Is Expensive Land Ever Worth It? When High Land Prices Make (or Break) Your Business Case
When manufacturers consider expanding or relocating, one line in the cost model always draws scrutiny: land cost.
It’s easy to assume high land prices are a dealbreaker. Why pay $200,000 per acre when land is $50,000 elsewhere? For many small and medium-sized manufacturers watching margins closely, that logic feels ironclad.
Yet the reality is more nuanced. In some cases, higher land prices actually signal greater long-term value. Other times, they’re an unnecessary burden that could jeopardize your business.
So how do you know when expensive land is worth it—and when it’s time to pack up and move?
Why Land Costs Vary So Widely
Land costs don’t exist in a vacuum. High prices typically reflect:
✅ Proximity to customers or suppliers. Land near major urban centers or industrial clusters commands a premium.
✅ Superior infrastructure. Sites with robust utilities, highway access, rail connections, and broadband fetch higher prices.
✅ Labor market strength. Strong talent pools often drive up both wages and land prices.
✅ Zoning and entitlements. Shovel-ready sites with favorable zoning can save time and money—leading to higher land values.
✅ Economic momentum. Growing regions naturally experience land price appreciation.
When Higher Land Costs Can Be Justified
Sometimes, paying more upfront can save far more over the life of your facility. Consider these scenarios:
1. Proximity Lowers Operating Costs
Locating closer to key customers, suppliers, or distribution hubs can:
Reduce transportation costs. Shorter hauls mean lower fuel, labor, and fleet maintenance costs.
Speed up delivery times. Critical for just-in-time manufacturers or those in competitive markets.
Enhance customer relationships. Physical proximity can be a competitive advantage.
If transportation makes up a significant part of your cost structure, expensive land in a prime location may pay for itself quickly.
2. Access to Specialized Workforce
In sectors requiring skilled labor—like precision machining, electronics, or food processing—being near an established talent pool is critical. Higher land costs in labor-rich regions may be worth it if:
You’d otherwise face chronic hiring challenges.
Labor shortages could halt production.
Training costs would be significantly higher in a lower-cost area.
3. Infrastructure That Reduces Risk
Sites with reliable power, robust water capacity, or rail connections may be more expensive—but they:
Minimize production downtime.
Lower future capital investments in utility upgrades.
Enhance your facility’s long-term value.
4. Speed-to-Market
Shovel-ready sites with environmental clearances, zoning approvals, and utility connections save months—or even years—of permitting. In fast-moving industries, that time-to-market advantage can outweigh a higher land price.
When High Land Prices Are a Red Flag
On the flip side, higher land costs are a warning sign when:
⚠️ Margins are razor-thin. Industries with low profit margins may not recoup the upfront cost.
⚠️ Your business doesn’t depend on location. For non-time-sensitive or commodity producers, cheaper land farther out may suffice.
⚠️ Future growth is constrained. Buying into an expensive, space-limited area might prevent you from expanding cost-effectively later.
⚠️ Speculative pricing. Some regions inflate land values based on speculative development that never materializes.
When Does It Make Sense to Relocate?
Relocation is a huge decision, but may be worth considering if:
Land prices have escalated beyond what your margins can support.
Your workforce has shifted (e.g., employees commuting from farther away).
Logistics patterns have changed, making your current location suboptimal.
Infrastructure is outdated and costly to upgrade.
New incentives elsewhere create a compelling business case.
However, remember that relocation costs extend far beyond real estate:
Disruption to operations.
Employee retention risks.
Cost of moving equipment and inventories.
Customer relationship impacts.
Relocation should only be pursued if the long-term savings or strategic advantages significantly outweigh those risks.
A Practical Approach
At Impact Economics, we advise clients:
Don’t fixate on land price alone—analyze total cost of occupancy and long-term operational efficiency.
Model different locations’ transportation, labor, utility, tax, and regulatory costs.
Consider how land cost ties into your growth strategy and customer service requirements.
Evaluate the value of proximity to clusters, infrastructure, and workforce pipelines.
