Site selection trends will typically follow the growth of industry sectors. The challenge is figuring out which industries are growing, what types of operations they will need and where they will locate those operations. Economic developers continue to try to crack that code as they seek to get in front of these trends and position themselves to win projects including manufacturing plants, distribution centers, software engineering, call centers, data centers and other corporate operations that create jobs and capital investment. To help identify some of these macro trends, Site Selection Group has analyzed 40 of the largest industry sectors’ growth trends.

40 largest industry sector growth projections

The following diagram shows the 10-year growth projections for the 40 largest industry sectors between 2018 and 2028. The sectors employ over 140 million workers in both government and private sectors.  They are projected to grow by just over 10% to 155 million workers over the next decade.



What type of operations could be expanded from this growth?

The U.S. Bureau of Labor Statistics measures the growth of particular industries by studying job projections. However, the types of workers needed in these industries will vary greatly. Some workers will need to be skilled like machinists while others will simply need some light computer skills to work in a call center. The following table provides a guideline to project types by industry.

Targeted Project Types by Industry

Project Type              Industry 
Call Centers
  • Administrative & Support Services
  • Insurance Carriers
  • Credit Intermediation
  • General Merchandise Stores
  • Miscellaneous Store Retailers
  • Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Data Centers
  • Administrative & Support Services
  • Insurance Carriers
  • Professional, Scientific, & Technical Services
  • Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Distribution Centers
  • Merchant Wholesalers
  • Motor Vehicle & Parts Dealers
  • Truck Transportation
  • Building Materials
  • Warehousing & Storage
  • General Merchandise Stores
  • Miscellaneous Store Retailers
Manufacturing & Production Facilities
  • Transportation Equipment Manufacturing
  • Food Manufacturing
  • Building Materials
  • Fabricated Metal Product Manufacturing
Medical Office
  • Ambulatory Health Care Services
  • Hospitals
  • Nursing & Residential Care Facilities
Retail Stores
  • Food Services & Drinking Places
  • Food & Beverage Stores
  • General Merchandise Stores
  • Health & Personal Care Stores
  • Miscellaneous Store Retailers
Software Development/ Engineering Delivery Centers
  • Professional, Scientific, & Technical Services
  • Securities, Commodity Contracts, and Other Financial Investments and Related Activities

Where will companies locate their projects?

The site selection process utilized by companies to expand is very complicated and will vary depending on the project type and industry. Manufacturing and distribution operations will be greatly influenced by logistics and their customer base while call centers and software development operations will mostly be driven by labor needs. The following table summarizes some of the macro site selection trends by project type.

Project Type              Macro Site Selection Trends
Call Centers
  • Lower cost large and mid-size metro areas.
  • Targeted regions in the Southeast, Southwest and Midwest regions.
  • Avoid states with high minimum wages and undesirable labor laws.
Data Centers
  • Clustering in major data center markets like Dallas, Phoenix and Northern Virginia.
  • Low electricity costs are important.
Distribution Centers
  • Concentrated close to population density to reach customer base.
  • Targeted regions to service include California, New York, Texas, the Southeast and the Midwest.
  • Adequate logistics infrastructure is critical.
Manufacturing & Production Facilities
  • Migration to periphery of larger metro areas.
  • Optimizing inbound and outbound logistics.
  • Leveraging strong workforce development programs..
Medical Office
  • Growth across all regions and city types.
  • Replacement and upgrades of older medical facilities.
Retail Stores
  • Shift to lifestyle centers from traditional malls.
  • Smaller footprint as shift to more ecommerce.
Software Development/ Engineering Delivery Centers
  • Migration from California to cities like Atlanta, Austin, Dallas and Salt Lake City.
  • Possible emergence of smaller delivery centers in secondary labor markets.

Conclusions

Industry growth and site selection trends are directly correlated. The days of throwing a dart at the map to identify where to expand are no more. As a result, you will find that growing industries tend to utilize more sophisticated site selection strategies to grow more strategically as they want to optimize their footprint. Hopefully this summary of some of these high-growth industries will help you think about where companies may be expanding into the future. 

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