Biden Sparks A Surge In Factory Building. Will A Jobs Boom Follow?

The televised debate on the evening of June 27 between President Joe Biden and former President Donald Trump will likely include a focus on the candidates’ policies for job creation and industrial development.

Biden can plausibly argue his administration’s efforts to boost U.S. manufacturing have had a tangible impact in the form of an influx of foreign direct investment and a surge in factory construction. But the anticipated jobs may take a while to materialize in great numbers.

The CHIPS and Science Act offered tax credits and incentives for domestic semiconductor production, while the Inflation Reduction Act provided funding and tax credits for both producers and consumers of U.S.-manufactured clean energy technology products. Both acts were signed into law in 2022.

A report released by Colliers in May 2024 highlighted that the U.S. manufacturing industry is performing strongly in attracting investment. Job creation through FDI in the U.S. increased 6% across all industry sectors in 2023 and investment into the U.S. has increased by 65% since 2019. On a sector basis, manufacturing has attracted the largest volume of FDI due to attractive operating costs and incentives, according to the report.

“We have certainly seen an incremental uptick in FDI, specifically in the manufacturing sector in the U.S., as companies look to reshore or friendshore,” Monty Turner, senior vice president and principal at Colliers Site Selection, says.

Meanwhile, according to the U.S. Census Bureau, annualized manufacturing construction spending reached $233 billion in April 2024, more than doubling in the last two years and nearly tripling in the last three.

This trend is also reflected in data from commercial real estate research firm Yardi Matrix, showing that manufacturing comprises more than 30% of all industrial space under construction. While demand for industrial space has normalized in recent quarters, the long-term outlook remains positive due to the nearshoring and reshoring of manufacturing, according to Yardi Matrix.

This activity has had an ancillary impact on logistics, spurring increases in industrial rents, especially in port markets, as well as job figures in warehousing and storage. After declines in 2023, the number of people employed in sector increased by 4,800 from January to May 2024, according to the Bureau of Labor Statistics.

Atlanta, host city for the presidential debate, is among the beneficiaries of the trend. While most markets have seen their industrial pipeline shrink in the last year, Atlanta has seen an uptick, according to Yardi Matrix, due to the city’s central location relative to the Southeast’s growing population and the major highways that connect the region.

Currently, 5.5 million square feet is underway at logistics and distribution centers in the Atlanta area. Additionally, more than 2 million square feet of space is under construction for manufacturing facilities. Among these facilities are PepsiCo’s 260,000-square-foot expansion in Stone Mountain; Renewal by Andersen’s 638,000-square-foot building at the Cubes at Locust Grove; and the Intuitive Surgical Regional Headquarters, a 750,000-square-foot facility that will make robotic surgical equipment after the firm relocates its southeast operations from Durham.

Although nationwide manufacturing construction has thrived, it hasn’t yet led to significant job growth similar to that seen in warehouse employment during the Covid-era logistics boom. Despite the sector recovering jobs lost during the pandemic, manufacturing employment has been stagnant over the past 18 months, with April 2024 figures only 1.4% higher than in February 2020. This stagnation is partly due to the lengthy delivery times for these facilities, meaning many of the largest projects are still incomplete.

“We anticipate that manufacturing will continue to drive a great deal of activity for industrial real estate, but it will be years before the impacts are fully seen,” Yardi Maztrix’s report states. “New tariffs will increase prices of clean energy technology for consumers but will be a positive for the industrial sector. When projects deliver, we expect manufacturing employment will rise and supplemental firms will take root as well.”

In January 2024, the Biden Administration imposed tariffs on imports of clean energy technology and other technologies from China, including solar panels, wind turbines, battery technologies, semiconductors and electronics.

“Restoring and protecting American manufacturing jobs in the current global economy was one of the chief reasons given by the Biden Administration when announcing the new tariffs,” says Peter Kolaczynski, manager, commercial, at Yardi Matrix. “Plants that build solar panels, electric vehicles, batteries and semiconductors won’t create jobs if they are undercut by cheaper Chinese goods.”