Reshoring Set to Boost Future Industrial development

Reshoring Set to Boost Future Industrial development

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The most recent national industrial report by CommercialEdge highlights a continued slowdown in the industrial development pipeline after two years of unprecedented delivery levels: For six consecutive quarters, completions have outpaced new starts, leading to a noticeable contraction. Even so, looking ahead, the report forecasts a gradual uptick in the new development pipeline in the next few years, though not at the record levels seen in 2021 and 2022.

A key driver of this anticipated growth is the reshoring of manufacturing, which is poised to significantly affect industrial real estate supply. Recent data highlights this trend: Between 2018 and 2021, manufacturing accounted for about 7% to 8% of the annual industrial square footage started. Then, this share surged to more than 13% in 2022 and 2023 — and it’s already reached 16.1% for 2024.

Supporting this shift, U.S. Census Bureau data reveals that annualized construction spending on manufacturing facilities hit $234.1 billion in May — more than double the amount from two years ago and triple that of May 2021. Although the growth pace is stabilizing with May’s figures showing a 20.3% year-over-year increase and a 1.3% month-over-month rise, the effect remains substantial.

Chip Plant Spending Spree Continues With $2B Phoenix Project

This resurgence in manufacturing is exemplified by the current chip plant spending spree in the U.S. One notable example is the Phoenix market, which leads the nation with 39.07 million square feet of industrial space under construction, accounting for 9.8% of the region’s existing stock. Here, Amkor Technologies is making a significant investment by planning to build the largest outsourced semiconductor assembly and test facility near Peoria, Ariz. The company plans to invest approximately $2 billion, create around 2,000 jobs and construct a facility covering 55 acres with more than 500,000 square feet of clean room space. Production is targeted within three years.

Furthermore, Amkor recently signed a non-binding preliminary memorandum with the U.S. Department of Commerce under the CHIPS and Science Act that could provide the project with up to $400 million in direct funding and $200 million in loans.

AI Driving Manufacturing Boom in Bay Area

As the semiconductor sector ramps up, the Bay Area continues to stand out as a prime market for industrial investment, fueled by a wave of new technological advancements. Notably, this demand for advanced manufacturing space has elevated the Bay Area to the top market in the nation for sales volume and prices as of July. Traditionally not considered an industrial hub, the region has already logged nearly $2.3 billion in transactions through June with an average price of $570 per square foot.

Currently, more than 4 million square feet of industrial space is under development in the Bay Area with roughly 1.2 million square feet dedicated to advanced manufacturing facilities. These facilities cater to companies in the clean tech, electric vehicle, and AI industries that benefit from proximity to tech firms and the region’s rich talent pool.

One of the most notable industrial transactions in the Bay Area market this year, as highlighted by Bisnow, was server manufacturer Supermicro’s acquisition of a 292,000-square-foot facility for $80 million. This acquisition underscores the region’s attractiveness for tech-driven manufacturing.

For more details and additional information, consult CommercialEdge’s complete national industrial report.

From manufacturing to distribution properties, CommercialCafe has a wide selection of industrial space listings for rent and sale. Check out the inventory in top markets across the U.S. or use our search function to search by location, price range or amenities.





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