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ElmTree Funds Releases Onshoring Demand Report

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Investment in domestic manufacturing positions U.S. industrial markets for growth

ST. LOUIS, August 29, 2023 — ElmTree Funds (“ElmTree”), a leading net-lease real estate private equity firm, recently released a research report titled “Onshoring: A Growing Demand Driver for the Industrial Sector.” The report outlines the increasing demand for domestic manufacturing supply chain operations in the U.S. industrial real estate sector. ElmTree CEO & Founder James Koman made the announcement.

The report was spearheaded by ElmTree Managing Director MaCauley Studdard, who oversees the firm’s underwriting and research department, and leverages data from several credible industry sources, including CoStar, the U.S. Census Bureau and the Federal Reserve Bank of St. Louis. The ElmTree team examined data in detail to identify which industries, markets and companies within the U.S. are best positioned to benefit from favoring domestic supply chains over overseas operations within the long-term investment horizon.

“The COVID-19 pandemic spurred a widespread global supply chain disruption that created unprecedented bottlenecks at ports, disruptions in rail freight and triggered losses for many manufacturers,” said Studdard. “Our research team has identified who is best positioned for success within the evolving supply chain landscape based on their investment activity in domestic manufacturing operations. ElmTree believes that an increase in domestic manufacturing will strengthen industrial fundamentals and act as a tailwind for the U.S. industrial market for years to come.”

Key findings from the industrial onshoring trends report include:

  • Efficiency Loss in Globalization: Despite the rapid growth of global trade over the past 50 years, globalization has lost efficiency in recent years due to the increasingly complex manufacturing processes that have led to addressing the need for more skilled labor, unstable geopolitics, supply chain disruptions and volatile fuel pricing.
  • Overseas Labor Cost Increases: The cost of overseas labor has seen an uptick in recent years. According to Trading Economics, Chinese manufacturing wages have increased by 183% since 2014.
  • Supply Chain Instability: In an IndustryWeek survey, 70% of manufacturing respondents expected they would re-shore or near-shore manufacturing operations, and a significant number of those respondents cited supply chain instability as a primary driver.
  • Skilled Labor Gap: Difficulty attracting skilled labor overseas is a significant driver incentivizing manufacturer to move operations back to the U.S.
  • U.S. Investment Trends: As a result of government incentives, many auto companies and chip manufacturers are investing in large-scale manufacturing plants in the U.S.
  • Market Trends: Markets with significant onshoring investment are expected to experience strong industrial fundamentals as a result of the additional supplier and logistics development required to facilitate manufacturing at these facilities.
  • Industrial Market Impact: ElmTree expects that reshoring will create demand for an additional 160 million square feet of industrial space this year.

The information provided in this report is effective August 2023. To access the complete report, click here.

About ElmTree Funds

ElmTree Funds, LLC, headquartered in St. Louis, Missouri, is a real estate private equity firm that manages capital on behalf of institutional and private investors. ElmTree’s investment philosophy focuses on making strategic investments in the commercial real estate net-lease and build-to-suit sectors with a focus on industrial properties. Since its founding in 2011, ElmTree has acquired, developed, or financed an extensive portfolio of commercial real estate. ElmTree targets investments in primary and secondary markets across the U.S. that are net-leased to investment grade tenants on a long-term basis. To learn more, visit https://elmtreefunds.com/.