In 2026, advanced manufacturing trends in California will center on AI-driven hyper-automation, digital twins and smart supply chains, according to a new Deloitte report.
This will boost efficiency and resilience against global uncertainty, while also focusing heavily on workforce upskilling (tech-enabled craftsmen), sustainability (green tech, circular economy) and new materials (advanced alloys, nanomanufacturing).
This is a move from aspiration to action for practical, resilient and eco-conscious production, all supported by investments in digital infrastructure, according to the report.
Greg Matter, vice chairman and co-lead of JLL’s advanced manufacturing group, told GlobeSt.com that advanced manufacturing, specifically AI infrastructure and the aerospace and defense industries, will drive demand in the inner Bay Area and the South Bay of Los Angeles as venture, with federal dollars flowing into these verticals.
Overall, California’s commercial real estate market will stabilize next year, with performance increasingly driven by sector selection and asset quality, according to Brian Connolly, founder & CEO at Feasibly, an AI-powered resource for CRE developers.
“A significant factor behind our outlook is AI’s expansion across the state, particularly in data centers, semiconductor-adjacent manufacturing, and AI-driven enterprise growth centered in the Bay Area and Southern California,” Connolly told GlobeSt.com.
“That activity will directly support industrial demand for logistics, advanced manufacturing, and power-intensive facilities, positioning the sector to outperform as recent supply is absorbed and new construction slows.”
He said that AI-related job growth will also reinforce multifamily demand near core employment hubs, helping offset higher operating costs and sustain rent growth despite affordability pressures.
Life Sciences Coming Back from Market Slowness
And finally, life sciences, “2026 will launch on the heels of market slowness for the industry as [it] relates to capital projects,” Pam Paddock, managing director of life sciences at JLL, told GlobeSt.com.
“Portfolio contraction continues; however, it focuses more on revitalizing existing spaces, both for laboratories and for manufacturing. Reliability of infrastructure, in this state of contraction, is ever more critical as stay-in-place strategies emerge.”
Later in the year, she said she anticipates that larger, brownfield and greenfield projects that have been on hold will be revisited, particularly in the San Diego and San Francisco markets.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.