< Previous8 JANUARY 2024 SITE SELECTION POWERING PROGRESS: I ndia aims to fulfi ll half of its electricity needs through renewables by , an ambitious target that promises to unleash unparalleled opportunities for global investors. e country is not merely embracing renewables; it is swiftly becoming a global frontrunner. With abundant solar, wind and hydro potential, coupled with a robust regulatory framework, India presents an inviting landscape for renewable energy ventures. Ranked No. globally in renewable energy installed capacity, wind power capacity and solar power capacity by the UN’s REN community in the organization’s global status report, and No. in new solar photovoltaics and bio-power capacity, India off ers ample opportunities for investments and expansion. Commitments and Milestones e pivotal moment came at the COP Summit in Glasgow, Scotland, in November when Prime Minister Narendra Modi unveiled an ambitious vision — GW of renewable energy generation capacity by . is commitment not only positioned India as a leader in the fi ght against climate change but also drew global recognition, securing the country’s sixth-place ranking on the EY Renewable Energy Country Attractiveness Index and an eighth-place position on the Climate Change Performance Index . According to data provided by the Ministry of New and Renewable Energy, as of October , the installed renewable energy capacity (excluding large hydro power) in the country reached an impressive GW, constituting a remarkable .% of the overall installed power capacity. Projections paint an even more staggering picture, with the government expecting to reach GW by . One catalyst propelling India’s renewable energy growth is the signifi cant reduction in the costs of solar and wind power, attributable to economies of scale, enhanced module effi ciencies, technological advancements and the availability of debt fi nancing at highly competitive interest rates. According to the Institute for Energy Economics and Financial Analysis, solar power costs in India have witnessed an % reduction since , surpassing coal-based power in many regions. In parallel, wind power costs have experienced a remarkable % drop in the last decade, solidifying their status as one of the most cost-eff ective sources of energy in India. by NALIN PATEL, DISHA SINGH & DELICIA DSOUZA, TRACTUS ASIA editor@siteselection.com ASIA Unlocking Opportunities in India’s Renewable Energy Revolution10 JANUARY 2024 SITE SELECTION Governmental Initiatives India’s appeal to foreign investors in the renewable energy sector is underpinned by a meticulously designed policy framework and the government’s proactive approach. The initiatives include permitting 100% foreign direct investment (FDI) under the Automatic Route, eliminating the need for government approval, and the exemption of Inter-State Transmission System (ISTS) charges for solar and wind power. Strategic initiatives further demonstrate the government’s commitment, such as the Green Energy Corridor project, Ultra Mega Renewable Energy Parks spanning 14 states, the National Green Hydrogen Mission, and the production- linked incentive (PLI) scheme for high-efficiency solar modules. Complementary policies like the Wind-Solar Hybrid Policy further encourage the development of a grid-connected wind-solar PV hybrid system, effectively addressing intermittency challenges and enhancing overall grid stability. The clarity and consistency in these government policies have played a pivotal role in significantly de-risking renewable energy projects in India. Foreign Investment Plentiful The roster of international investors actively engaged in India’s renewable sector reflects the global acknowledgment of its potential. Global Infrastructure Partners (GIP), a prominent U.S.- based infrastructure investor, entered India in 2018, injecting $500 million and establishing the 1 GW platform Vector Green Energy. Equally impactful is Goldman Sachs, which has deployed $3.6 billion in India since 2006, with a significant stake in Renew Power Ventures Pvt Limited, a major player in India. Shell, a global player, invested $1.5 billion in acquiring Indian renewable firm Sprng Energy from Actis Solenergi. French multinational TotalEnergies ventured into an agreement with Adani Enterprises Limited, acquiring a 25% interest in Adani New Industries Limited for green hydrogen production. Norway contributes significantly, with the embassy earmarking $1 billion in CIF finance for India’s renewable energy projects, and Scatec, in collaboration with ACME, establishing a 900- MW solar power plant in Rajasthan. Adding to the diverse mix of international renewables investors over the past few years are Enercon (Germany), Vestas (Denmark), Ebgie (France), Fortum (Finland) Applied Materials (U.S.), Asian Development Bank, Enel (Italy), Gamesa (Spain), Orix (Japan), Nordex (Germany), Sembcorp (Singapore) and Mudajaya (Malaysia). Challenges in India’s Dynamic Market While companies looking to enter the market have numerous avenues for doing so, navigating India’s renewable energy sector is not without its challenges. The market’s complexity and dynamic nature can pose obstacles for firms aiming to establish a successful entry strategy. Challenges include over-dependency on foreign supply chains, inadequate transmission and distribution infrastructure, and the costs associated with renewable energy storage. The country’s high demand for energy, spurred by its large size and ever-booming population, is a double-edged sword; even as demand creates a strong incentive for India to invest in and adopt renewable energy technologies to meet its power needs while mitigating environmental impact, the simultaneous challenges of scaling up infrastructure to meet such demand, addressing economic