Utah Alliance

The economy's gradual recovery during 2010 has resulted in increased business optimism and a refined set of selection priorities among site selection consultants, according to data from the 7th Annual Consultants Survey conducted by Area Development Online.

Since a large portion of EDCUtah's project load comes through its relationships with site consultants, the results of the survey provide an opportunity to compare the priorities of the site consultants with the economic development efforts taking place in the Beehive State. "Utah ranks well in all of the selection priorities identified by the respondents to the consultant survey," says EDCUtah Vice President of Business Development Todd Brightwell. "This is the premier state for business and we are working hard to get that word out."

Of the 110 site consultants that responded to the 2010 Consultant Survey, 44 percent said they expect the economy to improve by 2012, while 38 percent said the economy will not improve significantly until 2013.

Consultants' Site Selection Priorities
Area Development Online asked respondents in its 2010 Consultants Survey to rank each of 26 site selection factors according to importance: "Very Important," "Important," "Minor Consideration," or "Of No Importance." Labor costs and state and local incentives tied for the number one site selection factor -- both were considered "very important" or "important" by 96.8 percent of the respondents in the consultant survey.

More than half of the responding consultants said incentives are more important to their clients now than in the past.

Nearly half believe tax incentives along with other financial incentives (grants, loans, and the like) are the most important types of incentives.
Nearly half said more communities are instituting investment and/or job creation criteria that must be met in order for their clients to receive the incentives.
Forty percent said incentive closing funds are the factor they have found most deficient in their recent evaluations for location and expansion projects.
Two other tax-related factors placed among the consultants' top 10: tax exemptions ranked seventh, with an 88.4 percent importance rating, and corporate tax rates ranked ninth, with an 86.4 percent importance rating.

Highway Accessibility
Among the site consultants, highway accessibility ranked third -- considered "very important" or "important" by 95.8 percent of the respondents; however, among corporate survey respondents highway accessibility was ranked the most important site selection factor.

Fourth on the consultants' list of priorities was the availability of skilled labor, with a 92.6 percent importance rating. This factor was in seventh position on the corporate respondents' list. Meanwhile, the right-to-work state factor dropped 9.9 percentage points to a 71.3 percent importance rating, and fell from 13th position in 2009 to 20th in the 2010 Consultants Survey -- "the greatest drop in the rankings among the site selection factors," according to Area Development Online.

The responding consultants ranked energy availability and costs fifth among the selection factors with a 91.5 percent importance rating. "Consultants appear to be more keenly aware of the volatility of energy costs than their corporate counterparts, who only gave this factor an 82.1 percent importance rating," said Area Development Online. "Also, nearly half of the responding consultants say rising energy costs are impacting their clients' facility plans." Furthermore, nearly four-fifths say sustainable development is more important to their clients now than in the past. In fact, eighty percent of the respondents to the Consultants Survey said their clients are making energy-saving modifications to their facilities, and more than 40 percent said their clients are seeking LEED certification for facilities, as well as recycling or re-using waste products.

Proximity to Major Markets
Proximity to major markets placed sixth among the consultant survey respondents, with 90.5 percent considering this factor as "very important" or "important." Meanwhile, proximity to suppliers, "although ranked just 15th, showed the largest percentage increase among the site selection factors -- jumping 8.9 percentage points to a 79.8 percent importance rating," according to Area Development Online. "Additionally, the consultants agree with the corporate respondents regarding the increasing importance of railroad service, which showed the second-largest increase in importance -- 8.7 percentage points -- and is considered 'very important' or 'important' by 46.8 percent of the responding consultants."

Occupancy and construction costs ranked eighth by the consultants -- considered "very important" or "important" by 88.3 percent of the respondents. Similarly, the corporate survey respondents ranked occupancy and construction costs higher (fourth) on their list of site selection factors.

Rounding out the consultants' top 10 is availability of buildings, with an 86.3 percent importance rating, up 8.4 percentage points, the third-highest increase in the consultants' ratings, and jumping ahead seven spots in the rankings from 2009, the largest jump in the consultants' rankings overall. This is in recognition of the need to get projects up and running quickly in response to quickly changing market conditions, said Area Development Online. "In fact, more than 70 percent of the responding consultants say the existence of a shovel-ready or pre-certified site is very or somewhat important in their clients' site search."

When it comes to quality-of-life factors -- which were ranked separately from the other site selection factors -- respondents to consultants survey said a low crime rate is the number-one factor, while recreational opportunities ranked last among the quality-of-life factors, with the consultants giving it a 43.7 percent importance rating. Obviously, in tough economic times recreational needs are put aside.

In Review
What do the survey results mean for Utah? Brightwell says economic developers within Utah's cities and counties need to have more information available online, as a majority of site consultants and corporate real estate executives are doing their research online first. Further, he says economic developers need to leverage the state's existing strengths, which include a competitive incentive program, low energy costs, lower costs for skilled labor, low corporate taxes, a low crime, and a significant number of shovel-ready sites with rail and interstate highway access.

Top 10 selection factors from Area Development Online's 7th Annual Consultants Survey:

Labor Costs
State and local incentives (tied with labor costs as the most important factor)
Highway accessibility
Availability of skilled labor
Energy availability and costs
Proximity to major markets
Tax Exemptions
Occupancy or construction costs
Corporate tax rate
Availability of buildings
Quality of life selection factors:

Low crime rate
Colleges and universities in area
Housing costs
Ratings of public schools
Healthcare facilities
Housing availability
Climate
Cultural opportunities
Recreational opportunities