What businesses need to know about construction in the USA

Brian Gallagher, Vice President Corporate Development at Graycor, shares what businesses need to know about construction & manufacturing in the USA

Various factors are converging to drive the growth of the U.S. industrial real estate market. The existing manufacturing base is strong and is expanding into advanced manufacturing sectors, such as semiconductors and electric vehicles. The U.S. is steadily increasing its investment in clean energy and renewables. And consumer demand for manufactured goods through e-commerce channels is spurring growth in several industrial and warehouse/distribution categories. 

 

Investing in industrial real estate

Foreign investors have responded by increasing their investment in U.S. real estate, especially industrial real estate. They are also seeking to invest in different assets than they did before, such as distribution/warehouse space and data centres. 

According to Deloitte: “Industrial has become the new primary target for foreign investors and grew by a sizable margin, from 15% to more than 30% of all foreign capital invested since Q2 2020.” Investors are going to geographic locations outside of the cities that were traditionally “gateways” into the U.S., passing up Boston, Chicago, Los Angeles, New York, San Francisco, and Washington, D.C. and choosing, instead, sunbelt cities and other areas that saw an influx of people during the pandemic, and/or that have a greater abundance of the asset classes many foreign investors need.

Companies investing in new asset classes or building in unfamiliar locations will need help as they undertake the process in the U.S. Companies must be diligent in how they approach incentives and land purchasing, conduct negotiations with utilities, attract their workforce, and more. Therefore, it is critical that they be aware of services and partnerships available in the U.S. that will help them achieve a high return on their investment. For example, The U.S. Department of Commerce hosts SelectUSA, an event dedicated to promoting foreign direct investment by providing a forum in which to interact with economic developers. The U.S. Economic Development Administration’s Americas Competitiveness Exchange (ACE) programme hosts events that are “designed to build cooperation networks throughout the Americas and beyond to create better Innovation and Entrepreneurship Ecosystems that promote sustainable and inclusive economic development and increased trade.”

Site selection firms, design firms and general contractors can also provide support and key insights. Such firms can help scale incentives offered by county or other economic development organisations. They can bring perspectives regarding a locale’s regulatory environment. Building and fire codes, as well as permitting and zoning laws, will be highly specific to individual projects and will need to be reviewed with environmental and/or legal teams. The right partner can also help with environmental assessment, ruling out pollution or potential contaminants associated with nearby manufacturing or other site conditions.

Contractors can leverage construction expertise to develop project definition, scope, cost, and schedule at an early phase of a project. Using a preconstruction process, contractors address project scope development, constructability reviews, option analysis, construction budgeting and scheduling. 

Conceptual facility and site modelling, familiar tools used during capital planning, can address factors far beyond the standard schedule and budget concerns. For example, sites under consideration for investment can be assessed in terms of site access, transportation options, logistics and traffic flow. Day-to-day requirements, such as the manoeuvrability required for facility operations, can be modelled alongside larger scale logistics, such as those associated with finished product distribution. Models can compare site usage scenarios, cut-and-fill costs, and plant equipment (or other layout) considerations.

 

Investing in construction & manufacturing 

Experienced construction partners will provide cost estimates for utilities including water, power and waste stream management, engaging with local power and other providers to help optimise availability and costs. They are also positioned to understand regional materials costs and labour costs, and can incorporate these into early planning models and budgets. Contractors who have existing relationships with subcontractors and suppliers can ensure that all input data - especially for supply lines and labour costs - are up to date. In addition, having a local partner will help foreign investors achieve community engagement and become familiar with a region’s customs and traditions.

For international companies considering investing in or constructing manufacturing facilities in the U.S., project outcomes will be improved when governmental and nonprofit assistance is sought during early capital planning, and experienced construction partners are secured to further assist with planning and preconstruction. 

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