How Is the Lack of Real Estate for Your Operations?Fri, 12/01/2017 - 16:38
Mexico’s aerospace sector is growing unabated as more and more companies enter the country, generating employment and introducing new technologies. It is possible, however, to have too much of a good thing. The large number of companies arriving is saturating existing industrial parks, especially at popular export areas near the border, such as Baja California, Sonora and Chihuahua. For that reason, it might be the appropriate time for a bet on more industrial real estate.
Coast Aluminum’s growth reflects that of the expanding industrial sector in the state. Baja California is growing very fast and the state now lacks available real estate for new companies or for enlarging existing businesses. We are trying to expand our plant but it is impossible as there is no room. Industrial real estate is scooped up as soon as it is built and most industrial parks are already full. It is extremely hard to find real estate. To solve this, we are restructuring our offices in Baja California to maximize inventory in the available space, while also taking advantage of its facilities north of the border. We have the advantage of having a 200,000ft2 plant in Los Angeles, which allows us to quickly supply to Baja California and to avoid excess inventory. We are fully aware of what local clients need so we can keep an efficient inventory and still supply them in 24 hours.
Companies in California are trying to compete with China so they are finding themselves needing to move their operations to a cheaper zone to remain competitive. These companies are now looking to other options to reduce their costs and coming to Mexico is a good alternative. But the state is not ready for them due to a lack of labor and industrial real estate. There is 2.3 percent vacancy for industrial buildings that is leading existing developers to invest in the construction of more industrial real estate. To address this, TACNA plans to expand its existing real estate and even to build its own industrial park. We currently own 70,000ft2 next to our main offices and we plan to continue building industrial facilities. We lease approximately 3.1 million ft2 in many buildings spread throughout the state for 35 companies in different manufacturing sectors.
Terrafina is acquiring more property portfolios with a priority on location, connectivity, insured infrastructure and other characteristics that help assure their successful development, including efficiency and lower operational costs. Our occupancy rates continue to rise; from the US elections to the first quarter of 2017 we signed 25 new contracts, and we keep acquiring more properties. Approximately 57 percent of Terrafina’s properties are located in the north of Mexico, 25 percent in El Bajio and the remainder are located close to Mexico City. All of these regions have strong potential for growth in manufacturing. I do not believe that new areas will arise in the short term. About 75 percent of our lessees belong in this last sector and approximately 96 percent of our leasing contracts are valued in dollars.