Labor, Labor, Labor

Urine drug tests stain region’s appeal

Attention large companies looking to relocate: I have some sobering news. All the good sites are taken. What is remaining has been picked over. That’s straight from the mouth of one of the best site selection consultants in the country, Robert Hess, Vice Chairman of Newmark Knight Frank Global Services.

I recently was talking with Bob and learned that the factors that companies are considering these days are waaaay different than what they once were not too long ago.

Used to be companies focused on the location, hence the popular saying in real estate: “Location, location, location.” Makes sense when you are spending millions to set down roots for an office that you want to occupy for years.

Yes, companies are still looking at site location and site characteristics. But one factor is emerging as more important than location: The availability of labor. And it’s not just availability of labor, it’s the availability of a sober workforce.

Used to be manufacturing and distribution would stake its claim in the rural areas. Now, everyone wants to be inside the urban ring.

Hess gave three reasons for why this is the case:

  • We’re trendy now. There’s a rapid rush by residents to move to urban areas, noticeably Tier 2 markets such as Charlotte, Nashville, and Austin.
  • Three percent unemployment. This makes it hard for companies to find workers, so they have to follow the talent. Location of talent is the highest priority for CEOs making relocation decisions.
  • Need for a sober workforce. Hess says that opioid use has become so endemic it is affecting relocation decisions up to the boardroom level. And opioid use is higher in rural areas, adding to the desire to move closer to city centers.

The fact that companies are chasing a sober workforce was admittedly a bit startling to me. This means companies are willing to pick a more expensive property if needed to be closer to a reliable workforce.

Unfortunately, you don’t have to go far outside of the Charlotte metro area to run into extreme poverty, which often has higher drug use. According to North Carolina Health News, people who abuse opioids are more likely to live in the rural south than anywhere else in America. Of the 25 top cities for opioid abuse, Wilmington came in at No. 1, with more than 11.6 percent of the population abusing opioids. More bad news for the state: three other NC cities made the list: Hickory at 9.9 percent; Jacksonville at 8.2 percent; and Fayetteville at 7.9 percent of residents using opiates.

In 2017, there were 1,953 overdose deaths­­­ involving opioids in North Carolina—a rate of 19.8 deaths per 100,000 persons, higher than the average national rate of 14.6 deaths per 100,000 persons, according to the National Institute on Drug Abuse.

People who abuse opioids cost their employers about twice as much each year in medical expenses than those who don’t, North Carolina Health News also reported. On average, these workers cost $8,597 more than their non-using colleagues in 2015, or potentially $8 billion annually.

In short: A prime, perfectly established location may no longer be desirable, depending on the available workers. Labor will trump location every time.

I’d like to give a shout out to Robert Hess. He is really good. New York City hired him to manage the relocation process for Amazon. He is one of the best.

Real estate transactions can be fraught with frustration and pitfalls.

Sometimes the hardest part turns out to be working with your broker, the person who is supposed to help you through the complexities. Veteran commercial real estate broker and client advisor John Culbertson discovered that brokers’ interests aren’t always aligned with those of their clients. He realized there was a better way to advocate for clients and get the deal done.


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