Nearshoring & Reshoring: How Manufacturing's Return Is Driving Texas Industrial Real Estate Demand

The way the world makes and moves things is changing, and Texas is sitting at the center of that transformation. After decades of offshoring production to Asia, a powerful reversal is underway. Companies across automotive, electronics, defense, and energy sectors are bringing manufacturing back to North America, drawn by supply chain resilience, trade policy shifts, and the rising cost of doing business overseas.

This movement comes in two related but distinct forms. Nearshoring involves relocating production to a nearby country, for U.S. companies, that typically means Mexico, to cut logistics costs, shorten delivery times, and reduce geopolitical exposure. Reshoring goes a step further, returning operations directly back to U.S. soil. Both are creating a surge in demand for industrial real estate, and nowhere is that surge more visible than in Texas.

Why Texas? The Geography of Competitive Advantage

Texas occupies a singular position in North American trade. Mexico is Texas's largest trading partner, a position it has held for at least 16 years. The state exports roughly one-third of its $375 billion in goods to Mexico, with machinery, electronics, and automobiles topping the list. Cross-border trade between Texas and Mexico supports over 7 million jobs on both sides of the border. 

The numbers at the border tell part of the story. Laredo's port of entry is the second-largest in the United States, handling more than 2 million loaded truck crossings annually. Texas is among the top four states most impacted by both imports from and exports to Mexico. As nearshoring activity has accelerated, freight flows have intensified through border markets such as Laredo and El Paso, Texas, and into inland logistics corridors such as Dallas-Fort Worth rapidly becoming some of the most strategic logistics nodes in North America. 

Beyond the border, for a record 13th year in a row, Texas has earned the Governor's Cup award for leading the U.S. in job-creating relocation and expansion projects. Despite national uncertainties, Texas's economy remains one of the most resilient in the U.S., with a GDP now exceeding $2.6 trillion, making it the eighth-largest economy in the world if it were a country. 

The Reshoring Wave: What's Driving Manufacturing Back to U.S. Soil

Reshoring activity surged from 2020 to 2023 due to the CHIPS Act, the Inflation Reduction Act, and growing geopolitical risk. Total U.S. manufacturing jobs added from reshoring over the past five years has reached approximately 800,000.

The CHIPS and Science Act alone includes nearly $53 billion in incentives for U.S. semiconductor manufacturing and a tax credit worth 25% of qualifying investments in advanced manufacturing facilities. Manufacturing construction spending in the U.S. has more than doubled compared with pre-pandemic levels. 

The shift away from China-centric supply chains is equally significant. Production is no longer anchored in a single dominant hub but is fragmenting into what supply chain experts call the "China + many" model. The drivers are both geopolitical and commercial: the United States seeks to reduce vulnerability to Chinese supply chains, while industrial users seek greater resiliency in sourcing. 

The Real Estate Impact: What This Means for Texas Industrial Space

The manufacturing resurgence is showing up directly in the Texas industrial market. Reshoring is happening for select industries, with investments concentrated in markets in the Southeast and Central United States, including Texas, where lower labor and real estate costs provide long-term advantages. In these areas, manufacturing now accounts for 20% of new leasing, up from 13% pre-pandemic. 

The adjustment is resulting in additional demand, particularly for midsize facilities ranging from 100,000 to 400,000 square feet, as well as larger primary distribution and fulfillment centers of 500,000 square feet or more. 

Since 2018, manufacturing-related engagements at major CRE firms have increased more than 350%. Demand for manufacturing sites and facilities is as strong as it has ever been in history, accounting for nearly 20% of overall requirements in 2024, and is projected to grow to as much as 30% of overall requirements by 2028. 

Texas's Mega-Investments: The Deals Defining the Market

The scale of recent commitments to Texas underscores how seriously global corporations are treating the state as a production hub. Major recent investments include Eli Lilly's $6.5 billion biomanufacturing plant, Apple's AI server facility, and continued manufacturing investment from companies like Foxconn. A $365 million cable manufacturing facility near Houston is also slated to begin operations in 2026, highlighting the state's draw for large-scale, capital-intensive projects. 

Taiwan-owned factories in Mexico are providing key IT hardware for the U.S. data center build-out, while Taiwan companies are making increasing investments in Texas to support U.S. reshoring of advanced manufacturing, particularly semiconductors and AI infrastructure. 

Challenges: Infrastructure, Labor, and Power

The opportunity is real, but so are the constraints. Electrical capacity has become the single most critical constraint in industrial site selection, driven by the explosive growth of data centers, the increasing power demands of warehouse automation, and the electrification of logistics fleets. In multiple markets, developers report multiyear delays before utilities can provide the necessary power to a site. 

Labor is another structural challenge. The National Association of Manufacturers projects millions of unfilled manufacturing roles nationwide over the next decade. If businesses don't act boldly, the U.S. faces a shortfall of 1.9 million manufacturing workers by 2033, with nearly 3.8 million positions opening up, but close to half potentially going unfilled. 

Looking Ahead: A Multi-Year Demand Story

The structural forces behind nearshoring and reshoring represent a generational rebalancing of global production, not a short-term trend. Texas, with its border access, business climate, infrastructure, and established industrial base, is better positioned than virtually any other state to capture that demand over the next decade. By 2050, the Texas Department of Transportation projects that cross-border trade will generate more than 10.9 million jobs and contribute $604.5 billion in GDP to both the Texas and Mexican economies combined.

For industrial real estate investors, developers, and tenants alike, the message is clear: the manufacturing renaissance is a durable, multi-year driver of demand, and Texas is at the epicenter of it.