Hunt Rose, Managing Partner and Director, highlights the growing influence of manufacturing on industrial real estate, emphasizing the multiplier effect. “Manufacturing’s growing influence on industrial real estate will become more evident as we begin to see the multiplier effect of supplier and logistics networks clustering around new manufacturing plants.
Multiplier Effect:
• The development of mega manufacturing developments creates a need for the location or relocation of supplier and logistics networks nearby.
• Estimates state that every 1 manufacturing jobs creates 4-to-5 supplier jobs
• Supplier and logistics needs drive increase demand for existing industrial product and drive further new construction
Multiplier Effect Example – Hyundai plan in Savannah-Hilton Head market:
• Hyundai building 17 million SF EV plant ($5.9 billion)
• This mega plant has already attracted billions of dollars of fresh investment in the market
• At least 18 major suppliers are now in the market as a result of the new manufacturing plant
Manufacturing expansion in the U.S.:
• 100 million SF of manufacturing space delivered since 2022
• 100 million SF under construction currently
• Construction spending up threefold since 2021
Tailwinds:
• Weaknesses exposed in supply chains during pandemic
• Federal government incentives – EV, computer chips, and clean energy technology
• Current administration goal to boost stateside production
Headwinds:
• Land availability
• Access to water, power, and skilled labor
• Trade policy/tariffs creating volatility that could jolt certain manufacturers with significant exports”
Read the full industrial report here