Developers Stress Importance of Infrastructure for Nearshoring

As nearshoring is attracting more companies to key Mexican states, the availability of industrial space is falling below 1%. Industrial developers say basic infrastructure like highways or railroad connections could boost the potential benefits Mexico could receive through this phenomenon. Furthermore, they expect the public sector to collaborate on industrial projects.

Jonathan Pomerantz, Sales Director, Meor, said that industrial real estate developers are successfully overcoming challenges like high inflation and increasing interest rates. Nevertheless, the lack of appropriate infrastructure is Mexico’s Achilles’ heel. 

The construction sector blames the lack of proper infrastructure on insufficient investment in new projects. According to Fernando Solares, Director General, the Mexican Chamber of the Construction Industry (CMIC), Mexico invests only 1% of its GDP, in the development of infrastructure while it should invest at least 5%. “Industrial construction is a great opportunity for Mexico but without more investment in this subsector, we cannot move ahead. We are worried that the public sector does not consider us to be a strategic economic activity,” Solares added.

Solares stressed foreign companies need basic services like water supply and connection with the grid to properly operate, adding that housing and services for workers like hospitals, schools and public security are also essential. 

Nevertheless, collaboration between public offices and the private sector has occurred. According to Meor, this collaboration has mostly materialized in the north. The Federal Electricity Commission (CFE) has greenlighted developers to strengthen public substations and install wiring for industrial parks, for example.

Roberto Ballinez, Senior Executive Finance and Infrastructure Director, HR Ratings told MBN that companies are looking for countries that feature efficient logistic routes, cheap labor costs and appropriate infrastructure. Mexico’s current energy infrastructure assets might not be sufficient to fully cover the industry’s needs, however. Therefore, the country must increase the generation of clean electricity, which must be accompanied by the construction of new charging stations. 

José Lobatón, CEO, Proyectos 9, said that nearshoring will also bring a higher population density in key areas, especially in Nuevo Leon, where Tesla may construct a giga-factory. In this context, the country must also invest in providing proper housing to meet the demand and make urban centers more efficient. “We face a great issue. Nearshoring could boost the economy within the next 15 or 20 years but we must understand it and develop infrastructure, which also includes housing.”