Polishing the Rust Belt
The Midwest is undergoing a significant transformation as big tech, particularly semiconductor manufacturers, redefines the Rust Belt. States like Indiana, Ohio, and Kansas, have low incidences of natural disasters, stable political environments, compelling tax incentives, absence of corporate income tax, and a large amount of young top tech talent. These factors align to make the Midwest an attractive option for fostering economic growth and development. Additionally, President Biden’s 2022 $53 billion CHIPS Act catalyzed development across the region. The CHIPS act, which stands for ‘Creating Helpful Incentives to Produce Semiconductors for America,’ boosts regional growth by funding new research facilities and semiconductor plants, thus, advancing the U.S. position in the global semiconductor industry.
Homegrown Workforce
Universities such as Purdue, the University of Notre Dame, and Ohio State University all have spurred vigorous economic growth in their regions through their reputable engineering programs, attracting talent and securing major semiconductor development deals. Students in the STEM field represent a robust workforce that do not need to relocate due to the convenient proximity of the semiconductor and research developments to their universities. Significant investments from leading companies like SK Hynix and Intel have all been near these college campuses. For instance, the South Korean company SK Hynix is planning to develop a 430,000-square-foot chip facility located on 90 acres at the Purdue Research Park in West Lafayette, Indiana. This will cost around $3.9 Billion and will create over 1,000 jobs. The investment aims to develop a state-of-the-art facility for package fabrication and research and development for artificial intelligence products within Purdue Research Park. By 2030, these projects will create hundreds of skilled jobs. This workforce expansion will encompass roles in engineering, technical support, administrative, and facility maintenance. Indiana is changing the landscape of technological innovation by supporting and investing in these high tech sectors, setting a precedent for other states to develop products essential to power our future economy.
Favorable Factors
In 2022, Intel unveiled plans for a $20 billion semiconductor manufacturing complex covering 1,000 acres in the suburbs of Columbus, Ohio. Additionally, in August 2023, Google committed to a $1.7 billion investment to establish three data centers in Ohio. These major investments are indicative of the broader trend of growth in the region, represented by the 146% increase in data center investments in Columbus between 2012 and 2021. Driving these investments is not only the federal tax incentive but also state tax incentives, as the Ohio Data Center Tax Abatement Program was updated in 2013 to enhance Ohio’s appeal as a location for data center investment. This program eliminates sales tax on construction materials, computer and mechanical equipment, cooling systems, and power infrastructure for companies that invest at least $100 million within three years and maintain an annual payroll exceeding $1.5 million.
Midwest On The Rise
As the demand for industrial and commercial land increases, we should expect residential property values to rise correspondingly, due to the influx of workers and their families seeking housing in the area. We must consider how these large developments will affect these small cities. Not only will there be a demand for more housing, but also a demand for new, bigger schools, hospitals, retail, and other factors that will create ideal communities for the large incoming and growing workforce. The Midwest’s appeal to developers and the construction industry is enhanced by these factors and the region’s commitment to technological innovation. The Midwest has evolved into an area conducive to economic growth, offering numerous opportunities for real estate and development sectors. It will be interesting to see how things develop as the United States tries to revive its standing as the leader in technological innovation and utilize what it already has – land and a skilled workforce.
Q1: As the Midwest becomes a hotspot for high tech real estate development, how can it sustain its momentum, and what lessons can other states learn from its approach to draw similar investment opportunities?
Q2: What challenges do small cities in the Midwest face as they evolve into tech hubs, and how can developers address these challenges?
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