High tech modular home builder, betting on Amazon's HQ2 bidding war strategy, launches public real estate search for three Florida factories
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Aug 3, 2020

A high-tech modular home builder says it is on the hunt for three factory sites in Florida — and a big part of its real estate strategy appears to be tied to economic development incentives.

S2A Modular, based in Patterson, California, announced its plans for Florida in a July 29 news release. The company builds "electrically self-sustaining, custom and smart-connected 'GreenLux' luxury residences and commercial buildings." In April, S2A told sister news organization Phoenix Business Journal that it was planning to build a factory in that area by 2021.

The timeframe for completing a modular building in factory, S2A says, is a fraction of the time traditional construction takes. Its website lists Tampa, Miami and Jacksonville as desired locations; its color-coded map shows that Miami is a market where it is actively making land offers. Tampa and Jacksonville are targets where the company "expects to build."

The company calls its facilities "MegaFactories." Spokesman Rob Knoll told the Business Journal that the facilities include two large modular home factories, a sales center, five model homes and two smaller buildings used to manufacture building materials like stucco and insulation.

"S2A Modular has a lot of interest from developers and individual home buyers across the Southeast, and especially Florida, so we [are] looking across the state for municipalities that have aggressive economic development initiatives for companies like ours," Knoll wrote in an email.

By making its real estate and incentive search public, S2A Modular appears to be taking a page out of Amazon.com's search for a second headquarters. In 2017, Amazon publicly invited cities and states to submit proposals for the massive project, creating a bidding war of incentives and other enticements. High-profile real estate searches — the kind that cause cities and states to pony up big incentive packages — are typically shrouded in secrecy, with negotiations happening between top-level decision makers, commercial real estate brokers and economic development officials. Mayors and governors often use their authority to close the deals. The projects usually have a code name and sometimes do not reveal the company's identity even as public officials sign off on the incentives.

S2A Modular says it has an aggressive growth plan in Florida. But its public approach to striking a deal is unconventional.

"Since they don’t reveal the size and scope of their proposed operation in the press release, it creates the impression that they are more interested in securing the largest incentive package possible rather than finding the community that best meets their needs for long-term growth," said Melissa Glasgow, former head of economic development for St. Johns County and an independent consultant.

Knoll told the Business Journal that the company is looking for 30 to 40 acres for three different factories in North, Central and South Florida. Each could employ around 250 people. It's important that sites be near an "expressway," Knoll said, and be shovel ready.

S2A is looking for real estate at a time when interest in Florida's industrial land has never been higher, thanks to a booming ecommerce sector that's eating up warehouse space at an unprecedented clip. The search also comes as economic development officials have lost a critical tool for landing big projects: The state's popular Qualified Target Industry Tax Refund incentive program expired at the end of June.

Incentives that the company would consider include "land discounts, money to train new hires, fast tracking the permitting process and low permitting fees to build," Knoll said.

Glasgow said the S2A factories are in the same vein as a similar project she worked with in St. Johns County: The Link, a high tech community center in the master-planned Nocatee development.

"These two projects (SA2 and The Link) represent the new frontier in development, utilizing smart building technology to support environmentally sustainable development," she said. "I think this is the first of many smart building tech projects to come. It’s the right time for some positive economic development activity and will certainly be welcome to any community."

Still, Glasgow said, economic development is about more than short-term wins. Deals like S2A's "MegaFactories" need to be a good deal for both the company and the community that lands them.

"Hopefully they [S2A] will take a wider view of the complex site selection process to fully vet viable locations and quantify any potential incentives for maximum benefit. If they can show successful projects in other locations, that will help increase their negotiating power," she said. "With local communities eager to attract new companies to help score wins after the recent economic downturn, they will need to show some creativity and flexibility to support a business at this stage in the growth cycle."