Lack of Land and Rising Costs Block DevelopmentThu, 09/01/2016 - 22:09
Q: How did Roca Desarrollos emerge as a key figure in the Mexican market?
A: During 2015 Roca Desarrollos was able to penetrate several key states, including Tamaulipas, Nuevo Leon, Queretaro, Chihuahua and Baja California, by purchasing plots of land to meet the demand for industrial buildings. The task for 2016 is to set up buildings so our clients can begin operations as soon as possible. Our Reynosa, Monterrey and Silao industrial buildings are already running but construction in Ciudad Juarez and Tijuana is still underway.
Q: How is Roca Desarrollos working with the government to encourage land development that meets industry requirements?
A: That cycle takes much longer as secondary infrastructure must be secured to comply with sector requirements. The company is channeling its attention to land parcels with services installed. We have strong ties with the government but our relationship is primarily focused on the promotion of our services. Companies usually contact state governments to evaluate the incentives they can offer. This communication provides us with the opportunity to offer and promote part of our portfolio that caters to these companies’ needs.
Roca Desarrollos constructs its buildings with generic characteristics that can be easily adapted. Once a client decides to establish their operations we can customize any extra requirements. The company has access to an investment fund through an alliance with Gava Capital allowing us to offer our clients a more effective and malleable response.
Q: How much focus has the company given to sustainability?
A: We must keep sustainability in mind at all times. Although the industry has begun to focus on that specific area, its penetration in Mexico has not been substantial. There are some industrial firms that invest in certifications but the broader spectrum continues to fall short. Around 95 percent of users are not willing to pay the additional costs
this entails, putting Mexico behind international standards. Some companies like Roca Desarrollos are making key investments to turn this around. We make a great effort to keep costs low so users feel more comfortable joining the movement. Investing in key locations that can bring logistics and transportation costs down is a measure that we can take to balance the overall costs of their operations.
Q: What does Roca Desarrollos ask of the government regarding secondary infrastructure to offer better-quality products and services?
A: The industrial real estate segment needs energy availability. Mexico is still lacking investment to supply industrial zones with enough energy at a higher rate. We may be able to find land plots but if the infrastructure is not present to accompany the operations they become unfeasible for us. Sometimes constructing the right energy infrastructure can be more expensive than buying the land. As the Federal Commission of Electricity (CFE) is a publicly owned company, it is the sole responsible authority for this. There is no question that the government needs to improve its offering and push for advanced investment capabilities from public agencies. We also suggest the development of an open market where public investments can tackle the increasing demand of our segment.
Road infrastructure remains a shortcoming. Permit filing is one of the biggest hurdles and needs to change rapidly. The permits take too much ime to obtain and several permits can be needed for a single operation. As a result, ROI for our users takes longer, lowering their interest and commitment to the state.
Q: What are Roca Desarrollos’ short-term goals for its portfolio?
A: Our primary goal for 2016 is to consolidate our operations in markets we recently entered. Secondly, Roca Desarrollos is looking to expand its presence in Mexico City, Guadalajara in Jalisco and San Luis Potosi. We plan to close 2016 with the construction of almost 1,000,000ft2 of new buildings, which will bring a whole new dynamic to the company.