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Getting closer to customers has become a major priority for manufacturers that are looking to reduce transportation costs and delivery times. Expectations for faster delivery have risen thanks to the “Amazon effect.” Add in disruptions from recent years — the pandemic, geopolitical instability, extreme weather, trade issues, labor unrest — and you have a mandate for the increasing realignment of supply chains, production and sourcing.
And the demand reflects the attractions of proximity. According to JLL’s most recent U.S. Industrial Tenant Demand Study, manufacturing space requirements have grown 354% from 2018-2024. They’re projected to account for 18.8% of demand in 2024-2025, up from 6.5% in 2018-2019.
Within the broader supply chain strategy, the process of evaluating sites for manufacturing takes in many variables. Labor availability, from associates and assemblers to engineers and programmers, as well as prevailing wages are of course major factors. Logistics costs, the business and tax climate, incentives and livability of an area are also critical.
Power capacity has grown in significance for advanced manufacturing as electricity demands have surged. Robotics, 3D printing, IoT, laser cutters and data centers all contribute to the power load. In fulfillment centers, it’s more robotics, automated sortation and retrieval (AS/RS) systems, and electric trucks and forklifts.
To sum it up, whether it’s for a greenfield project or a retrofit, the trend towards regionalization is a major driver. As companies reshape their supply chains in response to evolving global conditions, proximity to customers is key, along with diversified sourcing, power capacity and access to the right kind of labor.
Through the entire process from planning to execution, an experienced commercial real estate firm with exceptional reach, resources, technology and expertise can prove an invaluable strategic partner.
Through deep expertise and sophisticated tools, an experienced commercial realtor can provide a cross-disciplinary approach to engagements on supply chain strategy and execution in manufacturing. They help clients make smarter decisions matched to their business needs and market demands.
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