High land prices can sometimes be a worthwhile investment—or a costly mistake. The key is to understand the trade-offs and run the numbers with eyes wide open.
Thinking about expanding—or questioning whether your current location still fits your business? Let’s talk about how to balance land costs with long-term competitiveness.
Talent is the Tipping Point: How Local Labor Market Data Shapes Site Selection Decisions
When companies look to expand or relocate, the first questions are often about real estate, logistics, or incentives. But the smartest site selectors know that one factor trumps them all: talent.
Your building can be retrofitted. Roads can be upgraded. Incentives will come and go. But if the right workforce doesn’t exist—or can’t be developed in time—your project will struggle before it starts.
That’s why local labor market data is a critical foundation of any successful site selection process. The question isn’t just where can we build? It’s where can we grow?
Labor Market Intelligence: Beyond Headcounts and Wage Rates
It’s tempting to scan a state labor report, see a few thousand workers listed in a target occupation, and call it good. But effective site selection requires a deeper level of labor market intelligence—data that tells you not just how many workers are there, but:
How experienced they are
What industries and employers they’re coming from
What wages they command—and what benefits they expect
How fast the local talent pipeline is growing (or shrinking)
What community colleges, training centers, or universities support them
A surface-level headcount doesn’t tell you whether the labor pool is accessible, affordable, or sustainable.
Real-World Example: Advanced Manufacturing Expansion
Imagine a midsize manufacturer looking to expand its operations in the Midwest. A shortlist of three communities all look similar on the surface—comparable wages, available buildings, and highway access.
But a deeper dive into labor data reveals key differences:
Community A has high manufacturing employment but a low replacement rate—meaning many skilled workers are near retirement, and younger workers aren’t being trained at scale.
Community B has a robust CTE pipeline and a new mechatronics training program aligned with the company’s automation needs.
Community C has a higher average wage but also lower turnover and stronger union partnerships that could streamline onboarding and retention.
In this case, the most resilient and growth-ready community isn’t necessarily the cheapest—it’s the one with the most aligned and replenishable talent base.
What Labor Market Data Should You Analyze?
At Impact Economics, we help clients go beyond boilerplate workforce stats to examine the indicators that really matter. Here are some of the most powerful labor data points we use to shape site selection decisions:
✅ Occupational Supply & Demand
Total employment in target occupations
Projected five- and ten-year growth
Job posting intensity and employer demand
✅ Skills & Education Alignment
Completion data from local colleges and training centers
Credentials earned (degrees, certificates, industry-recognized certs)
Alignment with your technical needs (e.g., PLC programming, welding certs, OSHA)
✅ Workforce Dynamics
Median wages and wage trends
Age distribution and retirement risk
Turnover rates, commute patterns, and workforce participation rates
✅ Ecosystem Assets
Availability of apprenticeships and internships
Partnerships with local workforce boards or EDOs
Employer engagement with local education providers
Labor Market Data as Risk Mitigation
Site selection is about opportunity—but it’s also about risk. Labor market gaps can derail an otherwise promising expansion. For example:
Underestimating wage inflation in tight markets
Overestimating the availability of skilled trades
Ignoring the pace of demographic decline in rural areas
Missing key retraining opportunities for transitioning workers
By integrating labor data early in the decision-making process, companies can de-risk site selection and build a more adaptive workforce strategy from day one.
What About Rural or Micropolitan Markets?
Many smaller communities worry they’ll be overlooked because they can’t match metro-level numbers. But here’s the secret: quality beats quantity—especially if a community can demonstrate:
A strong culture of workforce alignment
Custom training solutions and industry-responsive curricula
Employer retention and loyalty driven by place-based values
Rural labor markets can be attractive if they offer flexibility, cost efficiency, and collaborative ecosystems—and we can help tell that story with data to back it up.
Talent Should Lead Your Site Strategy
At Impact Economics, we believe site selection is about finding the best fit—not just the best deal. That means starting with a people-first approach:
Where will you find the workforce that powers your next decade of growth?
We use detailed labor market intelligence, sector-specific insights, and on-the-ground relationships to help our clients build talent-informed site strategies—and avoid costly missteps.
