Limited real estate options for new factories in US

Companies find it difficult to find “megasites” to fit their particular needs

(Photo Illustration by The Real Deal with Getty)
(Photo Illustration by The Real Deal with Getty)

There’s a downside to the factory boom in the U.S., namely when it comes to real estate.

While the country has plenty of land, it doesn’t have “megasites” that are conducive to building large, state-of-the-art factories, Reuters reported.

Volkswagen’s Scout Motors, for example, looked at nearly 75 parcels to build a multibillion-dollar plant, only to settle on a site in South Carolina that was 1,600 acres instead of its desired 2,000 acres.

Scout wasn’t alone. Multiple companies are searching for sites of at least 1,000 acres that are accessible, have transport, have skilled labor nearby, and also have access to cheap, green energy.

The boom is due in large part to government incentives, a concern over supply chains in places like China, and the conversion to new energy technology, the outlet reported.

The Biden administration so far has noted the problem, but also said it’s a nice one to have.

“Folks are finding places to build,” one White House official told Reuters. “I don’t think I’ve heard of one company abandoning plans to go forward because they’re not able to find a site.”

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Indeed, while plans to build a factory may not have been scrapped, locations have changed.

For example, Rivian Automotive switched plans to build a $5 billion factory from outside Fort Worth, Texas, to Georgia because the transportation infrastructure was not in place.

Some have specific requirements — like Intel needing its $20 billion semiconductor plant in Ohio not be too close to a railroad because the vibration would be too disruptive.

Another issue is power — as in many of the large factories, like battery plants, need lots of it.

“Some of these projects require hundreds of megawatts,” Didi Caldwell, president of consultancy firm Global Location Strategies, told Reuters. “At the same time, we’re shutting a lot of coal plants.”

At least several states, including Michigan, South Carolina, Virginia and North Carolina, are doing what they can to create industrial sites in the near future. Not that it’s easy, what with environmental regulations as well as local pushback making it difficult to create them.

— Ted Glanzer