Incentives have long played a pivotal role in corporate site selection. But in today’s competitive and compressed market cycles, the definition of a “valuable” incentive has fundamentally shifted. Companies aren’t just chasing tax abatements anymore—they’re looking for execution certainty, workforce readiness, infrastructure alignment, and market access.

For corporate real estate (CRE) executives evaluating sites in Southern Arizona, incentive packages must support real operational needs and reduce project risk—not merely offer short-term fiscal benefits.

Why Tax Breaks Aren’t Enough Anymore

Historically, municipalities and states relied on tax abatements, credits, and rebates to lure corporate investment. While these tools still have their place, companies are now weighing them against more tangible execution risks and delays. A tax credit loses its appeal if:

• Permitting delays set the project back by 18 months
• Local labor cannot support a full-scale ramp-up
• Utility infrastructure fails to meet operational loads
• Rail, road, or port access underperforms timeline needs

In this new landscape, CRE executives are asking sharper questions: What reduces execution risk? What enables speed to market? What supports long-term scalability?

These questions are increasingly relevant in a global environment shaped by supply chain disruptions, labor volatility, and evolving trade policy.

A New Era of Manufacturing and Nearshoring

Tariff pressures and geopolitical instability are leading more companies—especially in the industrial and technology sectors—to reassess their global manufacturing strategies. The result is a wave of reshoring and nearshoring activity, as companies seek to bring production back to the U.S. or closer to domestic markets.

Southern Arizona, particularly Tucson, is positioned at the center of this movement.

With its proximity to California ports, its access to major interstate corridors (I-10 and I-19), and its direct logistical connection to Mexico’s growing manufacturing hubs, Tucson offers a compelling location for companies aiming to serve both North American markets and global export routes. The region provides:

• Access to maquiladora supply chains across the border
• Lower-cost industrial land relative to coastal metros
• Close proximity to West Coast distribution centers
• A binational talent pool fluent in cross-border trade and compliance

For companies reshoring due to tariffs or seeking redundancy in their supply chains, Tucson combines cost advantages with infrastructure and trade access—critical components of any incentive package in 2025.

What Modern Incentives Look Like

Today’s incentive packages focus less on tax savings and more on project enablement. The most competitive offers now include:

1. Expedited Permitting and Regulatory Support

In fast-paced industries, time is the new currency. Southern Arizona communities that offer fast-track permitting, pre-zoned sites, and coordinated inter-agency support help companies stay on schedule—often more valuable than any cash-based incentive.

2. Infrastructure Investment

Infrastructure readiness is a make-or-break factor. Southern Arizona jurisdictions offering public investment in utility upgrades, road improvements, stormwater mitigation, and rail access are increasingly favored. These enhancements reduce upfront capital costs and increase reliability during ramp-up and operation.

3. Workforce Development and Training

Tucson’s growing higher education and technical training ecosystem—anchored by institutions like Pima Community College and the University of Arizona—plays a vital role in supporting workforce incentives. Programs that offer:

• Customized workforce training
• Hiring reimbursements or wage subsidies
  
• Pre-apprenticeship pipelines in trades, logistics, and manufacturing…help de-risk labor supply and accelerate hiring timelines.

4. Sustainability and Clean Energy Alignment

As ESG performance becomes a board-level priority, CRE teams are placing value on sites that offer renewable energy access, water reuse infrastructure, and support for LEED or other certifications. Tucson’s abundant solar resources and evolving utility programs offer promising advantages in this space.

A Smarter Way to Evaluate Incentives

The most successful CRE teams in 2025 are adapting how they assess incentive offers:

• Old Approach New Approach
• Focus on tax savings Prioritize speed, certainty, and infrastructure
• Treat incentives as last-minute Engage in early-stage planning
• Assume “all incentives are equal” Evaluate enforceability and timing
• View incentives as bonus Integrate into long-term cost modeling

Red flags to watch for include over-engineered packages with burdensome compliance, political volatility that puts funding at risk, and vague timelines or clawback terms. Savvy CRE executives are now requiring side letters, implementation agreements, and clear timelines to ensure delivery and mitigate risk.

Final Thoughts

Incentives in 2025 are no longer about who offers the biggest check. They’re about who can solve problems—who can get a project built, staffed, and operational on time and on budget. In Southern Arizona, that means a new level of alignment between public partners and private enterprise.

For companies considering reshoring, nearshoring, or expansion in response to global trade shifts, Tucson offers a uniquely strategic position—geographically, economically, and operationally. But success requires moving beyond outdated assumptions about incentives and instead building packages that align with actual business needs.

For CRE executives, brokers, and site selection teams, that means asking not just “what’s being offered?” but “how will this help us execute?” In Southern Arizona’s evolving landscape, that’s the question that separates good deals from great ones.

To learn more about how Southern Arizona can be a high-value destination for your manufacturing, logistics, or technology operations, reach out to the Commercial Real Estate Group of Tucson. We specialize in helping companies secure the right location, negotiate the right terms, and unlock meaningful incentives that support long-term success.