If you’re considering a new location, let’s talk. The right site isn’t just shovel-ready. It’s talent-ready.
Incentives vs. Infrastructure: What’s Worth More in the Long Run?
When small and medium-sized manufacturers look to expand, relocate, or build new facilities, two questions inevitably rise to the top:
What incentives can I get?
Does the region have the infrastructure I need?
For the purposes of this conversation, let’s include workforce as part of infrastructure.
Communities and states court manufacturers with millions in incentives—tax credits, cash grants, training subsidies, and more. It’s tempting to chase these short-term savings. Yet experienced manufacturers know that the true cost of doing business—and their long-term profitability—depends just as heavily on roads, utilities, logistics, workforce pipelines, and digital connectivity.
So, which delivers a better Return on Investment (ROI) for manufacturers in the long run: incentives or infrastructure? Let’s explore.
The Lure of Incentives
Incentives can be powerful:
✅ Lower up-front costs. Grants and tax abatements can significantly reduce initial capital outlays.
✅ Improve cash flow. Tax credits, refunds, and utility rebates help free up capital for other investments.
✅ Offset risk. For new market entrants, incentives help ease financial uncertainty.
But incentives also come with potential downsides:
⚠️ Complex compliance. Many incentives have strings attached: job creation targets, wage requirements, investment minimums. Falling short can trigger clawbacks. There are also the additional compliance reporting costs that governments will require. This typically includes additional accountant or attorneys fees; it also means staff time collecting data or completing forms.
⚠️ One-time boost. Incentives help you open your doors—but may not impact your daily operating costs for decades to come. Often, the incentives are not recurring unless there is an additional project or major capital investment.
The Power of Infrastructure
Infrastructure can be less flashy but often more fundamental:
✅ Reliable logistics. Quality highways, intermodal hubs, and rail access reduce shipping costs and improve supply chain resilience.
✅ Skilled workforce pipeline. Proximity to strong technical schools or community colleges means access to talent—and lower training costs.
✅ Utilities and energy. Reliable power, gas, water, and broadband keep operations running efficiently.
✅ Business ecosystem. Nearby suppliers, maintenance firms, and engineering services create synergies and reduce lead times.
Unlike incentives, infrastructure:
🌱 Provides recurring value. Good infrastructure lowers costs year after year, not just in your first few years of operation.
🔒 Is harder to replicate. Competitors can chase the same incentives—but infrastructure advantages often can’t be copied quickly.
ROI: Short-Term vs. Long-Term
So which is “worth more”? It depends on your business horizon.
Short-term ROI: Incentives often deliver immediate benefits and help fund your initial investment. For cash-sensitive projects, this can tip the scales on a go/no-go decision.
Long-term ROI: Infrastructure has the greater impact on operational costs and competitive advantage over 10, 20, or 30 years. For manufacturers planning to stay put for decades, infrastructure may save more than any up-front incentive package.
Here’s a rule of thumb:
If your profit margins hinge on logistics, workforce availability, and utilities, infrastructure may outweigh any incentive check.
Other Factors for Manufacturers to Weigh
If you’re a small or medium-sized manufacturer considering expansion or relocation, also think about:
🔍 Total Cost of Occupancy. Beyond incentives, consider land costs, construction costs, utilities, property taxes, and insurance premiums.
👥 Labor Market Dynamics. Workforce availability, quality, and cost are critical. An attractive incentive deal can’t compensate for an empty labor pool.
📈 Resilience and Risk. Infrastructure affects your ability to withstand supply chain disruptions, natural disasters, or market shifts.
💼 Business Ecosystem. Is there a cluster of similar manufacturers, suppliers, and service providers nearby?
So… Which Should You Chase?
At Impact Economics, we advise manufacturers to treat incentives as the cherry on top—not the cake.
Start with infrastructure. Pick locations with the logistics, workforce, utilities, and connectivity that support your operational needs and growth plans.
Then negotiate incentives. Once you’ve identified strong locations, leverage incentives to improve your business case and reduce risk.
