< Previous8 MAY 2024 SITE SELECTION E ver wanted to take a master class in industrial real estate but thought you didn’t have the time? Well, the next best thing is attending an Industrial Asset Management Council Professional Forum, which I did April 6-10 in Greenville, South Carolina. Jason Hickey, president of Minneapolis-based Hickey & Associates, said the best way to prepare for the practice of industrial real estate management is to be fully informed of the many challenges that confront the profession both now and in the future. In his keynote talk to IAMC at the Hyatt Regency Hotel & Conference Center in downtown Greenville, the site selection consultant made sure that his audience of 545 registered attendees — an all-time IAMC Forum record — knew what awaited them at work. “Most of the United States is running out of power,” he said. “If you look at the 9-year growth forecast for power demand across the U.S., you will see that a large section of the middle of the country will be facing a 4.75-gigawatt shortage by the end of this decade unless more power generation comes online between now and then.” Every region of the U.S. needs more power, Hickey said, including the Desert Southwest. The Taiwan Semiconductor Manufacturing Co. campus in Greater Phoenix will use 1.2 GW of the 4-GW Palo Verde nuclear power plant in Arizona, he noted. As more plants come online to produce microchips, electric vehicles and the batteries they need to operate, power demand will only increase. Plug In to These Countermeasures To make sure your company doesn’t get caught shorthanded for energy, Hickey offered the following advice: • Businesses need to understand their true power demands in the near term and long term. • An additional automated manufacturing line could trigger a delay to study the impact to local circuit and larger capacity. • Open dialogue with your utility provider about the lead time for an energy study. • Some regions are rebuffing projects above a certain power requirement. • Communities work with their utility partners to identify capacity and transmission gaps. • Plan and develop strategies for future demand and risks to local systems. Two other major challenges to industrial companies, he said, would be workforce and child care. “A recent survey A Master Class in Industrial Real Estate By RON STARNER10 MAY 2024 SITE SELECTION showed that % of all employers noted that job quitting rates are still trending high,” said Hickey. “In places that are not adding replacement workers, the situation is worse. Miami is experiencing low to no growth and low unemployment. at makes it that much harder for companies to fi nd workers.” Child care, he noted, can cost parents $, a year per child. Transportation costs can add another $, a year. Factors like these require creative solutions, said Hickey. “In Clarksville, Tennessee, they opened an -acre childcare facility in their industrial park with child care slots,” Hickey said. “ at includes dedicated slots for park employees and active-duty military.” Local opposition to industrial projects is also on the rise, he added. “Community engagement is growing in opposition to manufacturing projects,” said Hickey. “You are going to have to engage community groups early and often.” One solution is nearshoring projects to Mexico, he said. “ e Mexican population is growing, and Mexico is our No. trade partner. With a growing workforce and a desire to work in factories, Mexico is a place to consider for future expansions.” Also making Mexico more attractive is the Isthmus of Tehuantepec – a massive infrastructure project that will make movement of goods from the Gulf of Mexico to the Pacifi c Ocean that much quicker. (For more, see the Mexico spotlight in the March issue of Site Selection.) Get Ready for Changing Incentives Finally, Hickey advised corporate real estate directors to be fully aware of the changing landscape of incentives: • CHIPS Act match funding is being required, leading states to set up closing funds for these projects. • EDA (Economic Development Administration) and CDBG (Community Development Block Grant) funding have increased to incentivize more local projects. • More organized workforce training programs are being set up around specifi c ecosystems. • Incentives for retention of existing industry have increased, allowing for greater competition for internal investments. • Higher wage thresholds have meant that some distribution warehouse jobs no longer qualify for certain incentive programs. M oving from AI to Augmented Intelligence” was the title of keynote speaker Erica Orange’s presentation at the IAMC Forum in Greenville, but her talk just as easily could have been labeled: “Trust but Verify.” With all due apologies to the late President Ronald Reagan, who often quoted that old Russian proverb when he spoke of nuclear disarmament treaties with the old Soviet Union, “trust but verify” could form the foundation of how we approach the use of artifi cial intelligence in the workplace. “Question every single thing you are being told,” said Orange, executive vice president and chief operating offi cer of The Future Hunters, a leading futurist consulting fi rm based in New York. “Synthetic systems are creating in-bred data with built-in fl aws.” This has spilled over into our world of governance, she said. “We are in a massive cycle of trust decay. We don’t know who or what to trust anymore,” she said. “We don’t know which reality is real or fake.” The rise of AI deepfakes, artifi cial social media infl uencers and the enterprise metaverse has created a whole new set of challenges for corporate executives, said Orange. “It feels like we are freefalling into the unknown, but for every trend, there is a complementary countertrend,” she added. “For example, the rise of AI will eliminate 85 million jobs worldwide by 2025, but it will also create 97 million new ones.” The solution will come, said Orange, when industry learns to harness AI and adapt it to intelligence augmentation. “When robots and humans work collaboratively, productivity increases 85%,” she noted. “AI is not the end of work. It is the end of boring work.” “ AI is not the end of work. It is the end of boring work.” — Erica Orange AI is not the end of T o say my second visit to the Zhengzhou Airport Economy Zone (ZAEZ) in China’s Henan Province this past March was eye-opening would be a massive understatement. I’m still getting my head around the development that has taken place since I was there several years ago. at fi rst trip was hampered by a thick mixture of fog and smog that made viewing the area, and what little was built at the time, a challenge. I did tour the still-under-construction, . million-sq.