By Peter Kroner
The recent passage of the One Big Beautiful Bill Act of 2025 (“Big Beautiful Bill”) introduced new provisions allowing 100% rapid depreciation not only of equipment, but also of production and manufacturing facilities. This is a notable expansion beyond the 2017 Tax Cuts and Jobs Act (TCJA), which limited this benefit to equipment alone. By broadening the scope of eligible assets, the legislation aims to catalyze domestic production, reshape supply chain dynamics, and significantly reduce effective corporate tax rates. As a result, it is expected to spark a wave of industrial development across the country.
Key provisions in the bill
100% rapid depreciation
Reinstatement and expansion of 100% bonus depreciation is extended to include not just equipment, but also production and manufacturing facilities. Businesses can immediately write off 100% of the cost of qualifying investments (e.g., real estate, machinery, automation systems) in the year the asset is placed in service.
Eligibility
Applies to both new and used “qualified production property,” including manufacturing, agricultural, chemical and refining.
Timeline
Projects must commence construction by January 2029 and be operational by January 2031, creating a two-year window for action.
Source: Respective company press releases, announcements.
Note: Amounts and jobs are approximate, based on public announcements; actual amounts may very. Some pledges include non-manufacturing components (e.g., R&D, AI) but focus on manufacturing where noted.
Market context
Since January 2025, over $3.5 trillion in U.S. manufacturing investments have been announced (according to research by Avison Young, 2025). This wave of capital is expected to accelerate groundbreakings, spike demand for building materials, and drive up land values in regions with access to strategic infrastructure and labor.
Passage of the Big Beautiful Bill mirrors the effects of the 2017 TCJA expensing provisions, which allowed 100% rapid depreciation on production and manufacturing equipment only, igniting growth in e-commerce and third-party logistics (3PL). The new bill builds on that framework but broadens the scope by including production and manufacturing facilities, aiming to fuel a domestic manufacturing renaissance and reshape supply chain strategies. Expect concentrated activity within 6–8-hour drive times of major industrial hubs in the Midwest and Southeast, where market fundamentals are strongest.
First movers will secure early access to key resources such as state incentive programs, materials, and automation or production equipment. As demand ramps up, those who act now will be better positioned to avoid bottlenecks and delays. If we experience a surge similar to the post-COVID-19 cycle, lead times could easily extend beyond the January 2029 and 2031 target windows.
Impact on Industrial CRE
For developers
Expect a surge in both build-to-suit and speculative projects, especially in regions where labor availability and infrastructure intersect. As demand intensifies, developers will prioritize shovel-ready sites, increasing land values and straining already tight construction timelines. Rising material costs and prolonged lead times could challenge feasibility, placing a premium on efficient project execution and strategic site selection.
For owner-users
With full expensing in effect, many companies are opting to own rather than lease their facilities, leading to a rise in owner-occupancy. This shift may reduce near-term sale-leaseback (SLB) activity and limit the pool of investor-accessible assets. For occupiers, the tax benefits make ownership a compelling strategy, particularly for mission-critical or specialized facilities, while adding urgency to secure sites in competitive industrial markets.
For investors
Institutional investors may face tighter supply and increased competition for core industrial product, potentially compressing cap rates and raising valuations for high-performing assets. As the market pivots toward development-heavy activity and owner-user transactions, capital strategies will need to evolve, emphasizing joint ventures, early-stage partnerships and development financing. Looking ahead, as depreciation incentives sunset, sale-leaseback opportunities are expected to rebound, offering new entry points for capital markets and private equity teams positioned with flexible, capital-efficient solutions.
Navigating what’s next
With billions already committed to U.S. manufacturing and a clear incentive window now in place, industrial developers, users and investors must act decisively. The first and most invaluable step for producers and manufacturers exploring these key benefits is to determine if an expansion within the United States makes economic and operational sense. After this is determined, partnering with experts that can help hone in on state, regional and local incentives that will further complement the federal provisions outlined in the new law will be pivotal to executing a short-list of potential markets and then sites to go forward with a new facility. Elevated lead-times for development partnerships, general contractor and sub-contractor coordination, and production equipment orders is expected to accelerate by the middle of next year. Promptly engaging with experts who can help guide and fast-track key considerations of this law for producers and manufacturers in their site selection process is of the utmost importance in order to allow enough time to take advantage of the law’s key provisions, given the aggressive timeline Congress passed.
