The world of manufacturing is undergoing a seismic shift. After decades of offshoring, companies are increasingly bringing production back to the United States in a trend known as reshoring. This movement is driven by a confluence of factors, from rising labor costs overseas to concerns about supply chain resilience in the wake of the COVID-19 pandemic. As the reshoring wave gains momentum, it’s creating exciting opportunities for investors who understand the dynamics at play and can position themselves to capitalize on this transformative trend.
At Phoenix Industrial Redevelopment (PIR), we recognized the potential of the reshoring movement early on. We saw that the shift towards domestic manufacturing was not just a short-term reaction to the pandemic, but rather a fundamental realignment of global supply chains that would have long-lasting implications for the U.S. industrial real estate market. That’s why we’ve made reshoring a key pillar of our investment strategy, focusing on acquiring and repositioning the types of properties that are best positioned to benefit from this trend.
The Reshoring Revolution
To understand PIR’s approach, it’s important to first examine the forces driving the reshoring trend. For years, offshoring was seen as a way for companies to reduce costs by taking advantage of lower wages in countries like China and Mexico. But in recent years, the calculus has begun to change. As wages in these countries have risen and automation has become more prevalent, the cost advantages of offshoring have diminished. At the same time, companies have become more aware of the hidden costs of long supply chains, from increased inventory requirements to the risk of disruptions from natural disasters or geopolitical events.
The COVID-19 pandemic brought these risks into sharp relief. As factories in China and other countries shut down and transportation networks were disrupted, many companies found themselves struggling to obtain the parts and products they needed to keep their operations running. This experience highlighted the importance of having more resilient and flexible supply chains, with production located closer to end markets.
But the reshoring trend is not just about risk mitigation. It’s also about taking advantage of the many benefits of domestic manufacturing. By producing goods closer to their customers, companies can reduce lead times, improve quality control, and respond more quickly to changes in demand. They can also take advantage of the advanced manufacturing technologies and skilled workforce that the U.S. has to offer, from 3D printing and robotics to cutting-edge materials science.
The Ripple Effect
As large manufacturers bring production back to the U.S., they are relying on a network of smaller suppliers and service providers to support their operations. This is creating a ripple effect throughout the industrial ecosystem, as these smaller companies expand to meet the growing demand for their products and services.
Take the automotive industry, for example. As major automakers like Ford and GM announce plans to reshore production of key components like batteries and electric motors, they are partnering with a host of smaller companies to supply the necessary parts and materials. These companies, in turn, are expanding their operations and hiring new workers to keep up with the increased demand.
The same dynamic is playing out in other industries as well, from aerospace and defense to medical devices and consumer products. As large manufacturers invest in new domestic production facilities, they are creating opportunities for smaller companies throughout their supply chains. This is driving demand for the types of flexible, well-located industrial spaces that these companies need to grow and thrive.
PIR’s Reshoring-Focused Strategy
At PIR, we’ve tailored our investment strategy to capitalize on this reshoring-driven demand. Rather than focusing on large, single-tenant manufacturing facilities, we’re targeting the types of small-bay multi-tenant industrial properties that are ideally suited for the needs of smaller suppliers and service providers.
Our sweet spot is properties in the 20,000 to 100,000 square foot range with workspaces from 1,000 to 5,000 square feet. We acquire properties located in key markets with strong manufacturing ecosystems and transportation infrastructure. These properties offer the flexibility and affordability that smaller companies need, with the ability to customize spaces to meet their specific requirements. By aggregating these properties into a diversified portfolio, we’re able to provide investors with exposure to the growth potential of the reshoring trend while mitigating risk through diversification.
Our value-add approach involves making targeted improvements to these properties to enhance their appeal to reshoring-focused tenants. This could include upgrading building systems to support advanced manufacturing technologies, improving site layout and accessibility for logistics and distribution, and adding amenities like shared equipment infrastructure and high-speed internet connectivity. By creating modern, efficient industrial spaces that are tailored to the needs of today’s manufacturers, we’re able to attract and retain high-quality tenants and drive long-term value for our investors.
The PIR Edge
At PIR, we believe our focus on reshoring-driven demand sets us apart in the industrial real estate market. While many investors are chasing large, trophy assets in primary markets, we’re taking a more targeted approach that is tailored to the specific needs of smaller manufacturers and suppliers. This allows us to acquire properties at attractive valuations and add value through our expertise in repositioning and leasing to reshoring-focused tenants.
Our team brings decades of experience in real estate investing with a deep understanding of the unique requirements of manufacturing tenants. We’ve built strong relationships with key players throughout the industrial ecosystem, from site selection consultants and economic development agencies to real estate brokers and contractors. This allows us to source off-market deals, navigate complex transactions, and execute our value-add strategies efficiently and effectively.
We’re also committed to a long-term, partnership-driven approach to investing. Through our FixedFunds Program®, we offer accredited investors the opportunity to participate in the potential of our reshoring-focused strategy, with the benefits of fixed income and the potential for attractive returns. The FixedFunds Program provides two investment options:
- Income Notes: 8% annual return, paid monthly
- Growth Notes: 8% annual return, compounded monthly
Both options have a 5-year term with a 2-year extension option and a minimum investment of $50,000. This program allows investors to gain exposure to our diversified portfolio of industrial properties that are strategically positioned to benefit from the reshoring trend, all while enjoying the stability of fixed returns.
We believe this approach aligns the interests of our investors with PIR’s strategy, creating value and driving positive impacts in the communities where we invest.
The Opportunity Ahead
As the reshoring trend continues to gain momentum, we believe the opportunities for investors in the industrial real estate market will only continue to grow. With our focus on multi-tenant properties in key markets, our value-add approach, and our commitment to long-term partnerships, we believe PIR is well-positioned to capitalize on this exciting and transformative trend.
For accredited investors seeking to participate in the potential of the reshoring wave, the PIR FixedFunds Program® offers a unique opportunity to gain exposure to a diversified portfolio of industrial properties that are strategically positioned to benefit from this trend. With attractive fixed returns and the satisfaction of supporting the growth of domestic manufacturing, we believe the FixedFunds Program is an investment worth considering for those looking to ride the wave of reshoring in the years ahead.
