Over the past two decades, e-commerce has been the central driver of industrial commercial real estate (CRE) demand. Rapidly growing sales and faster delivery times required ever-larger distribution networks. The playbook for CRE investors was simple—own warehouse and distribution centers as demand outstripped supply, leading to significant outperformance. As a result, over the last 20 years, warehouse space increased by roughly 5 billion square feet, while manufacturing space grew by just 275 million square feet.1
That dynamic is changing and the new driver of outperformance in the industrial CRE sector is power. E-commerce growth is normalizing, and margin pressure is pushing logistics tenants to prioritize productivity over footprint expansion—often through AI-enabled robotics and automation. Additionally, as globalization unwinds, more manufacturing capacity is moving back to the U.S., particularly in energy-intensive industries.
This piece explains how power demand is shifting preferences for warehouse and manufacturing space, why power is getting harder to secure and how investing in high-power assets can translate into stronger portfolio performance.
Efficiency drives evolution in warehouse space
Building a two-day (or faster) delivery network is expensive. As e-commerce growth slows, e-tailers are turning to automation to protect margins and improve throughput. Since 2020, Amazon has increased the number of robots it uses from 287,500 to more than 1 million—a 3.5x increase.2 Over the same period, Amazon reduced employees per facility by more than 25% and increased packages shipped per employee by approximately 40%.3 The implication is straightforward: Automation can significantly reduce labor intensity, but it will also increase power intensity.
One of the ways to measure electrical capacity is amps. A typical single-family home has roughly 100–200 amps of service. A traditional warehouse has typically been built with about 2,000 amps. However, with the higher levels of automation mentioned previously—and additional loads such as the growing use of electric vehicles as environmental regulations become stricter—tenant power requirements can often double, pushing modern warehouse demand to 4,000 amps or more.
A manufacturing renaissance driven by security
Since 2019, manufacturing demand has grown by nearly 40% annually.4 That acceleration is driven in large part by federal policy. Biden-era programs directed more than $1 trillion toward rebuilding domestic manufacturing capacity,5 and the trend has continued under the Trump administration, where tariffs and provisions in the One Big Beautiful Bill Act (OBBBA) are estimated to save manufacturers more than $400 billion.6 These initiatives have also catalyzed private capital, including JPMorganChase’s $1.5 trillion Security and Resiliency Initiative, further supporting reshoring. Given bipartisan support tied to national security concerns, we expect fiscal stimulus—and demand for manufacturing space—to remain elevated.
Due to the intensity of production, manufacturing tenants require more electricity than warehouse users. This is particularly true for advanced manufacturing where complex machinery, strict environmental controls and sophisticated systems can drive power requirements that can be two to three times that of modern warehouse users. For example, the top three power users in JPMorgan’s industrial portfolio—a manufacturer of data center equipment, a defense contractor and a tenant involved in R&D and production of next-generation batteries—each use roughly 8,000 to 11,000 amps and selected their buildings in large part due to the power availability.
Power capacity is the new driver of outperformance in the industrial CRE sector. AI-enabled shifts in warehouses and power-hungry advanced manufacturing are fueling the surge in overall power demand.
A strained power grid increases the cost—and the timeline—to secure power
Industrial power demand is rising at the same time AI adoption is also driving outsized electricity consumption. Data center power usage grew by 13% annually over the decade ending in 2023, and that growth is now accelerating. Forecasts through 2028 call for annual growth ranging from roughly 16% on the low end to 26% using more aggressive assumptions.7 Combined with broader residential and commercial electrification, even more pressure is being added to an already constrained grid.
The result is that power is harder—and more expensive—to secure. As utility companies reach capacity, building owners are increasingly required to provide the infrastructure needed to get the power they want, including building and financing electric substations. Even larger substations that serve multiple buildings and benefit from economies of scale can still cost owners $2 million or more to secure 4,000 amps, adding another headwind.
Timing matters as much as cost. The cheapest time to add capacity is during construction. Retrofitting an asset is possible, but it is disruptive and more expensive: Larger service panels and additional wiring are difficult to integrate after the fact, and trenching truck courts or cutting slabs to install conduit can materially disrupt operations. In practice, installing 4,000 amps in a new building can cost as little as $250,000, while retrofitting an existing building for the same capacity can exceed $1 million. Even if the costs can be justified, the timing can create additional challenges. Securing additional capacity from the utility can take years—if it can be made available at all—with additional site work adding months beyond that.
These costs, complications and delays strain underwriting and tenant patience. So, although demand continues to increase, supply has not kept pace—and based on current market dynamics, that imbalance is likely to persist.
Stronger fundamentals and performance
Tenants are increasingly willing to pay a premium for high-power space, particularly in advanced manufacturing where intellectual property drives profitability. Take Nvidia as an example: Individual chips can sell for $40,000 or more, and corporate margins were nearly 75% as of the latest fiscal quarter.8 For tenants with this economic profile, the top priority is securing space that supports production and accelerates speed to market—not minimizing rent. As a result, “move-in ready” buildings with elevated power can command rents 20%–40% higher than competing product.9
This shift is also showing up in valuations. After decades when power capacity had little impact on pricing, it is now a meaningful driver of value. Sales comps show warehouse buildings with 4,000 amps or more trading at roughly a 12% premium to the broader market.10 With power demand rising and incremental capacity becoming more costly and time consuming to secure, buildings that already have high power in place are positioned for outsized tenant demand, rent growth and appreciation.
JPMorgan’s high-power industrial portfolio is positioned to outperform
Consistent with CoStar’s findings, our higher-power buildings have also performed better. Over the past three years, properties with more than 4,000 amps generated average annual returns of 4.2%, compared with -1.1% for assets with less than 2,000 amps—a 530 basis point (bp) spread. If we look just at performance in 2025, the spread widened to 730bps, suggesting the trend is accelerating.
JPMorgan is leaning into this dynamic. With the help of our partners, we analyzed more than 3,000 industrial buildings nationwide to benchmark power capacity. At an average of 2,679 amps, our portfolio has roughly 35% more power than the study average of 1,995 amps. We are most overweight (+11%) in the top-performing 4,000+ amp cohort and most underweight (-23%) in the underperforming 2,000-amps-and-below cohort.11 And because our industrial strategy relies heavily on development, we can often deliver higher-capacity buildings at a lower cost than retrofitting existing assets—positioning the portfolio for continued outperformance.
Bottom line
Power capacity is becoming the defining variable in industrial CRE tenant site selection and asset performance. Investors with the expertise and discipline to execute a cohesive power strategy can position portfolios to benefit from this shift—at the expense of those that cannot.