February 1, 2024

The NAIOP Research Foundation commissioned this report, authored by Lisa DeNight and Elizabeth Berthelette with Newmark, to examine the trends behind reshoring and nearshoring and to evaluate how related investments in manufacturing are affecting North American markets for industrial real estate and its two largest components: warehousing/logistics space and manufacturing space.

The study draws from secondary sources, Newmark market data and interviews with commercial real estate professionals to identify major new manufacturing announcements, quantify related construction activity and evaluate effects on adjacent real estate markets.

• Firms in the high-tech, automotive, energy and biomanufacturing sectors are making the largest investments in new manufacturing in the U.S. New construction is expected to expand the footprint of U.S. manufacturing space by 6 to 13 percent over the next ten years.
• New manufacturing plants have been announced in every U.S. state, but investment has been concentrated in Midwestern and Southeastern states. Most new construction is expected to be in secondary or tertiary market locations that can offer adequate supplies of affordable energy and skilled labor.
• Most of the new manufacturing construction will be build-to-suit or owner-built, but demand will also exist for speculative manufacturing space. The expansion of domestic manufacturing is also expected to generate demand for logistics space and other types of commercial real estate in the communities surrounding new plants. The amount of additional demand generated by this construction will vary depending on a project’s sector, existing supply chains and local market dynamics.
• Several of the trends driving onshoring in the U.S. are also contributing to nearshoring of manufacturing to Mexico and Canada, with Mexico attracting the most nearshoring investment. This investment is generating demand for logistics and complementary manufacturing facilities along the U.S. border with Mexico, pushing down vacancy rates and spurring new construction near key border crossings such as Laredo, Texas.