Manufacturing Demand Surges As Biden's Spending Meets Trump's Tough Talk

Manufacturing’s share of industrial space demand is up 354% since 2018, buoyed by federal spending. But despite the change in presidents and a broad reversal of trade policy, factory operators are still looking to set up shop back home.  

Manufacturing demand is projected to account for one-quarter of all industrial requirements by 2028, according to a recent report from JLL. It's part of a broad shift in strategy among manufacturers that's leading production back to the United States even as federal incentives are under threat and the first shots have been fired in a brewing global trade war.

“We looked at ourselves in the mirror during Covid and realized, quite frankly, that we don't make much of anything in our country,” Greg Matter, who leads the Advanced Manufacturing team for JLL, said during a webinar Wednesday. “We learned the word ‘supply chain’ and, today, I'm proud to say that we're going to be learning the word ‘manufacturing.’”

The shift to move some operations back, or at least closer, to the United States accelerated during the pandemic as firms responded to supply chain disruptions by putting operations closer to customers.

But even as the pandemic waned, U.S. manufacturing investment grew. Annualized spending on construction for manufacturing facilities has tripled since 2021, sitting at $235B in November, according to Yardi Matrix. Manufacturers accounted for 19% of industrial requirements in 2024 at 124M SF, according to JLL.

While the Biden administration offered incentives and loans to boost manufacturing, President Donald Trump’s early moves to aggressively expand tariffs while tearing up trade agreements haven’t yet percolated across the industrial landscape. 

But although the efforts of each administration are completely opposed, both presidents’ policies put wind in the sails of U.S. manufacturing, Matter said. 

“It's hard to find something that everyone is in favor of, and I think that the goals of the right and the left are to do more manufacturing in the country, and we're just seeing two different strategies on how to facilitate that,” he said in a Tuesday interview with Bisnow.

Global firms are leveraging incentives in the CHIPS Act, which was signed by former President Joe Biden in August 2022, to start or expand semiconductor production in the U.S. The first round of funding provided $39B in loans and grants to some of the country’s oldest technology firms, including IBM, Intel and Texas Instruments. JLL has tracked more than 540 announcements from manufacturing firms expanding or building new facilities since 2020.

“We have been seeing a dramatic increase since the Inflation Reduction Act, the number of companies that have come in looking for space is not slowing anytime soon,” JLL Global Head of Industrial Research Mehtab Randhawa said.

Trump and Congressional Republicans have threatened to repeal the law, which offers funding for sustainable development and green energy. Some of the program’s grant funding is being held up by the White House, which is looking to renegotiate the funding terms, Reuters reported this month.

Trump also vowed on the campaign trail to rescind any of the $369B in funding for sustainable development from the Inflation Reduction Act that had yet to be spent. The law, signed by Biden a week after the CHIPS Act, has struggled to get off the ground amid a tangle of bureaucracy, and billions of dollars in unallocated grants and loans are at risk.

The sudden shift in policy has sowed some confusion across the manufacturing sector, but Meredith O’Connor, a JLL executive managing director focused on site selection and incentives, said she expected the dollars would eventually get spent even if funds once earmarked for solar power are redirected towards fossil fuels. 

“While the focus on a green revolution will likely slow down, the demand for power will not,” O’Connor said during the webinar. 

Manufacturers, which need large amounts of electricity to power production lines, are competing with data center operators for both space and energy — and the data center firms typically win in a bidding war, even when manufacturers can promise a municipality more jobs. 

Manufacturers, like data center operators, are also being forced to accept longer timelines for power generation as demand for electricity stretches the U.S. grid. 

Data centers require significantly less staff than a factory, and many operators are turning to more rural markets where land is abundant and power is more available.  Eventually, those far-flung properties could be managed remotely with the help of artificial intelligence and advanced robotics. 

But manufacturers need workers on the production line and typically have to be located near population centers where people want to live, making site selection even more difficult.

“We like to say that power can be a two to six-year problem, or even a two to 10-year problem, but people are going to be a forever problem,” Matter said. 

Well over half of U.S. manufacturing space is more than 30 years old, with infrastructure that’s too outdated to support today’s production needs. Instead of refurbishing those spaces, manufacturers are looking to convert recently built warehouses to data centers.

“I've got two projects right now that are active that can't wait for a new building to be built,” Matter said. “We're looking at logistics facilities in some major industrial markets, like Dallas and Atlanta, and looking at what the pathway looks like to upgrade the power to those buildings.”

Since the passage of the CHIPS Act, the semiconductor industry has committed more than half a trillion dollars to U.S. manufacturing, led by $100B commitments from Intel and Micron Technology, according to JLL. 

While the Department of Energy has been the federal government’s main avenue for investment in power production and manufacturing in recent years, the nexus of activity is now shifting toward the Department of Defense as the Trump administration puts more of a focus on national security, Matter said. 

To offset higher domestic production costs, manufacturers are expected to leverage robotics and AI, with the U.S. already lagging far behind other advanced economies in utilizing automation to control costs, according to JLL. 

Matter said the country is at the start of what he expects will be a decades-long effort to reinvigorate the manufacturing sector. 

“We're really in the early stages now," he said. “It's going to be a bigger component of demand, and it's going to take decades to rebuild this industrial base.”