FACTORS TO WATCH: How an Increase in Domestic Manufacturing Could Impact the U.S. Industrial Landscape
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FACTORS TO WATCH: How an Increase in Domestic Manufacturing Could Impact the U.S. Industrial Landscape

As Stonemont continues our expansion into high-growth markets across the country, it’s clear the industrial landscape is beginning to shift. At Stonemont, we’ve consistently had a laser focus on booming e-commerce hubs such as Florida, Texas, and emerging port cities like Savannah and Charleston. With our founders and managing principals having a combined track record of more than 60 years of experience and $20 billion invested, we have a trained eye in spotting industry trends and predicting how the market could change in the next 12 months. 

E-commerce has served as the bread and butter for industrial development the last few years and will continue to play a major role moving forward, but we are beginning to see a significant demand spike for warehouse space by domestic manufacturers from coast to coast. While Stonemont’s broader development strategy specifically focuses on last-mile distribution and big box industrial, it’s worth noting that this time next year, investors could see a wave of manufacturing facilities being built or restructured to suit companies that are creating, storing and distributing goods across local and national transportation networks. And as the population increases, the need for move-in ready warehouse space will only continue to grow.

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A recent report from The Reshoring Initiative finds that 78 percent of the 1.3 million manufacturing jobs returned to the U.S. since 2010 were moved over the last 24 months. It’s imperative for developers to think about fine-tuning speculative development strategies so they can add value and efficiency for major manufacturers that are reshoring or near-shoring operations. Speed is of the essence for almost all of these companies, as is the need for a seamless transition. 

A Changing Political & Economic Climate:

An ever-changing political and economic climate is highlighting a desire for Americans to take control of their own supply chain. This comes as we continuously see delays in deliveries and a back up in goods at our ports, along with other issues that have been exacerbated by the pandemic and recession. Despite these challenges, tenant demand will remain high even during an economic downturn. Record-breaking consumer demand remains so strong that even a recession won’t diminish the continued need for new development, with most analysts predicting a multi-year period before supply can catch up and correct the ongoing imbalance.

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What the Future of Manufacturing Development Looks Like

As this shift to manufacturing happens, it's vital for developers to get into the mindsight of the end-user so they have a clear vision of where they need to build new product. Manufacturers will seek out lower cost markets with good labor fundamentals, a slightly different playbook than the driving factors for logistics or distribution warehousing. A manufacturer follows its purchaser. Auto manufacturers that supply the Big Three will be closer to Detroit or in the Midwest, for example, while Charleston might be a popular landing spot for those looking to be near Volvo and Kuntai. Semiconductor chip manufacturers will also be among the key movers and shakers to watch as evidenced by recent activity from companies like Intel and Samsung. No matter the industry, all of these users are always on the hunt for local economic incentives, another big draw that can differentiate one market from another.

This flight to quality among manufacturing users will force developers to put more thought behind choosing locations with immediate access to major brands, premier labor forces, key logistics hubs and business-friendly environments. At Stonemont, we look forward to expanding our footprint further into these key markets across the country, working with our partners to deliver state-of-the-art projects that will position users for success in the next decade and beyond.

To learn more about Stonemont’s capabilities and ongoing projects, visit www.stonemontfinancial.com.

Author: Avery Dorr

Leila Miles, P.E.

Development Manager at Stonemont Financial Group

1y

Awesome article!

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