By John H. Boyd
While there is no formal definition of what constitutes a “shovel-ready” site, here is a working description that our site selection firm relies on. A shovel-ready industrial site is a parcel of land or an existing facility prepped and available for immediate or at least near term use. Here are some key shovel-ready benchmarks we look for:
- Proper Zoning and Permitting: The parcel has been zoned for industrial use, and all required permits or land-use approvals from local, state and federal agencies are in place or can be secured quickly. Localities that provide an expedited permitting process can also enhance the attractiveness of a shovel-ready site.
- Utilities: Required utilities, including electricity, fiber optics, water, sewer and natural gas are available at or near the site and with adequate capacity to meet our client’s needs at startup and at established expansion targets.
- Access: Excellent transportation access, including proximity to major roadways, rail lines or even deepwater ports, depending on the project. A site within a planned industrial park setting might already have access roads, or plans for such infrastructure well underway.
- Environmental Assessments: Environmental studies or required remediation have been carried out on the site to ensure that it is free from contamination or that any contamination issues have been addressed, making it environmentally compliant and safe for new construction and occupancy.
- Site Preparation: The land might be cleared, leveled, or partially developed with foundational infrastructure like grading, drainage systems or even basic structures like foundations.
- Easements: Various types of easements (utility, access, historical or conservation) that may be promulgated or deeded to the site are acceptable and do not impede the intended industrial use of the property.
- Economic Incentives: Shovel-ready sites can come with already negotiated financial incentives from local or state governments to attract new industry and jobs. These might include various types of tax abatements, infrastructure grants, or other incentives like Enterprise Zone or Foreign Trade Zone (FTZ) benefits. More to say on FTZ’s below.
Logistics: A Shovel-Ready Hot Spot
While data centers are big news these days in the site selection field, warehousing and logistics are the most active industrial real estate sectors driven by the continued expansion of online sales and the need for more logistics space to handle order fulfillment. Signs of an economic recovery and a rise in business confidence are also tailwinds for the logistics sector. Amazon is back in the market in a major way and is again buying and leasing warehousing properties after undertaking a recent pause. Walmart, now the nation’s largest grocer, is constructing a series of new high-tech warehouses around the country. Prologis – the world’s largest warehouse operator – has increased its financial outlook on the heels of a surge in new leasing activity.
Shovel-Ready sites have served hundreds of Boyd clients well over the years. In the time-sensitive logistics sector, e.g., shovel-ready sites for longtime Boyd client UPS now house major regional distribution centers in North Chesterfield, VA, south of Richmond, in Douglas County, NV, near the Minden-Tahoe Airport and in the Enterprise Industrial Park in Schertz, just outside of Austin, TX. The UPS site in Shertz also enhanced speed to market due to its access to high-speed State Highway 130 in Central Texas, which is known for its role in alleviating traffic congestion in the busy Austin-San Antonio corridor and is being a pioneer at enhancing the capabilities of autonomous trucking through advanced infrastructure and technology embedded in its roadway. Another shovel-ready logistics site in Phoenix, Arizona’s West Valley now houses the national distribution center of New York City-based Boyd client Gwynnie Bee, the innovative clothing subscription service founded by entrepreneur Christine Hunsicker.
Free Trade Zones and Shovel-Ready Sites
Given the potential for new tariffs under the Trump Administration, we are seeing a growing interest in U.S. Foreign Trade Zones on the part of some site-seeking clients who are already strategizing on ways to mitigate future cost increases of imported products and component parts. FTZs allow for the importation of goods without immediate duty payment, which can be especially beneficial in a period of tariff hikes. Companies can store, manipulate, or manufacture goods within a FTZ, paying duties only on the final product or when it leaves the zone for domestic consumption. With higher tariffs, especially on imports from dominant trading partners like China, Mexico and Canada, FTZs offer a strategic site selection option to help mitigate these cost hikes.
Currently, there are 277 FTZs, including subzones, around the country. Most free trade zone sites are well-established and tend to effectively meet many tests of being “shovel-ready”. The economic climate created by a more tariff-heavy trade policy from Washington will likely encourage more real estate developers and economic development organizations to apply for FTZ designations for their prime, shovel-ready industrial sites. A new FTZ typically takes about 10 to 12 months from the time the application is officially docketed by the FTZ Board within the U.S. Department of Commerce, not taking into account the time needed to assemble all the necessary data for the application.
Speed to Market
In business and as in life, “timing is everything”. A site-seeking company choosing a shovel-ready industrial site puts it in a better position to achieve another strategic objective, that being “speed to market”.
