As national and international companies like Target, Under Armour, BMW and Mercedes-Benz are expanding their presence in the Southeast, what often gets lost in the shuffle is the behind-the-scenes work done by economic developers in the region. Whether they work for the government, an independent coalition or a branch of a utility company or railroad, economic developers have helped shape the Southeast’s commercial real estate landscape by recruiting and servicing clients around the world.
To get a better sense of the day-to-day work necessary to land deals big and small, Southeast Real Estate Business recently spoke with three economic developers in Tennessee, Florida and North Carolina.
Ben Teague is the senior vice president and executive director of Asheville-Buncombe County’s Economic Development Coalition. Part of the Asheville Chamber of Commerce, the organization has helped recruit 50 businesses to the market the past six years for a capital investment of approximately $1.1 billion.
Nitin Motwani is the economic development and marketing chairman of the Miami Downtown Development Authority (DDA). The DDA is an independent pubic agency of the city of Miami and is funded by a special tax levy on properties in its district boundaries. Motwani leads the DDA’s hedge fund initiative to lure financial and investment firms to Miami from New York, California and Latin America.
John Bradley is the senior vice president of economic development for the Tennessee Valley Authority (TVA), a utility company servicing 9 million residents in a seven-state region. The TVA’s economic development branch staffs 51 people. In fiscal year 2014, the TVA recruited and retained 60,300 jobs and capital investment totaling $8.5 billion. Year-to-date for fiscal year 2015, the TVA has recruited and retained 40,600 jobs and $4.3 billion in capital investment.
John Bradley, Tennessee Valley Authority
The following is an edited version of the discussion with the economic developers:
Southeast Real Estate Business: What are some recent companies that your organization has helped recruit?
Ben Teague: One of our most recent announcements was a San Diego-based bio-tech company called White Labs. Asheville is known for having more breweries per capita than anywhere in the nation. So everyone recognizes the New Belgium and Sierra Nevada brands, but we have a tremendous base of tech firms and manufacturing companies.
Nitin Motwani: Universa Investments LP and XP Securities are two of the main ones we discuss. Universa is a $6 billion hedge fund that came from Los Angeles, and XP Securities is a large financial securities firm coming from São Paulo, Brazil, that was originally going to bring 10 people here, but is now planning to bring 100 people here by year-end. Additionally, we have more than 12 other hedge funds that have relocated to Miami, but as is the world of hedge funds, a lot of them prefer privacy and don’t like to disclose their strategies, let alone where they’re moving and what they’re moving for.
John Bradley: Some companies we recruited in fiscal year 2015 include Polaris, United Furniture Industries, Raybern Foods , Under Armour, Target and several automotive suppliers. Last year some of the big names included Remington, Beretta, Academy Sports + Outdoors, Hankook Tire and Volkswagen.
Ben Teague, Asheville-Buncombe County’s Economic Development Coalition
SREB: What are some tactics and incentives that your organization employs to recruit businesses?
Teague: The fundamental difference between our organization and other economic developers is we can’t always be the lowest-cost carrier. Asheville has beautiful mountains and a lifestyle quality here that causes a “quality premium”. If the only success metric for an organization is maximizing incentives, we may not be a good fit. We need the whole package to fit their company for them to authentically connect with us.
The $175 million New Belgium deal came about because New Belgium saw Asheville as an extension of their brand. If you look at outdoor companies, they see the community where they’re producing as a communicator on whether they are authentic or not. We get aggressive with incentives on the right deals, but we may not always be the best fit. We do property tax abatements, tax-back grants and we’ve looked at sale-leasebacks.
Motwani: What makes Miami so great is that when you have something great to sell, it sells itself. The biggest thing that we do is to educate people on how the city has evolved. We’ve historically been thought of as a fun-and-sun destination, but what’s changed so much is how the environment and the people have matured. It reminds people who travel a lot that you can have an unparalleled lifestyle without sacrificing business opportunity.
The DDA staff has been great as acting as almost a concierge and a liaison to the business owners looking to relocate here. The DDA is not only a resource for information, but helps businesses navigate through the challenging process of choosing an office space, picking schools, finding a place to live and connecting with like-minded people.
Bradley: One of the things that we spend a lot of time on, and what really is a differentiator for us, is product development, meaning buildings and developable land. We’re working with communities day in and day out making sure they have products, and if they have products is it in a marketable position. If we do our due diligence on sites ahead of time, that saves prospective companies time and money. When companies are chasing markets, they don’t have six months to run around and look at every site.
We also operate a website, www.TVAsites.com, the single-largest building and land site database in the country. A lot of companies are doing desktop analysis before visiting sites, so if you don’t have your product and you’re not marketing it properly you’re going to be left out, so we spend a lot of time on the database, which is a lead generator for us.
Nitin Motwani, Miami Downtown Development Authority
SREB: If you had to pinpoint a single item, what would you say is the biggest challenge facing your organization and other economic developers across the country?
Motwani: We compete against a lot of other regions that are bigger. A lot of times, those regions have significantly deeper pockets. We have no money for incentives so our efforts are used on the educational process. Sometimes it requires a little bit of inducement to get them down here.
Bradley: Competition is as fierce as it’s ever been. It’s getting tougher and tougher to win deals. States, local organizations, utilities and railroads are all getting more competitive. You’re seeing law firms and construction companies in economic development now because that’s where the deals are. Product development is still a big challenge as well. What we’re trying to do is thinking through whether or not something is a good site, is it marketable, and that takes a lot of people working on things at the same time. We also try to keep our technology up to date and accurate, and that’s a big job.
SREB: What’s next for your organization? Is there a stated goal for 2015 that we can discuss?
Teague: We have hired a consulting group — Tip Strategies out of Austin, Texas — that is coming in to help us define aspirational goals and what our next steps should be. I’ve got a strong feeling that the next step will be leveraging our great manufacturing base to create more jobs and better jobs. We want to attract office users that will use urban product or product outside the central business district.
Bradley: Jobs and capital investment are what we are accountable for. Beyond the product development that we discussed before, we spend a lot of time servicing our communities because if you don’t get that piece right, you’re not going to be successful.
— Interview conducted by John Nelson. The article originally appeared in the April 2015 issue of Southeast Real Estate Business.