5 reasons Raleigh, NC will land 'mega deals' in 2023

RALEIGH – As recently as four years ago, North Carolina wasn’t attracting any interest for economic development projects in excess of $1 billion.

But that’s changed, said Chris Chung, CEO of the Economic Development Partnership of North Carolina, EDPNC, during a presentation delivered at the Launch 2023 event on Wednesday afternoon.

While 2021 was a record year for economic development, 2022 was another record-breaking year for the state, the North Carolina Department of Commerce confirmed with WRAL TechWire this week. That success led Business Facilities Magazine to name North Carolina the “State of the Year” for 2022 on Wednesday.

“We continue, and expect to continue to see a lot of these large, and one could argue, transformative type projects,” Chung said.

Watch live: Raleigh Chamber of Commerce gives predictions, trends for 2023
The reasons are fairly straightforward, Chung noted.

“When you have a manufacturer coming out of the electric vehicle segment, or the semiconductor segment, you can’t build a facility for less than $1 billion,” said Chung.

More large deals are coming, Chung projected. Earlier this week, Chung told WRAL TechWire that 2023 could be yet another sensational year for business recruitment, with a possible $112 billion in investment in the pipeline for projects that could bring more than 100,000 jobs to the state.

NC business recruiters aim for record 100k jobs, $112B in investment for 2023

What to expect

But that doesn’t mean there are large deals coming to the Triangle, or to the state, in the office segment, said Chung.

“We’re chasing manufacturing, industrial, food processing,” said Chung. “And office.” But before the pandemic started, said Chung, there were about 70% industrial and 30% office user, something like a new corporate headquarters or a regional hub office.

“Today, it remains, and has been about 5%, maybe 10%,” said Chung. The remainder is all industrial or manufacturing, he said.

Think about what that means for our cities, for our downtowns, when it comes to our office users, said Chung.

“So much of that has to do with the shift to remote or hybrid work,” said Chung. “It’s harder for companies to justify the cost of a lease or the cost of a building.”

And, some who planned to open office space in North Carolina are now deciding that they won’t do that. And that comes with “tremendous” impact in the cities of North Carolina.

“Most notable examples, here in this region,” said Chung, includes Advance Auto Parts and Centene Corporation, who backed out of economic incentive deals in 2022 due to changes in the labor market and a move toward remote and hybrid work in the economy.

That doesn’t mean that people are deciding not to move to the Triangle or to North Carolina. Instead, another speaker at the Launch 2023 event told the audience that the Raleigh metropolitan area would continue to be the second-fastest growing metro in the United States this decade.

Economic forecast: Raleigh set to grow at second-fastest rate in nation

NC’s strength in attracting important sectors

There’s another trend, which is that North Carolina is an attractive company for very important sectors, including biomanufacturing and biopharmaceutical production. Also, said Chung, semiconductors, clean energy and electric vehicles. There’s also a growing interest in food production, said Chung, including a company that announced it would come to North Carolina last month.

“If we’re going to be continuing to compete to attract large-scale industrial manufacturing,” said Chung, the state is running into the situation where economic development officials are asking whether there is enough developable land, particularly land that could be the site for very large projects, like those announced by VinFast and Wolfspeed.

“They’re much more likely to be in more rural or exurban locations,” said Chung, adding that the state must do a great job identifying and preparing these types of sites to continue to attract the mega deals to the state.