-ft. Terminal at Zhengzhou Xinzheng International Airport. On this last trip, I fl ew into and out of it. e -square-mile ZAEZ (that’s the size of Bengaluru, India) is the fi rst and only national-level airport economy zone in China approved by the State Council, and Beijing has the Zone’s managers working overtime to bring it to completion. Key parts are complete. Companies have operated in the Zone for several years, including iPhone producer Foxconn, in a -million-sq.-ft. complex, and EV manufacturer BYD, in a -million-sq.-ft. facility where production commenced in April . (Yes, the scale of the ZAEZ and its occupants is staggering.) ese two companies alone employ hundreds of by MARK AREND mark.arend@siteselection.com ASIA 12 MAY 2024 SITE SELECTION How China Is Fast-Tracking Its Next Logistics and Commercial Hub The Central China Medical Science Hub is a key component of the Zhengzhou Airport Economy Zone. On the right is the Henan Academy of Innovations in Medical Science. Image courtesy of ZAEZ14 MAY 2024 SITE SELECTION thousands of people, many of whom live in on-site accommodations. The others mainly live in one of the hundreds of high-rise apartment buildings throughout the Zone. They were relocated to these apartments from their small villages and farms by the government as plans for ZAEZ got under way. “iPhone assembler Foxconn, employing some 250,000 workers in the ZAEZ, initiated the Zone’s industrial surge,” says Dr. John Kasarda, chief advisor to the ZAEZ and president of the Aerotropolis Institute China, with whom I travelled to Zhengzhou in March. “More than 300 firms followed Foxconn in such sectors as aerospace, biomedicine, intelligent electronics, new energy vehicles and semiconductors.” High-Speed Hub The Zhengzhou Hangkonggang Railway Station (1.6 million sq. ft.) for high-speed trains opened in 2022 with connections to the airport and the Zhengzhou Metro, the city’s rapid transit rail network. It connects the Zhengzhou-Wanzhou and Zhengzhou-Fuyang high-speed railways, with more rail connections planned. High-value goods and even EVs made at the nearby BYD complex can be shipped by rail, which alone distinguishes ZAEZ as a state-of-the-art logistics hub. The railway station is the heart of the intermodal, 19.3-square-mile ZAEZ International Inland Port. It’s much more than a facility for shipping goods in and out. It’s virtually a city in its own right with districts reserved for everything from warehousing and distribution to logistics parks to supply chain service centers for a range of industries. It has a bonded zone, similar to a foreign trade zone, for storing imported goods, space for logistics R&D and an area reserved for future rail- water interchange. The railway station is in close proximity to a city center taking shape as a world-class conference and exposition destination. Five- and four-star hotels are planned, as are a resort hotel, office and commercial space, retail and dining and green space. With much of the logistics infrastructure in place, ZAEZ is focusing now on talent and urban development, which will happen quickly, if previous growth is any indication. “To position the ZAEZ at the forefront of China’s Fourth Industrial Revolution, which is being driven by applied research, breakthrough technologies, innovation and entrepreneurship, the Zone’s leaders are implementing a new strategic initiative called Aerotropolis 4.0,” says Dr. Kasarda. “Firms in the 4.0 economy, such as those engaged with autonomous vehicles, genetic engineering, the metaverse, robotics and virtual reality, depend especially on highly educated professional talent. The ZAEZ is reinforcing its transportation and industrial advantages with talent recruitment incentives and providing the institutional, residential and urban amenities that will help attract and retain this talent.” The Zhengzhou Hangkonggang Railway Station Image courtesy of ZAEZ16 MAY 2024 SITE SELECTION 2024 Top Micropolitan Areas Multiply CORRECTION In March, thanks to an inquiry from a micropolitan area leader, we discovered that a data query error had left out a number of micropolitan areas in our list of Top 100 and ties … 40 of them, in fact, all of them new to our annual Top Micropolitans rankings compared to the year before. Updated charts appear here, with the communities new to the Top 100 and states with new Top Micros totals color-coded. The web version and Digital Edition versions of the article were updated in early March when an updated press release was also sent to our national press distribution list. We regret the error and salute all the small towns accomplishing big things for their area economies. — Adam Bruns , Editor in Chief and Head of Publications 2023 TOP STATES BY NUMBER OF TOP 100 MICROS Rank State Counts Projects T1 Ohio 15 97 T1 Georgia 15 52 3 Indiana 13 47 4 Illinois 9 22 5 North Carolina 8 28 T6 Kentucky 7 25 T6 Texas 7 19 8 Michigan 6 15 T9 Alabama 5 26 T9 New York 5 18 T9 Oklahoma 5 13 9T Tennessee 3 9 9T Iowa 3 8 9T Kansas 3 7 Source: Conway Projects Database Palatka, Florida, is not only a Top Micropolitan but is also known as the bass fishing capital of America. Photo by Ron Starner Illustration: Getty ImagesNext >