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Push For Supply Chain Resilience, Reshoring Likely To Boost Industrial CRE

by Mary Rooney | Jun 02, 2020

Article from BISNOW

Many U.S. manufacturers are now evaluating how to bring at least some of their operations and real estate footprints closer to home. Nearly two-thirds of North American manufacturers say they are likely to bring production and sourcing back to the continent, a new survey by industrial data and tech company Thomas shows. The company surveyed over 1,000 of the continent's manufacturing and industrial suppliers, with the help of business-to-business data gathered on Thomasnet.com.

The U.S. manufacturing sector had seen a minor return stateside in recent years, with big domestic companies bringing some operations back to the U.S., or "reshoring." 

But since March, the share of North American manufacturers who say they are interested in bringing their operations home has leapt 10 percent to 64 percent, Thomas found. Some companies had already been disheartened by high shipping and logistics costs associated with offshoring. 

Colliers International Senior Vice President Gregory Healy, an expert in location strategy and supply chains, said a push for supply chain resilience will lead to an additional 750M square feet to 1B square feet of industrial space in the U.S. alone, as companies look to foster safety stocks of inventory in the already growing U.S. industrial CRE sector.  Companies also don't want to abandon the still-growing economies and middle classes of China and other Asian countries, Healy said, adding that they will likely pursue what he refers to as a "China-plus-one model."

Industries most likely to see accelerated reshoring include transportation and construction, according to Thomasnet.com President and CEO Tony Uphoff. Automation might encourage reshoring while making it much easier. Of the Thomas survey's 1,000-plus respondents, which have revenues ranging from less than $4.9M to over $50M, about 25 percent are considering expanding industrial automation as a result of the pandemic. An additional 20 percent already had such systems in place. 

As automation technology has advanced, the economics of reshoring have been attractive, Uphoff said. Boosts in productivity per square feet have also allowed some manufacturers to avoid many shipping and logistics costs, by finding smaller facilities closer to customers. 

Read more at BISNOW

 

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