From the Front Lines: Are Companies Pausing Site Selection Decisions?March 27, 2020
Recent calls with three separate economic development groups would suggest that COVID-19 has not had an immediate or significant impact on site selection decision-making. Now entering our third week of “this thing is real” for much of the country, DCI started asking various clients how their pipeline has been impacted. So far, we’re three for three in getting responses that new inquiries are still coming in and/or project meetings are proceeding as planned (except maybe via video conference instead of in person).
Why is this? Our view is the following:
- While headlines vary on the depth and longevity of any downturn, it seems at least some of the corporate world views this as a short-term disruption that is not changing their long-term expansion plans.
- For some industries, the disruption has only underscored the need to diversify supply chains and build business resiliency. This may actually encourage some companies that had been on the sideline to get in the site selection game, rather than the other way around.
- Much of the workforce impact has been in retail and hospitality so far, and we’re all getting a front-row seat to see how important those are to our global economy with record unemployment filings in the last week. But at the same time, companies like Amazon, Walmart, CVS and Walgreens are hiring tens of thousands of workers to help with logistical demand. Will COVID-19 reach “industry” if this is a prolonged lockdown? Absolutely, as paychecks ultimately support consumer demand and those short-term bursts will be replaced by long-term lag. However, for the time being, many companies with higher-skilled positions (office and industrial) appear to be holding relatively steady for now.
We will add that one vulnerable group appears to be startups. Those in or around the so-called “Valley of Death” and dependent on funding and fast growth—especially those in the hospitality space—are at significant risk of not just laying people off, but going out of business. If startups are part of your targeting strategy, beware that tough times could be ahead in 2020 (but keep those relationships going until the companies hopefully resume growth in late Q4 or in 2021).