developed, manufactured, and made available for consumers to purchase. Companies with reduced TTM have a competitive advantage, increased rev- enue, higher customer satisfaction, greater cost efficiency, and increased ability to adapt to customer demand. In the apparel industry, reshoring production helps companies cut lag time from their historic practice of or- dering products three to five months in advance and hoping they sell.
$280 billion available in new funding for the domestic research and manu- facturing of semiconductors in the U.S. In addition, the demand for solar panels, robotics, drones, and chips continues to grow. NO. 3 CHEMICALS. Pharmaceutical companies producing vaccines and treatments require reliable sourcing for chemicals. Renewable fuels and the production of batteries also re- quire chemicals. HOW REAL ESTATE INVES - TORS CAN CAPITALIZE The reshoring trend has led to job growth and will continue to contribute to employment opportunities in manufacturing jobs, research and development, and other supporting industries. According to the U.S. Treasury Department, real manufacturing construction spending has doubled since the end of 2021. The St. Louis Fed reports that U.S. manufacturing added “roughly 1 million workers be- tween 2010 and 2021.” The increase in domestic production and manufac- turing job growth has a ripple effect on industrial real estate and other asset types. This all spells opportu- nity for the savvy real estate investor. Southern and midwestern markets account for a combined 76% of jobs brought back due to the lower cost of land, labor, and skilled workforces. Reshoring has generated an increased demand for industrial space. The increased demand is driven by a few distinct factors: NO. 1 FACTORY EXPANSION. Com- panies reshoring their manufacturing operations require additional space to accommodate new production lines, equipment, and workforce. To meet
this demand, industrial parks and vacant manufacturing facilities are being repurposed. NO. 2 SUPPLY CHAIN LOCALIZATION. Reshoring involves clustering suppli- ers and distribution within reach of the customer. This localization neces- sitates the creation of industrial clus- ters or supply chain hubs near people across the U.S., leading to the devel- opment of new industrial spaces or the expansion of existing ones. NO. 3 MODERNIZATION AND AUTOMATION. Companies adopt manufacturing technology and automation systems to make reshoring cost-effective. These innovations require space for the installation of robotic systems and flexible layouts. NO. 4 WAREHOUSES AND DISTRIBUTION CENTERS. Reshoring drives a need for the warehouses and distribution centers necessasry for the efficient inventory management that supports one-day or same-day shipping to customers. Although the 2020 trend was to stock up on 2-ply, it’s looking like 2023 and beyond may be the time to stock up on industrial property. Unlike the pandemic, this looks more like a material shift than a phase. •
WHAT INDUSTRIES ARE RESHORING? The interest in reshoring
sparked by the pandemic has been perpetuated by the war in Ukraine and recent government incentives and federal policies (e.g., CHIPS and Science Act , Inflation Reduction Act, and bipartisan infrastructure bill). Given the recent advancements in automation and robotics, companies partner technology with a domestic workforce to be more cost-effective and reduce their global supply chain exposure. In the first quarter 2023 S&P 500 earnings transcripts, talk of reshoring was up 128% from the same time last year. Which industries are pushing this trend? According to the Reshoring Initiative 2022 Data Report, here are the top three sectors for reshoring production: NO. 1 ELECTRICAL EQUIPMENT. The top product in this category is the production of electric vehicle batter- ies. Federal incentives for electric vehicles have led to explosive growth in investments in EV batteries and charging stations. Job growth in this sector is up by 42%. NO. 2 COMPUTERS AND ELECTRON- ICS. The Chips Act of 2022 made
Neil Timmins is a real estate syndicator, broker, and educator. He generates passive income opportunities through industrial real estate in “Cash Flow
Country,” the Midwest. After spending years invest- ing in houses and $300 million in transactions, he graduated to investing in commercial real estate. Now he educates others on how to do the same. Neil hosts the podcast “Passive Real Estate Invest- ing with Mavericks.” His first book “Unicorn Hunting for Real Estate Investment Companies: The Com- plete Hiring Funnel” was released in 2021.
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