Manufacturers across the U.S. are bracing for a wave of change as sweeping tax law reforms reshape the industry’s landscape. The recently enacted One Big Beautiful Bill Act is set to dramatically alter how companies invest in domestic production, with new incentives aimed at making U.S.-based manufacturing more competitive. According to Yardi Matrix, the law’s restoration of 100% bonus depreciation for equipment and facilities put into service after January 19, 2025, is expected to lower costs and encourage more companies to produce goods domestically. Simultaneously, expensing R&D costs could free up capital for innovation, potentially accelerating long-term growth in the sector.
However, not all the changes are favorable. Tax credits for electric vehicle producers and consumers are being phased out faster than originally planned, which could slow EV and battery purchases and force companies to rethink their strategies. Despite these headwinds, manufacturing construction spending remains near record highs, though the pace has begun to slow. Yardi Matrix notes that even as current spending is nearly triple what it was in 2022, the momentum is waning.
Beyond tax policy, manufacturers are also grappling with ongoing supply chain challenges. The pandemic’s disruptions have left a lasting impact, prompting companies to rethink how they balance risk and cost when siting new plants. Yardi Matrix expects supply chains to become more localized, with supplier networks and downstream businesses likely to follow new manufacturing hubs.
On the real estate front, the national average industrial rent stands at $8.72 per square foot, up 6.1% year-over-year, with a vacancy rate of 9.5%. The strongest rent growth has shifted from major ports to inland logistics hubs and markets with high population growth. About 340.5 million square feet of industrial space—1.7% of total stock—is under construction, with 186.1 million square feet started in the first three quarters of 2025.
Source: “Manufacturing Faces Major Shifts as Tax Law Changes Take Effect”