Incentives can deliver an immediate boost, but infrastructure shapes your cost structure, workforce stability, and competitive edge for decades. For manufacturers planning to stay and grow, that’s usually where the biggest ROI lies.
Considering a new location or expansion? Impact Economics can help you weigh incentives vs. infrastructure, analyze total costs, and negotiate the best deal for long-term profitability.
Let’s talk about your next move.
Economic Development Isn’t Just Marketing - It’s Strategy
Too often, communities treat economic development like a branding exercise—design a logo, print some brochures, maybe attend a trade show or two, and hope the right company notices. But while marketing is part of the equation, real economic development goes much deeper. It’s not about selling a story—it’s about shaping your future.
At Impact Economics, I work with communities to approach economic development as a strategic, data-driven discipline, not just a promotional effort. And that starts with a hard, honest look at where you are today.
Start With the Fundamentals: Your Fiscal Foundation
Before trying to attract a single new business, every community needs to understand its current fiscal position. That means asking:
What does our tax base look like?
Is it concentrated or diversified? Are we overly reliant on a handful of large employers or a specific sector? What is the ratio of residential to non-residential value on the tax base? What is the relationship of our property tax to sales tax?What is our effective tax rate—on property, income, and sales—and how does that compare to peer communities?
What is the state of your employment base?
Are residents commuting out for work? Do we have an adequate labor pool for different types of industries?How many utility customers do we have—and are we growing or shrinking?
Utility data is a proxy for population, development momentum, and long-term financial sustainability. Is the cost of operating the utility system fall on industry or residents? Are rates competitive to peer communities?What are our demographics telling us?
Age structure, household income, educational attainment, and migration trends all signal what’s possible—and what’s not.
This baseline assessment is critical. Without it, you’re flying blind. With it, you’re ready to move from tactics to strategy.
Economic Development as Strategy, Not Reaction
Once you understand your fiscal foundation, you can begin crafting an economic development approach that fits your reality—not a neighboring city’s highlight reel.
If your tax base is stagnant, you may need to focus on redevelopment, infill, or adaptive reuse strategies that grow value without increasing infrastructure costs. Or, we may need to consider investments to attract new employers and businesses to town.
If your labor force is aging or shrinking, it may be time to invest in talent retention and attraction strategies—housing, childcare, and workforce development—before chasing another industrial lead.
If your infrastructure is underutilized, such as excess water/sewer capacity or an airport that’s underperforming, those can be assets with the right business targets—but only if you know how to position them strategically.
If you’re seeing revenue erosion, you may need to rethink your incentive policies or tax structures—not just to be competitive, but to ensure sustainability.
This is what strategic economic development looks like: not chasing leads, but building the conditions where the right investment fits, lasts, and lifts the entire community.
Don't Skip the Strategy for the Sake of the Spotlight
Marketing without strategy is like painting the front door of a house with a cracked foundation. It may look good in the photos, but it won’t stand the test of time.
Real growth happens when a community understands its position, defines its goals, and aligns its policies, investments, and partners to move in that direction.
That’s the kind of work I help our public sector clients do at Impact Economics. I bring a private-sector mindset to public-sector challenges—clear-eyed analysis, actionable strategies, and measurable outcomes.
Is your community ready to move from promotion to purpose?
Let’s have a conversation. Because economic development isn’t just about getting noticed—it’s about building something worth noticing.
Total Cost of Ownership: Why the Cheapest Site Often Isn't the Best
When manufacturers search for a new facility, there’s a natural temptation to chase the lowest price tag. On paper, a less expensive site or building can seem like a slam dunk—immediate savings, a faster path to profitability, and less upfront risk. But in economic development and industrial site selection, price doesn’t equal value. The true cost of a site is more complex and must be understood through the lens of Total Cost of Ownership (TCO).
At Impact Economics, we regularly advise clients to look beyond square footage prices or leasing terms and instead focus on a broader, more strategic understanding of operational costs. Here’s why the “cheapest” option is often the most expensive in the long run.