considerations, and ensuring continuous and reliable power supply underscore the complexity and need for strategic planning in navigating the country’s path towards sustainable energy. Despite these challenges, investor confidence persists, reflecting faith in India’s long-term renewable energy demand and the central government’s commitment to resolve sector issues. With ongoing projects valued at $197 billion and a plan to auction 50 GW annually for the next five years starting in FY24, the opportunities for global investors are vast. Nalin Patel is Country Manager; Disha Singh and Delicia Dsouza are consultants at Tractus Asia Ltd. Tractus has been assisting companies in making informed decisions about where to invest and expand in Asia and beyond for over 25 years. For more information, visit www.tractus-asia.com. Source: Ministry of New and Renewable Energy12 JANUARY 2024 SITE SELECTION Connecting the World to COLOMBIAN EXCELLENCE BPO and IT companies have hit their stride in Latin America. W ith the fourth largest economy in Latin America, Colombia is intent on increasing its overall competitiveness. Results can be found in the rapid growth of the country’s business process outsourcing (BPO) and IT services industries. As % of the population is under years old, the country is prioritizing education and building skills programs. e Colombian BPO Association has found that % of employees within the sector are between the ages of and . “About years ago Colombia started betting on an industry that at the beginning was just contact and call centers. We began to work with entities like SENA to create programs to simulate and give people a chance to be bilingual,” says ProColombia Vice President of Investment Julio Puentes Montaño. SENA is the Servicio Nacional de Aprendizaje or National Learning Service, which maintains regional centers and training centers. “Colombia is working hard in order to close these gaps and now we see the fruits of these programs.” Barranquilla Located in the Atlántico state on the country’s northern coast, Barranquilla is quickly becoming a services hub supporting U.S and European clients. Over the past fi ve years, % of the , direct jobs created in Barranquilla are in the BPO and IT industries. Leaders have been intent on becoming a bilingual city, ensuring the workforce hits intermediate to upper-intermediate (B to B) English levels. Multinational corporations such as Amazon, Dell, Acer, Walmart, Landstar, AT&T have established services operations here and largely depend on English for business communications. rough programs like Soy Bilingüe and Inglés para el Trabajo the city has been able to train thousands of students every year before they enter the workforce. Barranquilla is the coastal arrival point for four of the submarine fi ber optic cables that connect the by ALEXIS ELMORE alexis.elmore@siteselection.com COLOMBIA Valle del Cauca’s capital city Cali has become a hotspot for the IT services industry. Photos by Alexis Elmore SITE SELECTION JANUARY 2024 13 country to the rest of the world, offering increased bandwidth and reliability. That’s one reason international technology and telecommunications company GTD is preparing to open its second Colombian data center in Barranquilla with a $20 million investment. After success offering backup infrastructure for Bogotá clients from Medellín, the company felt expanding here was a natural fit. “The city has direct connection to the Americas, connection to four submarine cables, it has low seismic alerts and a good energy matrix,” GTD Country Manager Fernando Maturana told me during the ProBarranquilla segment of the recently held Colombia Investment Summit. “We found that we can make Barranquilla a connectivity hub for Latin America in Colombia.” Cali In Valle del Cauca in the Pacifica region of Colombia, a rise in BPO and IT investments created the need for Zonamerica to launch an over 93-acre technology park just south of capital city Cali. Valle del Cauca’s digital economy cluster includes more than 800 companies within the IT sector, and this addition looks to welcome more. Established as an FTZ and within the city’s university cluster, the site brings together the benefits of low cost of living and labor with ideal talent. Zonamerica has agreements with local institutions for companies to receive discounts for programs or skills training during operations. The park has its own on-site, 10,700-sq.-ft. tier IV data center and will soon feature restaurants, a gym, recreational space and transportation services. “This is different from anything offered in Cali or the country,” says Zonamerica Colombia General Manager Henry Arias Amórtegui. “We grow with the company with scalable infrastructure and try to be a one-stop solution.” The park offers 107,639 sq. ft. of leasable space and has 34 companies installed on site. Upon full buildout, Zonamerica will house 24 buildings over 1 million sq. ft., with the capacity to support more than 17,000 jobs. 14 JANUARY 2024 SITE SELECTION insider January 2024 Mark Your Calendar … www.iamc.org BOARD OF DIRECTORS Fall 2023 - Fall 2024 SPRING FORUM • APRIL 6-10, 2024 Greenville, South Carolina Chair Betsy K. Power PepsiCo Vice Chair Cary Hutchings BNSF Railway Company Secretary-Treasurer Matt M. Boehlke Xcel Energy Past Chair Karen L. Shchuka Penske Transportation Solutions James Chavez South Carolina Power Team Alan Darner WK Kellogg Co William DeBoer Kohler Co. Connie Fricke Land O’Lakes Lindsay Friedman Prologis Jim P. Horigan Corning Inc. Robert Kontur EnerSys Amy Madison Pflugerville Community Development Corp Dave Quinn, CEcD Fairview Texas EDC Eric Zahniser Cresa IAMC President & CEO J. Tate Godfrey, CEcD Growing Toward DEI — Part 2 I n my last letter, in the November issue, I discussed the miles