International symposium reveals that companies consider state financial incentives only after they’re satisfied that the lifestyle will attract and keep the workers they need.
Financial incentives to relocate or expand a business are nice perks for the business, but what company executives and commercial real estate site selectors are primarily looking for is a high quality of life.
We at Commercial Real Estate Group of Tucson took away that lesson at a global corporate real estate symposium in September.
We met with European business executives and Western Hemisphere economic development groups at the London “Doing Business in the Americas” gathering.
Lifestyle vs. Financial Incentives
At first it sounds like a surprising stance. Bottom-line thinking dictates that financial incentives would catch the attention of a relocating or expanding business.
But executives of international companies speaking at the symposium felt that while incentives come and go at the whim of the government in power, lifestyle tends to remain steady.
These speakers weren’t concentrating on things like weather, cultural offerings and recreation, although they play a part in keeping employees happy.
Instead, speakers focused on issues like educational opportunities and a diverse economy.
If the right people want to stay at a location, then the company can tap into that committed, talented workforce. It’s a simpler strategy than finding a financially attractive place in which to do business and then trying to attract people to work there.
In essence, companies follow the people they want to work for them.
Instead of looking at incentives first, companies consider lifestyle as they narrow their choices. It’s only after those choices are made that companies compare financial incentives, including
- multi-year exemptions from property and sales taxes
- workforce training programs
- discounted land and utility costs
- low-interest financing.
Other Site Selection Factors
Lifestyle and incentives are among plenty of other reasons why companies want to locate in a particular state. Here are a few that symposium participants mentioned:
- preference for states that do not have right-to-work rules
- one-hour proximity to an international airport with daily flights to international destinations such as Europe, Asia, Canada and South America
- adequate logistics and transportation systems
- atmosphere of innovation.
So how does Arizona stack up? Arizona is positioned well for attracting business, according to Chief Executive magazine’s survey, which was mentioned at the symposium.
It’s about middle of the pack among states for favorable business tax climates, according to the Tax Foundation, and for future livability as measured by Gallup.
Our impression from the symposium is that Arizona’s business and lifestyle attractors are strong enough to make a positive first impression, but not enough to make the final cut in that important narrowing process.