The factory-building boom in the U.S. is losing steam, but the tangible results of the surge are due to be felt in the coming moths and years.

Factory construction in the U.S. hit its highest point in half a century, according to an August 2024 report by Moody’s Anaytics. This is due to booming demand for semiconductors and billions of dollars in investments from the federal government as part of legislation passed in 2022.

Since late 2023, more than a dozen companies have secured agreements with the federal government, receiving more than $30 billion in grants to develop or expand facilities across the U.S. These deals involve prominent domestic firms such as Intel, Texas Instruments and Micron, as well as major international players like Taiwan Semiconductor Manufacturing Company and Samsung.

The Biden administration’s efforts to boost U.S. manufacturing through the CHIPS and Science Act and the Inflation Reduction Act spurred an influx of foreign direct investment and a surge in factory construction. But the anticipated jobs have taken a while to materialize in great numbers and will not arrive until after his presidency ends.

The CHIPS and Science Act offered tax credits and incentives for domestic semiconductor production, while the Inflation Reduction Act provided funding and tax credits for both producers and consumers of U.S.-manufactured clean energy technology products. Both acts were signed into law in 2022.

Manufacturing structures investment subsidized by the two pieces of legislation boosted capex growth by 3% in 2023, accounting for two thirds of total growth last year, according to Goldman Sachs analysis. Growth slowed to 1% over the past two quarters. Investment in manufacturing facilities will decline in coming months, the bank predicts, but at a much slower pace than previously expected.

“The boost from construction spending subsidized by the CHIPS Act and IRA has plateaued, and we expect it will soon turn into a -1pp annualized drag on capex,” Goldman Sachs’ report said. “Offsetting this, however, equipment spending for these new factories is poised to rise next year.”

Although nationwide manufacturing construction has thrived recently, it hasn’t yet led to significant job growth similar to that seen in warehouse employment during the Covid-era logistics boom. This stagnation is partly due to the lengthy delivery times for these facilities, meaning many of the largest projects are still incomplete. It also means the bulk of the factory openings, and associated jobs, are likely to arrive during Donald Trump’s tenure as president.

Goldman Sachs’ mega project tracker estimates that it usually takes two years to build an auto manufacturing facility – and even longer for semiconductor facilities. Since the bank’s mid-year capex update, new projects qualifying for the government subsidies have gotten underway, but several existing projects appear to have extended their construction timelines due to worker shortages.

“We anticipate that manufacturing will continue to drive a great deal of activity for industrial real estate, but it will be years before the impacts are fully seen,” Yardi Matrix’s report states. “When projects deliver, we expect manufacturing employment will rise and supplemental firms will take root as well.”