Beyond the logistical changes to the process for choosing new business locations, the pandemic has also influenced the importance of information used in company’s location assessment.
No Longer “Business Location As Usual”
The COVID-19 pandemic has impacted every part of daily life – and for companies, this includes the decision-making process for new business locations. But beyond the obvious changes (less travel, virtual instead of physical site visits, virtual meetings and presentations) the pandemic has also influenced the importance of information in the location decision process.
Two core selection factors that rise to the top are supply chain diversification and risk mitigation.
“Diversification of supply chain to mitigate risk, tax environment, quality of talent and incentives have become more important in the current environment,” says Larry Gigerich, executive managing director at site consultancy Ginovus. As companies reevaluate business models and reassess operations in light of the pandemic, increasing importance is given to mitigating future risk—whether that’s through lower operating costs, a more secure supply chain, or seeking a more business-friendly tax and regulatory environment.
In the current environment, Gigerich says, companies located in high tax states like New York, New Jersey, California and Illinois, in particular, are doing risk assessments of existing operations to prepare for future pandemics.
Risk mitigation, talent and economic costs will be equally important to companies, as will having site selection firms initiate these types of assessments, as times move forward.Larry Gigerich, executive managing director at Ginovus
Assessing the density of development and offering options to clients is also another increasingly important consideration in the pandemic environment. In a recent project that Ginovus worked on with Civix, a public sector software and services firm, the company assessed both urban and suburban office space across the country, including in Orlando and St. Louis.
“There was more comfort on the part of our client to locate its facility in a suburban area of the Orlando metropolitan area for a number of reasons, but the impact of the pandemic on urban locations was certainly a consideration for the company,” Gigerich explains.
As the pandemic continues to impact businesses and business recovery, there is no way to predict whether these trends will accelerate or decelerate. For business resources related to the pandemic, visit Orlando.org/COVID19. The latest economic indicators for the Orlando region are available at NewsInOrlando.org.
Read the full Q&A with Larry Gigerich, executive managing director at Ginovus, below.
Q: What are some of the changes you’ve seen in the site selection process due to the pandemic? What trends overall are you seeing? Do you think any of these changes or trends will permanently impact site selection in the long term?
A: Our firm and our clients are conducting much more desktop analysis due to COVID-19. We have begun doing virtual site visits for the finalist communities under consideration for a project. In addition, virtual meeting platforms, such as Zoom, have become increasingly important to conduct business and move site selection projects forward. We anticipate that we will see less travel during the site selection process for the foreseeable future and that some of the virtual activities that are currently being used will remain in place on a permanent basis.
Q: You mentioned that clients in high cost areas are starting to do risk assessments of their operations in order to prepare for future pandemics… what are some of the key data points that companies are using in those assessments? Is there anything specific (supply chain, cost of doing business, tax environment, talent, etc.) that seems to be of increasing value or importance? Are they mainly initiated due to cost factors or are there any other reasons a company might begin such an assessment?
A: We are examining population numbers, density of development, downtown versus suburban/rural real estate options and talent distribution in regions. Diversification of supply chain to mitigate risk, tax environment, quality of talent and incentives have become more important in the current environment (pandemic and economic recession). Risk mitigation, talent and economic costs will be equally important to companies as have site selection firms initiate these types of assessments as time moves forward.
Q: We [the Orlando Economic Partnership] had the pleasure of working with you and Ginovus on Civix’s Center of Excellence location project (Project Stocking) recently… was the project at all impacted by the pandemic? Why or why not? In your opinion, what made Orlando standout during this project?
A: We always enjoy working with the Orlando Economic Partnership and Enterprise Florida on projects. In terms of Project Stocking, we considered both urban and suburban office space for the project. There was more comfort on the part of our client to locate its’ facility in a suburban area of the Orlando metropolitan area for a number of reasons, but the impact of the pandemic on urban locations was certainly a consideration for the company. Orlando has so much to offer to an information technology company – great access to universities, a growing and talented population base, competitive cost of doing business, reasonable real estate costs, outstanding quality of place and economic development incentives.
Q: Do you have any insights on projects considering Orlando? How often do we make the short list?
A: The Orlando metro statistical area (MSA) is becoming even more competitive for office, R&D and logistics projects. Population growth and talent are really boosting the area. The proximity to higher educational assets; University of Central Florida, University of South Florida and the University of Florida, along with private colleges, positions the region for success. In addition, the cost of doing business and quality of place are also important factors. Central Florida is even more recognized today and both public and private companies are considering it as a top potential location more often than five years ago.
Q: In your experience, what is the main differentiator that Orlando brings to the table as a potential business location? What could we be doing better both as an economic development organization and a business destination?
A: It starts with a great regional economic development organization. The Orlando Economic Partnership is one of our favorite regional economic development groups to work with on projects. Excellent leadership, a great team, timely responses, quality information and the ability to bring key decision makers to the table are hallmarks of the organization. The growing population and great talent base are also vital ingredients to success. Diverse real estate and living options are also key assets for the area. The underlying business climate of the region and state are also outstanding, along with possessing a great airport with flights to several locations. It is very important for the Orlando MSA to continue to promote its image/brand as a great location for business. Given all of the outstanding tourism and recreational assets of the area, outsiders view the region as a destination for tourists, but it is so much more. In addition, the region has some of the best higher educational assets and technology base tied to the Space Coast that many people do not know about. Also, Orlando has become a location for many of the top U.S. and international based companies. Continuing to tell this story will help the region land on more short lists for projects in the future.