1. Workforce Quality and Labor Costs
A facility is only as productive as the people inside it. Communities with a shallow labor pool, weak technical training programs, or high turnover rates can impose hidden costs on your business—recruitment expenses, training delays, and production downtime.
On the flip side, paying slightly more for a site in a region with a well-aligned workforce, local training partners, and strong work ethic can improve productivity and lower labor-related risk. Sometimes, the “cheaper” location ends up costing more simply because it’s harder to staff effectively.
2. Utility Costs and Infrastructure Capacity
Older industrial buildings with bargain-basement prices often come with outdated infrastructure. Think inefficient HVAC, low power availability, or inadequate water/sewer capacity. The result? You’ll end up spending more in retrofits, higher monthly utility bills, and potential operational limitations.
Even if two sites look identical in size and configuration, energy rates and utility reliability vary dramatically by region. Over a ten-year period, a small difference in energy cost per kWh can result in six- or seven-figure differences in your bottom line.
3. Tax Structure and Regulatory Environment
Some states and localities offer low up-front costs but burden businesses with high property taxes, personal property taxes on machinery, or unpredictable regulatory enforcement. Others offer a more business-friendly tax and permitting environment that creates long-term cost advantages.
When evaluating a site, don’t just consider the building cost—consider the tax bill five years from now. Ask whether the community offers abatements, exemptions, or other long-term tax planning opportunities that offset your initial capital outlay.
4. Logistics and Proximity to Customers or Suppliers
Transportation costs are one of the biggest line items in any manufacturer’s budget. If a cheaper site adds significant mileage to your shipping routes, or positions you far from suppliers and key customers, those “savings” vanish quickly.
A site that’s 10% more expensive but 20% closer to your logistics hub may create meaningful recurring savings in fuel, time, and risk of disruption. In today’s just-in-time economy, smart location decisions are often less about real estate and more about supply chain resilience.
5. Insurance and Risk Profile
Your property insurance premiums reflect local risk factors: floodplain location, crime rate, emergency response times, and even political and environmental volatility. Choosing a lower-cost site in a higher-risk area may leave you with a monthly insurance bill that far exceeds any upfront savings.
We encourage our clients to evaluate total risk exposure—not just for property insurance, but also for business interruption coverage, workers’ comp, and liability insurance. A few hundred dollars per month in premium difference can add up fast over the life of a facility.
Making Smarter Location Decisions
The smartest manufacturers don’t look for the cheapest building—they look for the best overall value. That means understanding the long-term operating environment, aligning your location strategy with your talent and logistics needs, and partnering with communities that want to see you succeed.
At Impact Economics, we help mid-sized manufacturers move beyond surface-level comparisons and uncover the true cost—and true opportunity—of each potential site. By focusing on Total Cost of Ownership, you avoid surprises, reduce risk, and set your business up for sustainable growth.
Want to avoid costly mistakes in your next site decision?
Let’s talk. We’re ready to help you find the right site in the right community—at the right total cost.
What Really Matters in Industrial Site Selection: A Practical Framework for Mid-Sized Manufacturers
For mid-sized manufacturers, choosing a new facility location is one of the most consequential decisions you’ll ever make. It’s not just about rail access or tax rates—it’s about aligning your business strategy with a place that will support your growth for the long haul.
After two decades advising both companies and communities, I’ve seen how site selection can either unlock long-term success or slowly erode a company’s competitive edge. Here’s what really matters—and what every manufacturer should look for—when evaluating where to expand, consolidate, or relocate.
1. The Right Site in the Right Community
Industrial buildings and land are just the starting point. The real differentiator? Finding a community that wants your business and will go to bat for your success.
Communities that understand your industry, appreciate your investment, and are willing to offer tangible support will make life easier—before, during, and after your move. A great site in a disengaged community often becomes a regret. A good site in the right community becomes a competitive advantage.
2. A Competitive Incentive Package
Incentives are not just about headline numbers. The real value comes from aligning programs to your operational needs—upfront capital savings, long-term operating cost reductions, and flexibility in deployment.
