Image credits: Wilhelm Gunkel
News Article

Build-to-Suit Model Benefits Bajio Logistics

By Jorge Ramos Zwanziger | Fri, 04/09/2021 - 09:40

The e-commerce boom spurred increased demand for industrial spaces. Over the course of 2020, industrial spaces in Mexico increased by 2.1 million m2, 6 percent more than they grew in 2019. This trend has been particularly noticeable in the center and the Bajio region, argues CBRE, a Mexican real estate organization, according to Líder Empresarial. The increased demand for industrial spaces results from the need to strengthen logistics operations and to optimize e-commerce services, a strategy that can be achieved through a built-to-suit (BTS) model, reports Real Estate Market.

What is BTS?

“This is a business model where a real estate manager builds a property tailored to the needs of a tenant and then rents it out for the long term,” explains Grupo Cima, a company dedicated to the construction of industrial warehouses. The trend includes companies that seek tailor-made installations. “These are unique developments, specially developed at an architectural and operational level for a particular client in response to the strategic objectives of their business,” said Giancardo Fantoni, CEO at Bodenor Flexcenter, according to Revista Logitec.

One of the biggest strengths of this model is its flexibility, as it allows companies to better cope with instability. Grupo Cima gives two reasons for this. “The first one is that it involves long-term contracts of 10, 15 or 20 years. The second is that the warehouse is leased from the minute it is operational, so it is never unoccupied.” This way, both the tenant and the property owner benefit from this business strategy. 

In Mexico, industrial demand went through the roof due to the e-commerce and logistics boom. According to an analysis from CBRE, more than 100,000m2 were commercialized to be used for expansion or for BTS services to strengthen logistics and distribution networks, reports Real Estate Market. According to CBRE, one of the corridors with the highest construction rate of class A ships with BTS projects in Mexico is in Toluca, reports Líder Empresarial.

In the Bajio region, storage grew by 3 percent from 2019 to 2020, with Queretaro and Guanajuato holding around 70 percent of the region’s logistic spaces, reports Líder Empresarial. Unoccupancy rates were low in 2020 at less than 10 percent. According to Líder Empresarial, 2020 closed with 370,000m2 of industrial spaces offering a BTS model, with the main customers being from the manufacturing, automotive and logistics sectors.

The data used in this article was sourced from:  
MBN, Líder Empresarial, Grupo Cima, Revista Logitec
Photo by:   Wilhelm Gunkel, Unsplash
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst