by Shane Henson — July 29, 2013—Global professional services firm Jones Lang LaSalle (JLL) announced the release of a new research report this month that examines how changes across the manufacturing industry will create more complexity and challenges for manufacturing companies but increase opportunities for real estate developers and investors.
According to the report, The Evolution of Manufacturing, three-dimensional printing (3D printing) will transform certain parts of manufacturing, and the nature of factories and supply chains. While still in its infancy, 3D printing has the longer-term potential to spark what some commentators have dubbed a “new industrial revolution,” says JLL.
The ability to “print” objects on demand could radically change how and where manufacturing takes place, and the types of facilities companies require, the report explained. Instead of mass production, 3D printing emphasizes customization; instead of off-shoring, 3D printing is likely to encourage more local production closer to the market.
According to Jon Sleeman, director of EMEA Logistics and Industrial Research at Jones Lang LaSalle, 3D printing will change the nature of factories in certain industries. Instead of large custom-designed factories, it will create demand for more standard small and medium-sized buildings, which companies would be more likely to lease than own. As a result, this will open up opportunities for developers and investors, he says.
Per the report, the dynamics driving the location of manufacturing capacity—including issues around off-shoring, re-shoring or near shoring—are also shifting. The report notes that, while off-shoring has been an important trend, many types of manufacturing are characterized by a predominantly local or regional focus, and are inherently less mobile and may have a strong rationale for remaining in higher cost economies.
In addition, over the past two to three years there have been some indications that the pace of off-shoring is slowing, and even some evidence of re-shoring by companies, particularly in the United States, but also in Europe. This reflects a greater understanding of the wider “hidden costs” associated with overseas production, including the extended lead times of meeting customer demand and exposure to supply chain risks.
“The evolution of manufacturing is driving demand for a range of real estate across the value chain, including research and design facilities, which are often co-located with production, and logistics facilities which support manufacturing,” says Sleeman. “According to Jones Lang LaSalle, over the past five years, manufacturing companies directly accounted for 16 percent of the total take-up of logistics real estate across 11 major European countries, highlighting the significance of manufacturing as a source of logistics property demand.”