Whether it’s infrastructure support, tax abatements, training grants, or discretionary cash incentives, your project deserves a package that reflects your value to the region. That only happens when the incentives are professionally scoped, negotiated, and aligned with performance.
3. Labor Cost Without Overpayment—and Training to Match
Labor availability matters. So does labor cost. But where many companies go wrong is assuming that “cheaper” means “better.” The real goal is workforce value: getting the skillsets you need without overpaying—and securing the community, state, or educational support to build your workforce over time.
Well-structured training assistance and workforce partnerships can dramatically reduce ramp-up costs and turnover rates, which pays off far beyond your first hire.
4. Proximity to Customers and Suppliers
Logistics and access remain core to manufacturing performance. Whether you’re shipping finished product or relying on just-in-time deliveries, being within reasonable proximity to key suppliers, end markets, or transportation corridors can reduce inventory carrying costs and improve on-time performance.
And the cost of being too far away? Increased shipping expenses, missed deadlines, and strained relationships with customers and vendors alike.
5. A Location That Makes Business Sense
Every business has its own mix of cost drivers, customer expectations, and operational quirks. That’s why “lowest taxes” or “cheapest land” shouldn’t be your sole filter.
What matters is whether a location supports your entire operation—your logistics model, labor model, financial model, and long-term strategy. In short: does it make business sense?
6. A Place You’ll Be Proud to Call Home
Corporate fit isn’t just for Fortune 500s. Mid-sized manufacturers often have long-standing cultures, loyal employee bases, and leadership teams that are active in their communities. You need a place that aligns with your company’s values and offers the quality of life that will attract and retain key talent.
If you're going to invest millions—and commit decades—you should like where you're landing.
The Bottom Line
Site selection is more than a real estate decision. It’s a strategic business move that affects your people, your profits, and your future.
At Impact Economics, we help mid-sized manufacturers navigate this process with clarity, confidence, and a bias for value. We bring an integrated approach that combines market data, labor analytics, incentives expertise, and community insight to ensure you land in the right place—with the right deal.
If your company is thinking about growth, expansion, or relocation, let’s have a conversation. The right site in the right community isn’t just a possibility—it’s a strategy.
Jim Gibson, CEcD
Founder, Impact Economics
Welcome to Impact Economics: Turning Insight into Advantage
In today’s competitive landscape, where you grow matters just as much as how you grow. I founded Impact Economics to help companies make smarter, faster, and more confident decisions about where to locate, how to scale, and how to leverage economic incentives along the way.
After more than a decade advising corporations on site selection, incentive negotiation, and market entry strategy, I saw a need for a more strategic, partnership-driven approach—one that aligns corporate goals with public sector opportunities to drive both business value and long-term impact.
Further, I spent a 22 year career working in local government, serving as city administrator/manager, finance director, and economic development director. I understand the language of what will resonate with community leaders and how best to convey my clients’ value proposition to achieve maximum impact.
What I Do for Corporate Clients
At Impact Economics, I serve as an extension of your internal team, bringing deep industry experience and insight to some of your most consequential decisions. I help companies:
Select Sites with Confidence – I analyze labor markets, cost structures, infrastructure, policy environments, and local dynamics to recommend locations that position your business for long-term success.
Maximize Incentive Value – I identify, negotiate, and secure economic development incentives that reduce costs, improve ROI, and strengthen community partnerships.
Navigate Public-Sector Relationships – I help you speak the language of government, align your business case with community goals, and manage complex stakeholder dynamics with credibility and clarity.
I don't just identify incentives—I unlock hidden value by helping you tell the right story to the right people, in the right way.
Built on Experience. Designed for Results.
I've had the privilege of working with companies ranging from global brands to small town entrepreneurs. I understand the pressures of growth timelines, board expectations, and internal alignment. I also know how to bridge the gap between corporate strategy and public-sector processes—because I’ve done it, project after project.
At Impact Economics, I bring this experience to every engagement with one goal: to help you grow smarter and negotiate from a position of strength.
Let’s Talk
If you’re planning a new location, evaluating expansion options, or exploring incentive opportunities, let’s connect. Impact Economics is here to help you turn insight into advantage.