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Phoenix leads in manufacturing construction

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Dive Brief:

  • Phoenix is the top growth market in the U.S. for manufacturing construction, with the most new major projects and projected new jobs, according to New York City-based real estate firm Newmark Group. Its January Manufacturing Momentum report surveyed domestic manufacturing announcements totaling at least $100 million since 2020 through the third quarter of 2023.
  • The Phoenix metro area saw 14 major manufacturing announcements during that period, while Atlanta nabbed the second-most with seven megaprojects, followed by Austin, Texas, and Detroit with six each. Phoenix’s new facilities are expected to generate nearly 15,500 advanced manufacturing jobs.
  • As federal funding from the $52 billion 2022 CHIPS and Science Act flows, more than 160 jurisdictions across the U.S. are set to receive at least one new manufacturing facility, per the report. The multibillion-dollar investments range from biotechnology facilities and chip plants to electric vehicle battery factories and clean energy projects.

Dive Insight: 

Major manufacturing projects are cropping up around where they have the labor pool to do so, Newmark Group found. Different stages of manufacturing operations — research and development, pilot plant and mass production — require different types of labor, and must be located accordingly. 

R&D facilities tend to be smaller and located near specific talent such as universities, but at the mass production level, they need a deep labor pool and access to an abundant power supply. Locations with affordable land, lower construction costs, favorable tax structures and financial incentives are most attractive for these types of manufacturing facility projects, the report found.

The domestic manufacturing sector has been growing around the country since 2020, according to the report, when the COVID-19 pandemic stressed supply chains and exposed vulnerabilities.

“The desire of firms to bring operations closer to consumption, especially in the wake of the pandemic, has been a clear driving force behind considerable sector-specific labor market gains since 2020,” the report said.

Even before the pandemic and new federal funding, Phoenix’s’ stable weather, low utility costs and business-friendly environment attracted an uptick in industrial building over the past seven years, contributing to its moniker “Wall Street of the West.”

Phoenix’s construction market volume is nonetheless forecasted to dip 13.4% this year, mostly dragged down by the residential sector. Area contractors have also reported difficulties in finding enough labor, forcing them to bring workers from as far as California, as well as concerns about the availability of water.

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