Gloria Salinas, Managing Director, Economic Development
The Dallas Region’s pre-pandemic economic development momentum and success make it well-positioned for a strong recovery from COVID-19.
That was the positive post-pandemic outlook for the Dallas Region shared by three top site selection consultants during the Dallas Regional Chamber’s first virtual Tomorrow Fund Investors meeting, presented by Holmes Murphy, on Thursday, April 9. Mike Rosa, DRC Senior Vice President of Economic Development, moderated a panel discussion with consultants to provide perspectives on current and future corporate location activity as the region works to curb the outbreak.
“The best organized communities will return the quickest, and that’s what this is going to be about,” said Mike Mullis, President and CEO of J.M. Mullis. “I see the DFW metroplex as one of those probably eight to 10 opportunities that is going to continue to grow, and prosper, and realign. [There’s] going to be new projects coming in or existing projects expanding.”
Mullis, along with Larry Gigerich, Executive Managing Director of Ginovus, and Michelle Comerford, Industrial and Supply Chain Practice Leader with Biggins Lacy & Shapiro Co., gave insight into the pandemic’s effects on the corporate location decision process from industry trends in remote work to the future of incentives in economic development. All three consultants are members of the Site Selectors Guild, an association of about 50 of the world’s premier corporate and industrial location advisors.
While research and analysis continue for companies considering corporate and industrial relocation or expansion, the consultants said some projects have been delayed in the final decision-making stages due to travel restrictions and internal decision-making around the virus.
“We have seen here in recent weeks, really the last two weeks, a couple of our clients say, ‘we’re going to need more time before we make a final decision,’” Gigerich said. “They were probably within a few weeks of making final decisions on their projects.”
Mullis said one of 27 active projects has a three-month delay to reevaluate laying out a facility for a more direct-to-consumer distribution model.
Predictions on the Pandemic’s Impact
The consultants agreed that the longevity of the pandemic will determine how certain industries are impacted. The spread of the virus could possibly lead to permanent changes from deciding where to locate an operation to repositioning logistics from direct-to-store to direct-to-consumer.
“We are still pretty early in this, but I do think there are a couple of things that will be a bit more scrutinized as companies look at future locations for operations,” Gigerich said. “I do think it will cause more companies, for sure, to look at how they disburse human capital and financial assets going forward. Meaning, from a risk mitigation standpoint, [companies may not] put 2,000 people in this location or 300 people in this location. They may say let’s do a couple of operations with lower head count to mitigate risks.”
Gigerich said companies will also take a closer look at very densely populated places, especially urban cores, which may offer a good supply of talent but have been a hot spot for the COVID-19 outbreak.
On the topic of talent, Comerford said the pandemic has forced companies to adopt working from home. Companies that previously considered the trend as an employee attraction initiative have now made large investments in moving to the work-from-home model to keep business going.
“I think it would be remarkable if [COVID-19] didn’t have an impact,” Comerford said. “I think looking forward, companies will like the idea of saving some money on their occupancy costs. That said, you can definitely argue the other side—in certain businesses a loss of innovation or some of those ideas that come out of conversations around the water cooler and not having those in the same way might hinder their performance.”
Comerford also noted that the pandemic highlighted the nation’s lack of medical supplies and medical device manufacturing suppliers. She said reshoring, which has been a growing trend due to the advances in technology, such as automation, and the supply chain benefits of making products closer to the consumer may accelerate and create more supply manufacturers.
Rosa asked Gigerich to weigh in on how economic development incentives will emerge as a location factor in the near and long term.
“When it boils down at the end of the process, and you are down to the three locations that look very similar on paper, the incentives make a difference,” Gigerich said. “If we do go into a recession and we are seeing more consolidation projects, like we did in 2009 and 2010 after the financial crisis late in 2008, those incentives are going to be important at the end of the process and in impacting decisions.”
Gigerich said that while economic development incentives have been heavily scrutinized during the strong economic times (when unemployment was at three percent), he believes they will be important going forward.
A Positive Outlook
In 2019, the Dallas Region created more net new jobs than Chicago, Denver, Austin, and Nashville combined, Rosa noted before asking the consultants for their outlook on corporate locations and expansions to the Dallas Region.
“You had such strong forward momentum before the crisis, and there is really no reason that this wouldn’t continue,” Comerford said. “The demand we talked about that was in place before the crisis is still there. As we talk about potential manufacturing coming to the U.S. in the coming years, I think the state of Texas is well-poised for that.”
Gigerich said the pandemic won’t change Texas’ business friendly regulatory and tax environment or the Dallas Region’s diverse economic foundation.
“First of all, COVID-19 is not going to change the underlying fundamentals that have led to the success of the Dallas-Fort Worth area and the state of Texas as a whole,” he said.
“I think in particular as you look at the Dallas-Fort Worth area, having a hub airport, continuing to invest in your infrastructure, quality of place, the fact that your population and talent pool has continued to grow, and you continue to have abundant real estate options ready to go to support businesses—I think you guys are better positioned than a lot of places around the country, and certainly with the peers you compete with on a day-to-day basis. When we come out of this, [you will] continue to have all the great success.”