yet to go on the industry’s path to greater Diversity, Equity and Inclusion (DEI). The challenges that face the industry on this journey can open the doors — when they are viewed properly — to many exciting opportunities for individual IAMC members, their corporations and indeed for IAMC itself. Those opportunities are limited — and for that matter, capitalized on — only by individual imagination. We discussed last issue the creation of internship programs within our organizations to foster the hiring and promotion of all underrepresented groups. A terrific place to start on this journey then is to ask ourselves what programs we have in place to foster, train and groom new recruits for promotions to more managerial roles. A word here about promotions. It is one matter to hire people from diverse backgrounds. While that will boost your diversity score, it really does little for the other two legs of the DEI stool — equity and inclusion. (Here is a good litmus test for that: What does your C-Suite look like?). DEI is not simply some altruistic endeavor; it is a hardcore business imperative. It is a common thought now that a diverse team of decision-makers can broaden the scope of your company’s strategic success, broaden the range of strategic possibilities and even potentially help you reach communities and constituents you never could before. Consider this from a recent Harvard Business Review article entitled, “How Investing in DEI Helps Companies Become More Adaptable”: “Doing DEI well correlates with better change power, which in turn is linked not only to company performance but also leadership and employee engagement.” Another question to ask yourself is what your outreach looks like. Not many young people even know that corporate real estate is a “thing,” a potential career path. Happily, the number of colleges and universities offering CRE educational tracks is growing, exposing more candidates to real estate as a career. Your involvement in such programs is a way not only to foster understanding of the career but, frankly, it is also a terrific way to promote your company. Promoting open positions and internship programs on school job boards is an obvious way to attract young people. A less obvious way is to do the same at the community college level, where you are more likely to gain the attention of students from a wider range of economic backgrounds. And while we are on the subject of job boards, try outreach to special-interest groups such as the LGBTQ community. If you are not familiar with how to go about that, start where every search begins: Google. Finally, I urge you to check out two programs integral to the DEI process. The first is Project REAP — the Real Estate Associate Program (www.projectreap. org). In its own words, “REAP exists because the commercial real estate industry’s professional ranks are less than 2% minority at management levels. Betsy K. Power SITE SELECTION JANUARY 2024 15 During its short existence, REAP has increased that minority cohort by 10% — by spotlighting a talent pool that was always there, but previously unacknowledged.” A bevy of heavy-hitting sponsors and board members, including many IAMC members, support REAP in its efforts to connect qualified minority job seekers with potential employers. There is also CRE Analyst (www.creanalyst.com), a program designed to give “talented and driven professionals” the training they need “to unlock their value.” The awarding of scholarships is part of that unlocking of value. Why? “At CRE Analyst … we understand that there are great candidates out there who can make a huge impact but may not have the resources to invest in themselves right now.” With more than 40 coaches from the commercial real estate industry, CRE Analyst is determined, as it says, to “change the CRE industry.” These are only a handful of suggestions designed to either change our own corporate DEI direction or, as participants in third-party programs, to positively impact the broader industry. Yes, true DEI starts at the top, with the recognition on the part of decision-makers that DEI is not only a good thing to do, but it can also have broad, bottom-line impacts. However, from the corner office, DEI must filter through the entire culture of the company with managers down the line promoting its importance. It takes you, as a member of the leading trade group for industrial real estate, to lead that charge. Betsy K. Power Chair, IAMC Board of Directors T o say the least, it’s an interesting time for the industrial market. Still enjoying a sort of favored- nation status among investors, thanks in large part to its record runup during the depths of the pandemic, the market nevertheless is starting to show signs of normalization, a return to pre-COVID-19 numbers, amid an ongoing inflationary environment and a rocky capitalization market. Interesting, indeed. With so many sands shifting around the sector, we wanted to hear from IAMC members on how they see 2024 shaping up. Here is what they had to say: Scott Cameron, Global Real Estate Manager, Sonoco, Hartsville, South Carolina : “Speaking generally, there are a lot of real estate companies now facing leases that are about to roll. While many of these were originally based on lower-than-market rates, those rates have skyrocketed — often by 50% or higher — since 2019, and when those leases roll, you’re going to see landlords asking for massive increases in most situations. As corporate real estate executives, it’s our goal to limit that as much as possible. “That said, with the post-COVID normalization of the sector, I think we’ll see a short window in early to mid- 2024, with new builds coming on the market and a little better opportunity for corporate occupiers. The problem is that there are a lot fewer building