Offsetting upfront capital for a distribution center can greatly influence the overall project. While no company should make a location decision based off incentives, it can be a differentiator between two good communities and is playing an increasingly significant role in supply-chain decisions.
Site Selection Group, a full-service location advisory, real estate and economic incentive services firm, has tracked distribution center incentive packages over the past six months. While a large percentage of projects have received relatively modest packages (over 50% came in at less than $500,000), over a quarter have received benefits ranging from $1-4 million, which can make a large impact on their bottom line.
The average capital investment for a distribution center project in the first half of 2018 was $21.1 million and created an average of approximately 90 jobs, while retaining roughly 43 jobs per project.
Jobs and capital investment impact distribution center economic incentive packages
The average incentive package awarded to distribution center projects over the first half of 2018 was $1.71 million. Of the ~58% of projects receiving $500,000 or less, job creation averaged 27 positions with investment averaging $5 million. Projects receiving over $5 million in incentives created an average of over 100 jobs, with $32 million in capital investment.
Smaller projects should not be discouraged, however. For those projects awarded less than $500,000, the incentive package represented a benefit of over $13,750 per job created, which can be a significant factor in these smaller projects. The table below shows how economic incentives were divided among distribution center projects.
Economic Incentive Packages by Size
Geographic trends in economic incentives
As with last year, the Midwest and Northeast saw the highest amount of economic incentive packages awarded to distribution center projects. The interactive map below displays this in more detail. Hover over or select a state to see the total amount of economic incentive packages awarded, average incentive amount, average capital investment and jobs created by projects that were awarded an incentive.
Economic Incentive Packages by State
Top economic incentive packages for distribution centers
The following table shows the top economic incentive packages awarded to distribution centers over the past six months.
|Company||Location||Capital Investment ($M)||Job Creation||Awarded Incentives ($M)|
|Benjamin Foods||Camden, NJ||$74||251||$52.47|
|CVS Health||Memphis, TN||$12||0||$11.65|
|Choice Logistics||Jersey City, NJ||$2||110||$8.25|
|US Foods Holding Corporation||McClellan, CA||$72||216||$7.00|
|Samuel Coraluzzo Co||Glassboro, NJ||$6||30||$5.42|
|The Northwest Company||Memphis, TN||$25||25||$5.00|
|Amazon||Grand Rapids, MI||$150||1000||$4.00|
|The TJX Companies||Lordstown, OH||$167||1000||$3.53|
|Louis Vuitton||North Las Vegas, NV||$102||60||$3.13|
|Costco Wholesale Corporation||Oklahoma City, OK||$15||75||$3.00|
|Barrett Distribution Centers||Memphis, TN||$22||74||$2.95|
|Walgreens Boots Alliance||Perrysburg, OH||$80||350||$2.50|
|United Parcel Service (UPS)||El Paso, TX||$41||10||$2.39|