Montana Positioned to Benefit from Onshoring

Montana Positioned to Benefit from Onshoring

Matt Mellott, Advisor

It’s official – the warehouse and industrial real estate market is feeling the impact of onshoring. You may be asking: on-what now?

Onshoring is a recent phenomenon in which manufacturers and distributors are bringing their products — and distribution networks — back to the United States in response to recent transportation shocks and uncertainty around the globe. The world’s supply lanes and shipping channels have been a highly complex but highly efficient way to provide goods to people the world over… when everything is going to plan. 

But when COVID lockdowns and conflict-induced security risks to shipping upset the apple cart, the US government and private companies alike have sought to bring back overseas manufacturing and distribution systems to more reliable, more secure (and more expensive) locations in North America.  

Businesses from all industries are now “onshoring” – shipping their operations back to the US, Mexico, and Canada. That means more demand for warehouses and industrial properties to support their operations. Places that have direct access to major ports via rail become especially good targets for onshoring activity, which in turn drives demand for industrial and warehouse space of all types in these locations.

Montana is well-positioned to benefit from this trend over the coming decade with two major BNSF rail lines connecting major cities like Missoula, Bozeman, Billings, Great Falls, and Kalispell to the rest of the country, including the deep-water seaport of Tacoma. 

In fact, Montana has the second highest number of miles of rail in the west at over 3,600 miles, second only to California in the west (and 13th overall). Investors that control warehouse and industrial space along these lines will be able to offer relatively low-cost alternatives to manufacturers versus more expensive options in major metros like Seattle, while still possessing access to the markets both domestic and international.

As tech-led manufacturing comes back to America, Montana will play an outsized role in fulfilling demand for new industrial capacity.  

Questions about Montana industrial properties? Contact Matt Mellott CCIM/SIOR.