starts now, given the cost of construction and the interest rate environment. So after that brief room for negotiation, the opportunities will dry up again. I can see a 2% to 3% annual increase during that window as opposed to the 4% or 5% we’ve been seeing. Some tertiary markets might even remain flat. If there is good news here, I think the days of take-it-or-leave-it discussions are over. “Overall, I think the real challenge for people in my seat is going to be protecting what we have. That said, this market has forced us all to take a more proactive approach with our portfolios — not just where we’re located, but what Member Outlook: 2024 in Their Own Words By JOHN SALUSTRI “Washington, D.C., will be key to market health. We’ve got to get our politicians to incentivize companies to bring back manufacturing and corporate headquarters.” — Pete Quinn, The Sansone Group16 JANUARY 2024 SITE SELECTION book of business is being run at that site. Maybe you can’t win the rate battle, but you may be able to reduce your footprint and meet the same goal.” Pete Quinn, National Director of Industrial Business Development, The Sansone Group, St. Louis: “I talk to a lot of different people in the market — users of space, real estate directors, brokers, economic developers — and their comments are pretty consistent: The biggest challenge for industrial in 2024 is confidence. There’s not enough capital to drive speculative development. A lot of companies are on the sidelines if they don’t absolutely have to have the space immediately. They’re worried about cap rates, and they’re waiting to see what’s happening on the world stage — including the wars in Ukraine and Israel. “The ironic thing is that, while we’re experiencing sticker shock over the rapid change in interest rates, six years ago we’d have been thrilled with the current cap rates. I have a client who wanted to do a build-to-suit for 170,000 square feet. But he’d be looking at more than double the rent from six years ago. It just doesn’t pencil. So he might renew, wait until the market is back to normal and then roll the dice. Deals are getting done for those companies that need the space now, but for the most part, they’re putting it off. “But, barring a total economic meltdown, industrial will still be hot for a long while, and for a couple of significant reasons. First is e-commerce, which may not be growing as it did during COVID, but it’s still growing. That will require a lot of distribution space, so industrial has a lot of legs. Secondly, we’ve finally learned to bring at least some manufacturing back to the U.S. It’s not as much as there should be, but it will continue to increase, and that too will require more industrial space. “But there’s another issue, at least partially related to reshoring. Frankly, Washington, D.C., will be key to market health. We’ve got to get our politicians to incentivize companies to bring back manufacturing and corporate headquarters. And we need to be an energy exporter again. A lot of the turmoil in this country right now is because we’re sending oil to countries that don’t like us. We have to start dealing with issues like this in a meaningful way. “In all, given everything that’s happening in the broader real estate markets, such as in the office sector, where no one really knows what the outcome will be, I think anyone who’s not in industrial right now probably wishes they were.” Cary Hutchings, Director of Corporate Real Estate, BNSF Railway, Fort Worth, Texas: “The key issue now is the capital markets. There’s a lot of capital on the sidelines right now that will likely start moving as soon as we get meaningful signals from the Fed. That is to say, either rates stop increasing or there’s a clear plan to end increases. That needs to happen for investments to start again in 2024 … Despite the uncertainty, deals that have to get done will get done. If the pandemic taught us one thing, it taught us how to be nimbler and, when necessary, deploy capital quickly. “The new year will also see more corporate real estate executives shifting from optimality to optionality in their operations and supply-chain solutions. Before the pandemic, there was greater focus on efficiencies and the lowest cost of operations. This doesn’t mean simply shifting from Just in Time to Just in Case protocols. It means a blend of the two to mitigate risk. “Optionality also means having manufacturing and distribution closer to our customers. And getting close to your customers takes on several different aspects. For us, it also means good communication between supply-chain and real-estate decision-makers, ensuring there’s an alignment of goals between the two. For instance, we’re working with customers to help them develop distribution and manufacturing centers close to our rail hubs or distribution points to increase efficiencies and reduce truck trips. And we’re being proactive, expanding our network and facilities to further enhance those relationships. We’re currently developing new rail- served developments in California, Arizona and Texas to stay ahead of the curve and get closer to our customers. “Finally, I think 2024 will be a year of greater alignment of providers, like ourselves, with our customers on shared sustainability initiatives. We’re focused on this alignment and on partnering with them to help them achieve our mutual goals. This relates directly back to optionality in terms of supporting our customers and contributing to the long- term sustainability of the communities we serve. I think 2024 will be a year to optimize those relationships.” “This market has forced us all to take a more proactive approach with our portfolios — not just where we’re located, but what book of business is being run at that site.” — Scott Cameron, SonocoNext >