All $39 billion from the landmark CHIPS and Science Act is going to be allocated by the end of the year according to a recent announcement by the U.S. Government, incentivizing onshore semiconductor production with considerable tax breaks and direct grants. At the same time, cleantech tax credits, advances like solid-state EV batteries and a spike in investor interest for U.S.-based production all spell one thing: Manufacturing is riding high.

Empowered by this multifaceted situation and a surge in reshoring, U.S. manufacturing space development has entered a phase of historic growth, quickly becoming a darling asset class within industrial real estate. In this paradigm, long-established manufacturing centers compete with newcomers to attract investment and deliver high-tier properties.

To look at which areas show the most promise amid the resurgence of manufacturing, we ranked the 100 largest metropolitan statistical areas (MSAs) by total industrial manufacturing space based on a three sets of indicators: manufacturing space inventory, manufacturing indicators and costs, and logistics infrastructure (read our Methodology section for a full breakdown of the metrics). We then selected the 20 best performers to highlight their individual strengths when it comes to manufacturing.

Highest Manufacturing Space Growth, 2019-2023

Semiconductor factories are at the cutting edge of manufacturing, requiring ample developable space in greenfield locations. Thus, this requirement has placed Phoenix high on the list of expanding semiconductor makers, given the Valley of the Sun’s sprawl.

For example, after an initial Phoenix-area investment of $12 billion in 2020, chip mammoth Taiwan Semiconductor Company (TSMC) began construction of a second facility in early 2023, tripling its investment. Now, a third fabrication plant has been announced in conjunction with $6.6 billion in direct CHIPS Act funding, bringing TSMC’s total investment in Phoenix to more than $65 billion. In parallel with TSMC’s developments, Intel also moved to benefit from federal funding with a considerable expansion of its Phoenix facilities. As a result, Phoenix stands to become one of the foremost chip manufacturing hubs in the entire country. That includes the production of leading-edge, 2-nanometer technology chips, which are the most advanced type currently available which were previously only made overseas.

It’s not just chipmakers driving manufacturing in the Valley of the Sun, though. Rather, the industry as a whole has experienced explosive growth in recent years, with the metro receiving top marks in three different categories in our study. More precisely, Phoenix has (1) the largest share of modern manufacturing stock out of its total (30.2%), (2) the largest percentage growth of manufacturing space in the last five years (11.4%), as well as (3) the largest new stock currently under construction (10.5 million square feet). These metrics highlight Phoenix as a rising star in the industry, despite a relatively undersized current manufacturing inventory of 64.3 million square feet.