Reshoring has become an effective method for improving a company’s supply chain resiliency. As U.S. businesses decouple from Asia and bring their production operations and supplier sourcing back to American soil, they will need viable industrial real estate properties that can handle the varying needs of modern manufacturing. One of the biggest changes facing these reshoring operations is labor, which is more expensive and less readily available in the United States. 

As a result, many new U.S. factories must rely heavily on automation to offset labor shortages and higher costs. That means today’s factories look very different from the production facilities that powered American manufacturing during its heyday before outsourcing became the norm. When scouting locations to site a smart factory, consider the following factors.

1. Power Requirements

Automated factories use significant power to continuously run machine tools, robotics, and the sensors and software that support them. If power suddenly becomes unavailable, it can cost thousands of dollars each hour production lines are down. As such, part of choosing a location for a smart facility involves careful examination of the reliability of the local power grid. Siting a facility that relies heavily on technology in an area known for brownouts and blackouts could be a costly mistake.

Beyond the local grid, consider the building itself. Industrial zoning doesn’t automatically make a structure suitable for smart manufacturing. For example, the wiring in a building several decades old may not be able to handle the load requirements of a smart factory. 

2. Green Manufacturing

Climate change has caused many businesses to examine their carbon footprint and how they can reduce it. Therefore, sustainability should be a primary consideration for a modern production facility. Here are some features to look for:

• Cool roofing systems to help keep HVAC costs down
• Solar panels and battery storage to help offset the operation’s power grid requirements
• Green spaces on the property
• Electric vehicle chargers in the parking lot

The presence of sustainable features doesn’t have to be a dealbreaker for your new building, but you’ll want to make sure the building is at least capable of supporting them. You can get significant tax incentives under the Inflation Reduction Act for green improvements made to your new factory. 

3. Reliable Connectivity

Smart factories can’t exist without fast, unwavering access to the internet. Workers in the office and on the factory floor will need to use numerous cloud-based and Software-as-a-Service solutions. Engineers and technicians need high-speed connectivity to monitor production in real time from anywhere. Businesses must reliably communicate and share data with vendors, customers, logistics providers, and other supply chain stakeholders. 

Before committing to any facility, work closely with local internet providers to verify the existence of a suitable connectivity option that can handle heavy data transmission and secure access to your cloud applications, remote workers, data centers, and more. 

4. Educated Workforce

While an automated factory will employ less labor overall, it does require niche skills from the workers it does employ. Compared to a manual machine shop or traditional factory that needs access to a high volume of unskilled labor, a smart factory needs programmers, engineers, and technicians to keep things running smoothly. When considering a specific location, explore the area for technical schools, community colleges, and universities you could partner with and recruit from to fill these roles. 

The ongoing digital transformation of the manufacturing sector will eventually make smart factories the norm. In the meantime, the average age of industrial properties in the U.S. means that finding an appropriate location for a smart factory can prove challenging. However, an experienced industrial real estate broker can help you find a property that checks the boxes above. 

About Phoenix Investors

Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations and public stakeholders, Phoenix has developed a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost-efficient solutions, and a reputation for success.