Q: How has Grupo Avante set itself apart from its main competitors in Mexico?
A: Grupo Avante develops industrial real estate that increases our customers’ probability of success. What distinguishes us is that we have the best locations in terms of labor supply. Most of our clients are manufacturing companies coming to Mexico for the first time so we help them find the best locations offering the lowest labor costs. Our locations in the Monterrey metropolitan area and the north of the country have an abundant labor pool, where workers can walk, cycle, or take a bus to work. In other locations, companies have to provide transportation, which can make labor more expensive. On top of that, when employees are living close to their work and can spend more time with their family it enhances company loyalty.
Q: How attractive is the automotive industry for your business, and what are you doing to attract automotive clients?
A: The automotive market is very attractive to us because it is a growing sector, so we want to be a part of it. We understand that automotive companies are very sensitive to costs, so we aim to be competitive in that aspect of business. Some of our customers even require flat rates for a five-year period, meaning that we have to be creative in offering solutions. Currently, around 20% of our buildings are designated for the automotive industry, but this will rise to 40% with our Apodaca location which is specifically targeting that sector. Our studies have shown that employees are more loyal in our locations. This lowers costs because companies have to offer less economic incentives for people to reduce staff turnaround. Differences in rent costs are no longer a deciding factor when the location benefits represent such important savings. The savings might even cover the rent if companies have a large workforce. This focus will become more important in the coming year.
Q: What strategies are you implementing in order to serve the new suppliers that will arrive for KIA?
A: Although Korean companies have a tendency to buy land and buildings to suit, some of those companies are still interested in leasing. Out of all companies arriving to Mexico, just under half will look to lease, and those companies are our targets. We are developing a new industrial park in Apodaca, very close to Pesqueria, which is one of the most important industrial areas in the country where hundreds of companies are located. The demand for labor is such that the area is an importer of talent. We have chosen to settle in Santa Rosa because it is close to the airport, restaurants, hotels, and customers like KIA, but most importantly, close to an abundant labor pool.
Q: Besides providing an advantageous location, what does Grupo Avante do to specifically address automotive needs?
A: In comparison to other industries, the automotive sector requires more improvements to their buildings. Our engineering and construction staff can easily adapt to every phase of the automotive production cycle as they make improvements to the buildings. Monterrey has one of the most competitive industrial real estate markets in Mexico, as a result of the considerable industrial investment. Therefore, the cost of land is higher than in other markets. While construction prices are similar to other areas, leasing prices are low due to the strong competition in the region. This makes the CAPEX higher and the internal rate of return rates lower than in other cities, but creates a more stable market that lowers the investment risk.
Q: How does Grupo Avante collaborate with brokerage firms in order to gain a broader presence in the industry?
A: Industrial brokerage firms have gained great prestige and presence, and consequently brokers will represent foreign companies through tenant listings. With 80% of our transactions carried out through brokers and 20% directly with clients, most of our marketing efforts are focused on providing information and sharing our products with brokers who know the market very well, and have a deep knowledge about client needs. Our typical customers are foreign companies that are concerned about the wellbeing of their staff, eager for their employees to live close to work, and interested in transforming these advantages into economic benefits for the whole operation. Moreover, they are customers that need high-quality service standards from a developer. When those factors are met, the brokers will typically recommend Avante.