While it may seem easy to simply buy or lease a warehouse or fulfillment center near to your target market, there are a variety of factors that must be considered when determining the best location for a new facility. “Selecting a site for fulfillment or distribution is a nuanced decision, with many determining factors at play,” says Frank P. Crivello, Chairman & Founder of Phoenix Investors, Phoenix Logistics’ affiliate. Taking a holistic approach to site selection ensures the best long-term viability for your operation.
You will want to make sure that the local labor pool is sufficient to staff your facility. In addition, you may need access to interstate highways, ports, railheads, and other transportation to control supply chain costs. Most importantly, however, you will want to understand how friendly state and local governments are to your business.
Many state and municipal governments offer a variety of benefits to lure in new businesses. Many of these areas also have public or private economic development organizations that offer additional benefits. This blog will discuss some of the key benefits you should look for when sourcing your next industrial facility.
Many localities will implement grant programs for new businesses that will help their communities grow. These may come from the government bodies themselves, or from economic development councils and utility providers.
These grant programs typically have a number of strings attached. For example, an economic development organization may fund improvements to an existing facility in an economically deprived area or they may even fund new manufacturing equipment in exchange for a guaranteed number of jobs.
Infrastructure grants may also be available in certain areas to expand access or upgrades for high-speed internet, power and sewer, and more. These grants are given simply because large industrial facilities tend to be high-dollar customers for utility providers, which makes it in the best interest of the provider to sign the customer. Companies should also explore opportunities for training grants, which typically come from partnerships with local technical schools or universities.
Some entities will also offer very low interest loans to attract new businesses by offsetting their upfront costs. Oftentimes these loans may be forgiven altogether if the facility meets various commitments to the local community, such as job creation or sustainability goals.
Tax incentives come in a wide variety of forms. Some of the most common include:
- The types of tax credits used as site selection incentives vary wildly. The most common include credits for job creation or for investments in assets or property.
- Similar to credits, tax rebates offer a performance incentive to businesses that act in the best interests of the community at large. Rebates for energy efficiency improvements are a common example.
- Many states attract industrial businesses by making industrial equipment exempt from sales tax or by significantly reducing the tax-burden of specific property and asset types.
- Tax free zones. Some locales establish special exemption zones wherein state and/or local taxes are significantly reduced or entirely eliminated. Of note, these areas are typically selected specifically because of underdevelopment, so it’s important to make sure that labor and other resources required by your business will be available.
- Industry specific. Some states have targeted specific industries as key factors in their growth, and as such offer specific tax benefits to companies operating within those industries. For example, the State of Wisconsin offers substantial tax benefits to manufacturers and agricultural businesses.
Without the support of state and municipal governments, establishing a new facility can be needlessly slow and expensive. Large building projects inevitably require a host of departmental approvals and permits, which can cause significant delays and unexpected expenses.
Partnering with local economic development agencies or government bodies can help to streamline permits and fast track necessary zoning changes so that your new facility can get up and running as soon as possible. Many geographic locations also offer waivers for various permits and fees to incentivize new businesses.
Site Selection Help from Phoenix Logistics and Phoenix Investors
Phoenix Logistics and Phoenix Investors collectively hold approximately 30 million square feet of industrial real estate space spanning 23 states. We are well-versed in helping our clients find an ideal site for their needs, complete with state and local incentive packages that will benefit their businesses. We have established relationships with many economic development organizations and extensive experience in negotiating incentive packages.
As an affiliate of the real estate firm Phoenix Investors of Milwaukee, WI, Phoenix Logistics has unique and preferential access to an expansive portfolio. Phoenix Investors’ Senior Management includes Frank P. Crivello as Chairman & Founder; David Marks as President & CEO; and Anthony Crivello as Executive Vice President. Robert Kriewaldt serves as Phoenix Logistics’ Senior Vice President. For more information about our site selection capabilities for your industry or business, please contact us.