Seven Insights from a Peer-to-Peer Economic Development Summit

November 28, 2023

In October, CBRE hosted a two-day, peer-to-peer summit in Chicago for senior economic development executives from around the US. They invited ten executives from peer U.S. markets and seven top CBRE site selection consultants (SSCs) to trade notes on the most pressing topics in today’s evolving world of corporate expansion. I had the honor to represent the Economic Development Corporation of Utah (EDCUtah).  

Here are some top takeaways from the event.  

Workforce Training and Incentives

All markets reported increasing challenges with workforce availability and readiness. Companies and SSCs are paying close attention to state programs that train potential employees in manufacturing and other industries. Utah’s robust community colleges and Career Pathways program are good examples. South Carolina’s ReadySC program was highlighted as a particularly effective approach.

Other states such as Missouri, Michigan, and Idaho are taking a free-tuition or incentivized approach to attract candidates to specialized training programs for emerging targeted industries. Idaho offers $8,000 to high school graduates who enter a training program for semiconductor manufacturing, and Michigan offers $10,000 for those entering their “EV Scholars” program. Time will tell if these approaches provide a measurable return on investment for taxpayers, and EDCUtah plans to monitor these efforts accordingly. Here at home, the University of Utah has recently launched the Utah Network for Integrated Computing and Semiconductor Research & Education (UNICOS)—a statewide network that will accelerate Utah’s workforce readiness in this critical industry through education and hands-on training. EDCUtah looks forward to supporting them, and I’m honored to be serving on their advisory board.

While workforce availability and readiness concerns are universal, growth challenges and responses varied. Some states – including Utah, Arizona and Idaho – are working on strategies to minimize the negative impacts of rapid population growth. Others, particularly in the Midwest, are taking steps to catalyze more growth. Michigan has a “Chief Growth Officer,” and Ohio is working on strategies to grow their population from 11.5 to 13 million. There was a broad consensus in the room that open-ended talent-relocation incentives do not work, although multiple markets are still doing them.  

The Office Market

CBRE presented a deep dive into data on the office market. A few observations:

  • Nationwide, there is a flight to quality (e.g. Class A+ space).
  • In comparison to the tech industry, the finance industry is seeing more employees return to work. Tech-heavy markets nationally are seeing lower occupancy rates.
  • There are no good answers regarding the glut of vacant Class B and C space.
  • A slow recovery is predicted beginning in 2025, but we may not have seen the peak of office vacancy and subleasing yet.

Childcare a Critical Factor

More and more companies are evaluating childcare availability as a “must have” in their expansion decisions. This is driven partly by requirements stated in the CHIPS Act and partly by data that show onsite childcare increases retention and workforce participation.  

The broad consensus was that the childcare issue is on a lot of minds, but there are no great answers yet. Idaho has invested in 65 daycare centers, and Michigan has developed a “tri-share” model involving employees, employers, and the state. CBRE is considering putting childcare accommodations into requests for proposals (RFPs) as an incentive option. This is an area where EDCUtah would welcome dialog with our investors to arrive at a Utah-tailored solution.

Adopting a Future-Proofing Mindset

ED leaders are engaging on a wide range of strategies to “future proof” their states and communities. One participant stated: “I spend 90 percent of my time working on "future proofing” and economic competitiveness and only 10 percent of my time on transactions.” Another said that economic development is broader, harder, and way more demanding of civic collaboration than ever before.

One approach may be the development of “future-proofing” scorecards that demonstrate regional initiatives to address challenges in infrastructure; energy mix; welcoming and belonging; and environmental responsibility—among other competitiveness factors. Perhaps site selectors like CBRE can develop these criteria. A standard scorecard would help economic developers inform policy makers in their communities about what “future-proofing” investments companies are looking for as they evaluate markets that will be stable, long-term partners for corporate expansion.

The Anti-Growth Conversation

Utah is not alone when it comes to anti-growth and not-in-my-backyard sentiments. To engage with the public at large, our peer EDOs are talking about the outcomes of their work, such as: “Our success pays for parks, trails, and other community amenities” and “We’re growing our quality of life while growing quality jobs.”

It’s OK to Say No

All EDOs shared that, in this post-COVID market focused heavily on manufacturing and data centers, they currently have more demand for infrastructure-equipped industrial sites than their supply can support. Communities are having to make strategic decisions on what they’re targeting and what they are not.  

CBRE consultants gave some counter-intuitive advice: “It’s OK to pass on a project. SSCs prefer a fast no over a slow maybe.”

Saying no to a project that is not a good fit for your community builds trust and does not negatively impact a consultant’s willingness to call you for the next project.  

Girding Up the Power Grid

Perhaps the biggest topic of discussion was power infrastructure. In a summary of the summit, CBRE stated: “Power demands continue to outpace infrastructure and operational capacity in many markets across the U.S. There is a new wave of demand for uninterruptible loads, which is placing a strain on the infrastructure grid. Energy risk never used to be a major topic for concern, but now EDOs are in the middle of that dialogue and there is no easy fix for capacity constraints. Solving for these complex energy challenges requires the need for collaboration and exploration of new strategies.”

To quote one participant, the current power demand is unprecedented. “To serve all the demand in the pipeline, we’d need to double generation by 2030. Yet with supply chain issues, it takes three years just to build a substation.”

EDCUtah is convening with partners to strategize on Utah’s response to this national challenge.  

What Next?

As economic development issues continue to evolve, the collaboration of public-private partnerships will play a critical role in identifying and applying effective solutions. Luckily, this is an area where Utah thrives. Utah is widely recognized as a state of collaboration—where partners of diverse industries, sectors, and backgrounds come together to solve tough challenges. EDCUtah is committed to ensuring that Utah stays on a path of quality of life and long-term prosperity for generations to come.  

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