspace. Ports and inland hubs may see benefits, perhaps in the veryshort term, but when you see more concerted activity to protect thesupply chain in the US and North America as a whole, those USMCAcountries, then port or inland hubs may not see any unusual growththat is not already occurring since imports might slow, especiallyif policy makers act on their threats to incentivizeon-shoring."

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The work from home experiment will change thefootprint of office real estate. Nearly three-fourths (72%) ofrespondents believe the current rise in remote workers will have amajor impact on how work is done in the future for both theemployer and employee. From the employer perspective, Guild memberspredict a decrease in demand for office space and adoption of newtechnologies that allow remote employees to work moreeffectively.

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From a talent perspective, Guild members believe impacts couldrange from employees expecting and wanting more work-at-homeopportunities and changes in the way teams work and interact.

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A majority of site selection projects arepaused and nearly half of projects are moving forward.When asked to reflect on their interactions with client companiessince mid-March, 52% of Guild members responding to the survey saidthat companies are pausing site selection projects, 45% saidcompanies are moving forward with site selection projects and theremaining 3% indicated it was a combination but highly dependent onthe industry and function. None of the Guild members surveyed saidthat clients were canceling projects outright at this time.

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Life sciences, logistics and advanced manufacturingemerge as hot industries in a post-COVID world. When askedto select the industry sectors that will have the most locationdecision activity post COVID-19, 68% predicted that thebiotech/life science sector will be the most active industrysector. Approximately 48% anticipate an increase in locationdecisions in the transportation and logistics sector followed bythe advanced manufacturing sector (39%). Rounding out the top fivesectors most likely for increased location activity are thesoftware/information technology sector (19%) and the food andbeverage sector (16%).

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Economic development organizations should focus on bothbusiness and workforce retention. While Guild members areconfident about an uptick in location decisions in the next 12months, they also agree economic development organizations shouldfocus on business and talent retention. It was nearly unanimousthat economic development organizations need to focus on existingbusiness retention and helping employers to weather this storm.Similarly, workforce retention was also seen as apriority–including helping displaced workers findemployment–closely followed by talent/workforce attractioninitiatives.

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It is critical for economic developers and siteselectors to maintain relationships. Guild memberssurveyed stressed that as economic developers and site selectorstry to grasp what the future will hold, it is critical to maintainrelationships and not social distance in the literal sense. Guildmembers reinforce that they are still busy, projects are movingforward and communication from economic development organizationsis still helpful.

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"While none of us have a crystal ball, our 50 members representthe nexus between communities and corporations," said Rick Weddle,president and CEO of the Site Selectors Guild. "This survey givesus a sense for what site selectors are seeing from their corporateclients, and a glimpse into what we might expect coming out of thiscrisis."

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Lisa Brown

Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.