#183 – Inside Our Industry – Manufacturing Momentum – Scaling for Success in Key Markets

Posted on | Inside Our Industry

Two weeks ago we shared the first part of three parts of an Industrial Research report from Newmark. Part 2 of their three-part series has been release and we are sharing highlights from it below.

Manufacturing Momentum – Scaling for Success in Key Markets

In this installment, we delve deeper into unique trends catalyzing growth, site selection considerations, and which markets are poised to benefit the most.

Rapid expansion in North America’s advanced manufacturing sector promises to deliver significant economic impact to newly selected sites and their surrounding regions through added jobs, infrastructure improvements and substantial capital investments. New clusters are forming and existing clusters further maturing as a record number of new industrial projects are set to begin in over 160 metro and micropolitan areas in the next decade, as captured in Newmark Research’s survey.

Successful advanced manufacturing operations require a combination of critical factors, with the cost and access to labor, utilities (especially power), real estate and ease of doing business taking precedence over most other considerations. Proximity to colleges, universities and trade schools, incentives and a strong supply chain are also of importance. The specific type of operation and company stage will impact the site selection process as well.

Although surveyed announcements fall in a wide variety of places, the regions poised to benefit most from advanced manufacturing investments are predominantly secondary and tertiary metros near major markets with higher-than-average levels of preexisting advanced manufacturing talent, relatively lower-cost energy and abundant, affordable land.

While the top growth markets demonstrate the forecasted impact of mega investments, the advanced manufacturing narrative is not all about gigafactories. The average square footage of the mega investments proposed is 1.45 million SF, but the average domestic manufacturing leasing deal done in the past three years is approximately 45,000 SF, representing a panorama of space, labor and locational requirements within the manufacturing sector.

Access to a skilled workforce is one of the most critical factors for manufacturing users. In the U.S., there are currently almost 13.0 million manufacturing workers, with the four key advanced manufacturing sectors identified in this series (high-tech/digitalization, automotive/transportation, energy, and biomanufacturing) accounting for over 30% of all jobs in this industry. Structural shifts in domestic production over the last 50+ years led to stagnant growth in overall manufacturing employment, and recent employment gains have been concentrated in the Automotive/Transportation and Biomanufacturing industries – both sectors that were seeing burgeoning manufacturing growth even prior to the passage of recent federal spending programs. The desire of firms to bring operations closer to consumption, especially in the wake of the pandemic, has been a clear driving force behind considerable sector-specific labor market gains since early 2020. Following a nearly 12.0% decline – equating to roughly 450,000 jobs – during the pandemic, advanced manufacturing payrolls have increased by more than 600,000 jobs since bottoming, outpacing overall manufacturing job growth.

Full report with charts, maps and graphs.