Lawmakers in Washington, D.C., rarely agree on much, but supporting American manufacturing is a rare point of bipartisan enthusiasm. President Joe Biden has gone all-in on subsidies for chipmakers, electric vehicles, and clean energy projects. His once predecessor and now successor, Donald Trump, staked his strategy on hefty tariffs, aiming to shield U.S. factories from foreign competition and tempt more manufacturing jobs back to domestic soil. Yet, despite the feverish pledges and billions in incentives, the U.S. manufacturing sector remains mired in an unexpected stagnation.
Commercial real estate markets—so often buoyed by new factory openings and warehouse construction—have found little of the hoped-for windfall. The optimism once tied to this sector, both directly through industrial real estate demand and indirectly via economic cascades, has yet to materialize in a sustained upswing.
Data from the Federal Reserve confirms the trend. While industrial production numbers did show some bumps during the pandemic, they have otherwise remained flat since 2015. The figures hover at historic highs, but year after year, they show remarkably little progress. The Institute for Supply Management’s Manufacturing PMI—an industry bellwether—registered its fourth straight month of contraction in June 2025, having spent most of the past three years below 50 percent, the threshold signaling expansion. Even the S&P Global U.S. Manufacturing PMI, which at times offers a rosier view, has likewise struggled to cross that crucial halfway mark for much of the recent period.
The employment picture offers even less reassurance. In February 2023, there were approximately 12.9 million manufacturing workers in the United States. As of June 2025, that number has slipped to about 12.75 million, marking a loss of roughly 150,000 jobs. “The past three years have been a real slog for manufacturing,” explained Eric Hagopian, CEO of Pilot Precision Products, a cutting tools manufacturer in South Deerfield, Massachusetts, told the Associated Press. “We didn’t get destroyed like we did in the recession of 2008. But we’ve been in this stagnant, sort of stationary environment”.
Yet, paradoxically, federal incentives touched off a boom in construction. According to Census Bureau data, between April 2021 and October 2024, spending on manufacturing construction more than tripled, rising from $6.26 billion to $20.80 billion. This surge was especially pronounced in fields championed by the Biden administration, such as semiconductors and clean energy. Still, those dollars have yet to fully translate into robust factory output or a rebound in hiring.
Tariffs and more combative trade measures, especially under the Trump administration, did little to spark new production or job growth. The Federal Reserve has found that while these policies do sometimes help domestic producers by discouraging reliance on imports, they just as often result in higher costs for materials and supply chain snags, stunting the very resurgence they promise.
For commercial real estate, the ramifications are significant. Expectations for industrial growth have dampened; the much-heralded factory construction boom risks turning into a glut of underused facilities. If hiring and output don’t pick up, this new inventory could push commercial vacancies higher and drive rents lower. Warehouse demand, too, may falter if manufacturers are priced out of needed materials, resulting in softer sales and reduced imports—two traditional engines of warehouse expansion.
“If production is flat, that suggests manufacturing employment will continue to slide,” Mark Zandi, chief economist at Moody’s Analytics, explained to AP. “Manufacturing is likely to suffer a recession in the coming year.”
These words ring as a caution for anyone betting on a quick industrial renaissance, or for those building the vast logistics networks presuming a new boom just around the corner.
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