At the midpoint of the year, the site selection and economic development worlds are facing a complex set of conditions.

Tariffs, global conflict, political uncertainty, persistent workforce challenges, rising power constraints, and increasing community scrutiny around major projects now hang large over every decision. Companies are motivated to minimize risk, so when risks are high, activity is low, and projects can stall out.

Foreign direct investment (FDI) is particularly sensitive to these conditions. FDI intrinsically carries more risk than domestic investment decisions, including regulatory and legal hurdles, currency exposure, operating in a new business environment, increased logistics complexity, and supply chain setup.  

In recent months, we’ve seen a consistent set of questions from companies evaluating cross-border investments into the U.S.:

• Can infrastructure keep pace with growth?  

• Will there be enough reliable power five years from now?  

• Should I trust the political stability of the state and community to execute a long-term investment?

• Can this region deliver the workforce we need?  

• Is there political and community alignment behind development?  

• Can projects move through approvals with speed, certainty, and transparency?  

These questions point to a common priority: reducing uncertainty. Confidence in execution is as important as analysis of current conditions.

As communities and companies strive to mitigate risk, the first six months of the year have demonstrated demand for agility, transparency, and local leadership.  

Agility Matters More Than Ever

One of the clearest themes that continues to emerge from our work is the speed at which market conditions are changing.

Projects that were financially viable a year ago may now face different cost structures due to tariffs, financing conditions, construction costs or energy availability.

At the same time, public dialogue on power usage, land use, water resources, transportation, and workforce impacts have taken the “main stage” — especially for large industrial and data center projects — and require higher levels of communication and coordination to achieve project approvals.

The communities and organizations succeeding in this environment are the ones willing to adapt quickly, rethink assumptions and proactively address concerns and perceptions before they become obstacles.

Closer Evaluations Yield More Transparency

The sharp increase in demand for industrial land for development over the past few years has shifted some of the dynamics in the corporate site selection and economic development equation.  For decades before that, most communities were fighting to win large projects worth hundreds of millions of dollars in investment.  Today, more communities are being upfront and open about what types of projects they can and cannot support.

Rather than pursuing every potential lead, economic development organizations are now being forced to take a more fine-toothed approach to evaluating prospective industries, reassessing their community attraction objectives and what operations fit those goals, then assessing whether a particular project fits before making a decision.  

Behind the scenes, states, regions, and communities are embarking on new approaches to business attraction, forcing to rethink how they position themselves to both prospective domestic and international companies. In addition, they are considering new approaches to community engagement and infrastructure planning, while working to form even stronger partnerships between utilities, workforce organizations, educational institutions and developers. Taking a hard look and making honest assessments about capabilities and constraints can then drive decisions about the types of new investments they can confidently pursue. Transparency and honesty upfront in these situations are key to maintaining good relationships with companies and consultants as projects move forward.  

The Most Important Conversations are Local

While global economic conditions shape investment trends and interest, project success is ultimately determined at a local level.

As we help clients vet potential sites and locations, we’re looking for low-risk communities that can demonstrate:

• Clear documentation of available utilities capacity and service levels

• Long-standing records of consistent, collaborative relationships with area employers

• Easy-to-understand pathways to obtain permitting and other requirements  

• Well-established training and educational programs with the proven ability to meet corporate needs

• Innovative and successful approaches to workforce housing and childcare

• Strong, healthy transportation infrastructure

• Sound fiscal management

• Sites that are annexed, zoned and ready for development

Perhaps above all, our clients, both domestic and foreign, want to know that when the sands shift – as they most certainly will – the company has chosen a community partner that has their back to help support and navigate any challenges that arise.

De-Risking the Uncertainty is Key

In today’s market, foreign direct investment activity and interest in the U.S. is at a high. Companies are seeking solid community partners to help support not only their new plant, but also their business as they navigate and grow in a new territory. The state and local economic development organizations that embrace local cooperation are the ones best positioned to build the trust required to attract, retain and expand investment.

De-risking the uncertainty does not necessarily mean offering the largest incentive packages or running the loudest marketing campaigns, but rather aligning long-term strategy with operational reality through agility, transparency, and collaboration.