Speed to market is a key goal for companies for a number of reasons, including establishing early brand dominance, capturing significant market share from competitors and starting to generate sales and revenue asap. Also, the choice of the right shovel-ready site is often the first step in a company’s ability to meet or adjust to changing consumer preferences. Being first to market can also help to secure patents or establish a brand before competitors can copy or claim similar designs or technologies.
Getting up and running sooner can also help a company qualify for certain time-sensitive incentives, especially those coming from federal programs. Our ability to find a shovel-ready site in Tennessee for Culver City, CA-based Moldex-Metric helped it qualify for federal contracts totaling $51.3 million, including two big projects from the Department of Health and Human Services (HHS) for the production of N95 masks which was part of the first Trump administration’s response to the Covid-19 pandemic. Another Boyd Co. client, EV fast-charger manufacturer Tritium (now owned by Indian EV leader Exicom), was able to meet deadlines, largely due to site readiness, in order to benefit from Biden’s Bipartisan Infrastructure Law which included $7.5 billion for deploying a network of EV chargers across the U.S.
Growing Role of Third-Party Evaluators of Shovel-Ready Sites
While site selection consulting firms continue to play a leading role in many corporate relocations – a greater number of site selection projects are carried out in-house due to the expansion of online data, previous experience within the company and the heightened sophistication of state and local economic development organizations. Another reason is the explosion of third-party players tied to the site selection industry in fields like engineering, accounting, law and real estate. Many of these third-party players are also active in the certification of shovel-ready sites, especially those in the engineering space.
A multitude of both national and local engineering firms in the U.S. are heavily involved in certifying industrial sites as shovel-ready, either directly or through partnerships with state economic development organizations or with private real estate developers. These engineering firms are tasked with handling the various technical aspects of site certification, such as soil analysis, environmental assessments, water quality and infrastructure evaluation. Some leading engineering firms and other third-party organizations here include AEP, AECOM, Jacobs Engineering, Fluor Corp., Quanta Services, CH2M, and Austin Consulting.
The Site Selectors Guild, which provides a searchable database of available sites that have undergone rigorous assessment set by this Phoenix-based association of site selection consultants founded by my old colleague and friend, the late Bob Ady – one of the true giant’s in our site selection industry – is another valuable resource for site-seeking companies.
A growing number of states and Canadian provinces have site readiness programs that list industrial sites as fully approved and ready for development. Some programs here include those of South Carolina, Georgia, Iowa, Tennessee, North Carolina, Indiana, Alabama, Ohio, Arizona, the Province of Ontario and others.
It’s The Power, Stupid
Of all the criteria to be analyzed in researching a site’s readiness, the power factor today has become the most critical and challenging. This is due to the boom in data center construction, especially hyperscale ones spurred by AI, which is putting unprecedented strains on local and regional power grids. Many utilities are struggling to build transmission infrastructure fast enough to meet this demand, leading to delays in industrial projects of all types.
Data centers, which are essential for AI processing, are projected to grow in demand, potentially consuming up to eight percent of U.S. power by 2030, compared to 3 percent in 2022. This increase is largely due to the power-intensive nature of AI operations, where a single query in systems like Grok can require nearly ten times the electricity of a regular Google search.
One solution is to build energy generation and energy assets on site to not rely solely on the grid. This option opens up a whole new shovel-ready investigation into local and state laws governing on-site power generation and storage by fuels like LNG, hydrogen and nuclear which is already being employed by major the players like Google and Microsoft.
The new power demands coming from the data center industry is impacting the power needs of other industrial users that require significant amounts of electric power. These especially include site-seeking companies in chemical production, primary metals, paper manufacturing, food processing and cold storage warehousing.
NIMBY
We have found while a shovel-ready site might be ready, it does not always follow that the local residents and political leaders are likewise ready to roll out the welcome mat. Long an issue with warehousing, we are now seeing a new NIMBY contingent in states like Virginia and Washington centered around power and the huge new demands placed on power grids by the data center industry.
About John H. Boyd
John H. Boyd is founder and principal of The Boyd Co. Inc. Founded in 1975 in Princeton, NJ, and now based in Boca Raton, FL, the firm provides independent site selection counsel to leading U.S. and overseas corporations.
Organizations served by Boyd over the years include many Fortune 500 companies, The World Bank, The Council of Supply Chain Management Professionals (CSCMP), The Aerospace Industries Association (AIA), MIT’s Work of the Future Project, Canada’s Privy Council and The President’s National Economic Council.
