Power, People, Policy: Revolutionizing Industrial Site Selection in 2025

In the ever-evolving world of commercial real estate, the landscape for industrial site selection has undergone a seismic shift. According to a recent report from Lee & Associates, titled Power, People, Policy: The New Drivers of Industrial Site Selection, strategic incentives are no longer just perks—they're the core architecture behind major expansion and relocation decisions. Amid tariff uncertainties, high interest rates, and cautious tenant growth, companies are leaning heavily on tax abatements, infrastructure grants, workforce programs, and federal initiatives to make projects viable. Let's break down the key insights from this thought leadership piece.

The Evolving Incentives Ecosystem

The report highlights a "layered capital ecosystem" that's fueling massive industrial projects across North America. Federal programs are at the forefront:

• CHIPS Act: This has been a game-changer for domestic semiconductor manufacturing, drawing giants like NVIDIA and TSMC back to the U.S. with their supply chains in tow.
• Inflation Reduction Act: It's pouring billions into clean energy, battery production, hydrogen, grid upgrades, and advanced manufacturing.
• One Big Beautiful Bill Act (OBBBA): By making the New Markets Tax Credit permanent and boosting Opportunity Zones, it's targeting rural and underserved areas for economic revival.

States and localities are matching this federal momentum with site readiness funds, infrastructure upgrades, and tailored workforce training. Even landlords are getting in on the action, offering free rent periods to offset rising vacancies and occupancy costs. The result? A competitive frenzy that's accelerating industrial growth in tech-heavy sectors like data centers and semiconductors.

Core Drivers: Power, People, and Policy

Site selection now starts with incentives, with three pillars standing out:

• Power Availability: Mega data centers need 400-500 megawatts of reliable, scalable energy. States like Arizona and Texas lead here, offering packages that prioritize infrastructure over pure cost savings.
• Tax Incentives: Sales tax exemptions on equipment can save data center projects $100-200 million upfront, while property tax abatements sweeten the deal further.
• Workforce Considerations: Skilled labor is non-negotiable, with wages benchmarked at $20-25 per hour (thanks to anchors like Amazon and Walmart). Proximity to educational institutions and customized training programs give states like Georgia and Tennessee an edge, creating economic zones around big players like Hyundai and Samsung.

These factors aren't just checkboxes—they're decisive in outbidding competitors.

States Stepping Up Their Game

Competition is heating up regionally:

• East Coast and Midwest: Pennsylvania's Site Readiness Fund preps parcels for quick development. Ohio snagged SEMCORP's $916 million lithium-ion plant with $186 million in incentives, including grants and tax breaks. Indiana is rethinking its scaled-back approach to stay competitive.
• Southern States: Texas, Georgia, and Tennessee excel with "plug-and-play" sites—pre-approved land, guaranteed utilities, and fast permitting.

The report contrasts successes with pitfalls: New Jersey's aggressive incentives under Governor Christie revitalized urban areas, but tighter reforms under Governor Murphy stalled momentum, underscoring the need for balanced policies.

Winning Strategies and Cautionary Tales

Real-world examples illustrate what works:

• Arkansas and Trex: By providing 200 acres of free, prepared land worth $20 million, Arkansas overcame site challenges and clinched a major project with a total $69 million package.
• Oklahoma and Emirates Global Aluminium: A unified push secured a $4 billion aluminum smelter—the first new U.S. primary facility in 45 years—with $700 million in incentives, beating out Mississippi and Texas.
• Ohio and SEMCORP: Workforce analysis and $186 million in tailored incentives anchored this supply-chain win.

On the flip side, avoid missteps like premature announcements (which can kill negotiating leverage) or late consultant involvement. Early "desktop analyses" can evaluate options across locations, as seen with Ollie's Bargain Outlet securing $18.5 million for its Illinois distribution center.

Looking Ahead: Metrics for 2026 and Beyond

As we head into 2026, the report urges tracking key indicators:

• Economic resilience (unemployment, consumer confidence, productivity).
• Labor dynamics (skilled worker availability, wage growth).
• Trade policies and infrastructure (especially power for energy-intensive ops).
• Emerging tech like nuclear (e.g., Kairos Power's modular reactors), hydrogen, fusion, and advanced solar.

Federal defense and reshoring initiatives will align with state incentives, creating prime opportunities for aligned companies.

Final Thoughts: Incentives as a Strategic Compass

Lee & Associates positions incentives as the new north star for U.S. industrial growth. By engaging early, fostering transparency, and building partnerships, brokers and advisors can navigate this complexity. As policies evolve, those who interpret and leverage them will drive the next wave of American manufacturing and distribution.This summary draws from Lee & Associates' expert insights, contributed by North American Director of Incentives & Credits, Mike Mikulski. For the full report, check out their thought leadership series—it's a must-read for anyone in commercial real estate eyeing expansion in this incentive-driven era.

Want the full report? 

Contact:

Ron Mgrublian

Lee & Associates 

(For a complimentary copy of Power, People, Policy: The New Drivers of Industrial Site Selection)

The game has changed. The winners will be the ones who treat incentives as strategy — not just savings.