March 5, 2024

Borderlands Mexico: Developer bullish on industrial real estate on border


As nearshoring attracts more manufacturers to prime sites in Mexico, real estate firm Meor is betting big on continued demand for industrial space along the border.

Meor, a real estate developer based in Mexico City, announced its search for U.S. equity partners to help fund a $1.7 billion plan to develop a multiphase portfolio of 13 industrial projects along the U.S.-Mexico border.

The developer hired Chicago-based Cushman & Wakefield (NYSE: CWK) to help it find equity partners to fund the projects, which will total over 18 million square feet. Cushman & Wakefield is a global real estate research and services firm.

“The Mexico industrial market has experienced unprecedented growth in recent years driven by both the headlining tailwinds of nearshoring and the exponential growth of e-commerce,” Ernesto Sanchez, Cushman & Wakefield’s vice president of institutional equity, debt and structured finance, said in a news release. “This is a robust industrial development portfolio of best-in-class industrial parks that will be strategically positioned in several of Mexico’s strongest industrial markets to service both existing, expanding users and new entrants alike.”

Mexico was the top overall U.S. trading partner in 2023. The country’s trade with the U.S. rose 2.5% year over year to $798 billion last year, boosted by exports of gasoline and other fuels and imports of passenger vehicles.

According to Meor, the vacancy rate for industrial space in key Mexican locations along the border is around 1%, with demand outstripping available locations.

Meor is seeking partners for an initial investment of $300 million to build a 5.7 million-square-foot industrial park in Tijuana, Mexico.

The Tijuana industrial park will be a five-phase project constructed on the “last land-site of scale in proper Tijuana,” according to Cushman & Wakefield. The project will have a total capitalization of nearly $700 million once completed.

Tijuana is the largest city in the Mexican state of Baja California and is just across the border from San Diego. It has nearly 2.3 million people.

Foreign companies looking to diversify their supply chains have increasingly been choosing Mexican border states in recent years.

One of the biggest beneficiaries of the evolving global trade flows has been the so-called Cali-Baja mega-region, the border area connecting Southern California and the northern portion of Baja California.

From January through September, foreign direct investment reached $1.1 billion in Baja California, accounting for 3.6% of the national total, which placed the state ninth among the 32 states in Mexico in attracting foreign direct investment across the country, according to Mexico’s National Institute of Statistics and Geography.

More than 950 maquiladora factories currently operate in Baja California, of which 621 are in Tijuana. A maquiladora is a factory in Mexico run by a foreign company and exporting its products to the country of that company.

In addition to Tijuana, Meor plans to initially develop an industrial park in Monterrey, Mexico, about 135 miles south of Laredo, Texas.

After the initial phase of developments in Tijuana and Monterrey, Meor aims to construct industrial and logistics parks in the Mexican cities of Ciudad Juarez, Guadalajara, Mexicali and Torreon.

Ciudad Juarez, which lies across the border from El Paso, Texas, is expected to be the largest single project, accounting for about 37% of the total 18.3 million-square-foot portfolio.

“This is a very special opportunity for a U.S. capital partner/investor to establish a long-term, programmatic relationship with Meor, a premier developer with deep ties to the highly competitive and relationship-driven Mexico market,” Rob Rubano, executive vice chair at Cushman & Wakefield, said in a statement. “Meor offers extensive development experience, having completed nearly 100 projects encompassing 10.2 million-square-feet since 2006.”

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