The nation is in the midst of a manufacturing renaissance. The last two presidential administrations have been laser focused on creating policy that will bring manufacturing facilities—and their jobs—back to the US. The prior administration worked to stimulate manufacturing through The CHIP Act and The Inflation Reduction Act, both of which provided different financial incentives and tax credits for manufacturing in specific industries, like semi-conductor production and clean energy. The current administration built several key tax benefits into the July 2025 reconciliation bill to support domestic manufacturing. Both had the same goal: to increase manufacturing in the US.
The policy initiatives are working. From 2021 to 2024, manufacturing facility construction more than doubled in the US. The incentives provided by the reconciliation bill are expected to create even more opportunities in manufacturing, driving growth in 2026 and beyond.
A New Perspective for Industrial Developers
For industrial developers, the trend toward manufacturing is a significant shift. For the last two decades, warehouses and last-mile facilities that support ecommerce have accounted for almost all of the activity in the industrial market. Before 2021, the warehouse and distribution sector generated more than 90% of industrial demand, and in the height of the pandemic, warehouse and distribution generated more than 95% of demand. Policy changes have begun to reverse those numbers, and now experts expect that manufacturing will account for 30% of industrial demand by 2028.
The impact is already manifesting. In 2023, manufacturing demand increased to 13% of total industrial demand, and last year, manufacturing demand accounted for nearly 19% of demand. Regionally, the increase in manufacturing demand can be even more significant. Phoenix, in particular, has become the manufacturing center of the West Coast, with demand for facilities increasing 385% since 2020. Atlanta and Savannah and the Mid-Atlantic regions are also emerging as modern manufacturing hubs as a result of increasing demand.
While the ecommerce vertical continues to dominate, the clear resurgence of manufacturing is creating new opportunities for industrial developers to break ground. JLL research notes that companies are trying to reduce overreliance on global supply chain networks and instead focus on proximity to customers. However, the availability of modern manufacturing facilities remained constrained in key markets, providing an opportunity for new construction to meet demand.
The Reconciliation Bill Adds New Benefits
So far, the boost in manufacturing demand and new construction has been driven by Biden-era policy, like The CHIP Act and The Inflation Reduction Act. Those policies contributed to that substantial increase in manufacturing facility construction investment noted above. This year, manufacturing construction actually declined, according to research from Deloitte, as a result of policy uncertainty, tariffs and the renegotiation of trade deals. However, the reconciliation bill passed by Congress in July 2025 has additional incentives for manufacturers that are expected to offset tariffs and reignite the upward trend of manufacturing demand in 2026.
The 2025 reconciliation bill has several benefits for manufacturers, but the bonus depreciation on equipment purchases is the most significant. The bill allows for 100% bonus depreciation for equipment and machinery and restores full expensing for research and development. These benefits were available under the original Tax Cuts & Jobs Act of 2017, but were set to expire this year. The tax incentive is available only to companies involved in the “substantial transformation of the property comprising the product,” or in other words, manufacturers.
The bill includes other changes that will ultimately help manufacturers. It permanently extended the qualified business income deduction at 20% and expanded the 100% bonus depreciation rule to include a 100% deduction for qualified manufacturing production property. These new tax benefits along with other economic incentives, like lower interest rates, will help continue to drive manufacturing demand in the US.
Investment in Modern Facilities
Manufacturing demand is increasing—great news—but it’s important to qualify the demand. Manufacturing facilities should no longer evoke a picture of a building with billowing smoke. Modern manufacturing facilities are tech-enabled smart houses that have agent-like AI, cloud computing, sensors and automated hardware. These are the facilities that modern manufacturers need when they reshore operations to the US—and it is where investment is heading. A Deloitte survey found that the vast majority of manufacturing executives plan to invest at least 20% of their budget on smart manufacturing initiatives with plans to target foundational tools and technologies. These tools will help manufacturers remain competitive and agile.
New facilities should reflect the technology needs of modern manufacturers. The facilities need to be outfitted with the technologies to support manufacturers grow and expand their business in the wake of reshoring, evolving global supply chains and new trade agreements that are creating massive cost uncertainty. Those are the facilities that are in limited supply and the ones that will see the most demand.
Leaders in the development field will benefit from having an advanced tech stack that can help take advantage of legislative opportunities and drive business growth. Northspyre provides commercial real estate developers with the same type of advanced technologies that manufacturers need to advance their business. The end-to-end development platform has been proven to optimize project performance through smart budgeting tools, predictive analytics, automation and financial modeling. In the end, these features help developers reach their targeted outcomes on a new development project and mitigate risk. Manufacturers are looking for the same resiliency through technology in their buildings. Policy is creating an opportunity for manufacturers, but commercial real estate developers can deliver the spaces that manufacturers need to take advantage of that opportunity and thrive.
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