The headlines around domestic manufacturing tend to feature big numbers: billion-dollar semiconductor plants, battery facilities, million-square-foot build-to-suits. Those projects are real, and they are reshaping regional economies. But they are not where most of the resulting real estate demand actually shows up.
When a manufacturer commits to a new U.S. facility, it brings with it a supply chain. Component suppliers, tooling shops, parts distributors, equipment servicers, freight brokers, and specialty contractors all need space near the plant — and almost none of them need 300,000 square feet. They need 4,000. Or 12,000. Or 25,000. That demand lands in multi-tenant shallow-bay industrial parks, and it is beginning to show up clearly in the leasing data.
For most of the past decade, industrial leasing was a story about third-party logistics providers and e-commerce distribution. Manufacturing was a small share of the total.
That has changed. According to CBRE’s Q2 2026 U.S. Industrial & Logistics Market Report, demand from manufacturers rose to more than 12% of total leasing volume in the first half of 2026 — while 3PLs, still the largest single category, saw their share of activity decline as other sectors became more active. CBRE has noted that this is the first sustained period in which manufacturing has represented more than a single-digit share of overall leasing.
The pipeline behind that shift is substantial. Link Logistics research has tracked more than 250 onshoring, reshoring, and nearshoring announcements since 2021, representing roughly $1 trillion in planned investment across electric vehicles and batteries, semiconductors, pharmaceutical production, and aerospace and defense. Manufacturing-related leasing — space used for sub-assembly, parts storage, and component servicing — rose 35% to 45% in some regions in 2025, according to CBRE.
CBRE also expects data center construction, national infrastructure projects, and defense spending to drive additional manufacturing-adjacent demand in coming quarters. Every major data center build generates its own requirements for electrical components, cooling equipment, and maintenance parts — and those requirements are met from local warehouse and flex space, not from the data center itself.
The mechanics of U.S. trade policy have shifted repeatedly over the past eighteen months. In February 2026, the Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the President to impose tariffs, invalidating a significant portion of the tariff structure then in place. Within hours, the administration moved to reimpose duties under other statutory authorities, and tariffs under Section 232 and Section 301 were unaffected by the ruling.
For businesses making sourcing and inventory decisions, the practical takeaway has been consistent regardless of which statute applies: tariff exposure is a durable planning assumption rather than a temporary condition. Companies have responded in two ways that both consume industrial space.
The first is inventory. The shift from “just in time” to “just in case” means carrying deeper stock, which requires more square footage to hold the same product line. For a small distributor, that is not a new distribution center — it is an additional 2,000 to 5,000 square feet.
The second is domestic sourcing. As manufacturers diversify away from single-country supply chains, they increasingly buy from domestic suppliers, and those suppliers need production and warehouse space of their own. Tier-2 and Tier-3 suppliers rarely occupy purpose-built facilities. They lease existing multi-tenant space.
Geography matters here, and the pattern is not the coastal port story of the last cycle.
CBRE’s outlook points to labor availability and power access as the primary drivers of manufacturing-related expansion, favoring the Midwest, mid-Atlantic, and Southeast. Markets including Louisville, Nashville, Cincinnati, Chicago, Detroit, and Kansas City are identified as particularly attractive for occupier expansion tied to manufacturing operations.
Texas and the Southeast continue to lead on raw volume. Dallas-Fort Worth recorded 17.9 million square feet of net absorption in the first half of 2026 — the highest total of any U.S. industrial market — pushing vacancy to 9.3%, a seventh consecutive quarterly decline from its 2024 peak, according to JLL Research. Cushman & Wakefield credits onshoring and nearshoring for outperformance across inland hubs including Dallas-Fort Worth, Phoenix, Atlanta, and the Midwest.
These are established industrial markets with deep local business communities, not speculative frontier locations. That distinction matters for the tenant base that occupies small-bay space.
What makes this demand shift meaningful for owners is that the small-bay inventory absorbing it is effectively fixed.
National industrial construction completions fell to 47.9 million square feet in Q2 2026 — the lowest quarterly total since 2016, per CBRE. Within that already-reduced pipeline, shallow-bay product represents a small fraction. Land costs, zoning constraints, and the per-square-foot economics of small-unit construction continue to make ground-up shallow-bay development difficult to justify in most infill locations.
The result is visible in availability. Small-bay infill warehouse properties are running at roughly 5.5% to 6% availability nationally, according to Link Logistics — meaningfully tighter than the national industrial vacancy rate of approximately 6.8% to 6.9%, and dramatically tighter than the large-format segment, where availability remains well into the high single digits.
When new demand arrives in a segment where supply cannot respond, the adjustment happens through rent and occupancy rather than through new construction.
Avistone’s strategy is built around this dynamic. We acquire multi-tenant shallow-bay and flex industrial parks in established U.S. markets — including Texas, the Southeast, and the Midwest — where tenant demand is local and durable and where new competitive supply is structurally constrained.
Owning the right assets is the starting point. Value creation comes from active management: modernizing building exteriors and common areas, improving functionality and curb appeal, and reconfiguring suites as space turns over to match what tenants actually need. In many older parks, that means converting excess office square footage back to usable warehouse space — a change that serves the supplier, contractor, and light-manufacturing tenants driving today’s demand, and that supports closing the gap between in-place rents and market.
A diversified rent roll of local businesses, NNN lease structures that pass operating costs through to tenants, and a supply base that cannot easily expand combine to produce the risk profile our investors are underwriting.
The return of domestic manufacturing is usually measured in plant announcements and capital commitments. For industrial real estate, the more relevant measure is the footprint those plants create around them — hundreds of suppliers, servicers, and distributors that need modest amounts of functional space in established locations.
That demand is arriving in a segment where supply has not grown in decades and is not growing now. For owners of well-located multi-tenant industrial parks, that is the opportunity worth paying attention to.