LORENZO DOMINIQUE BERHO
CEO of Vesta
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View from the Top

Industrial Developer Betting on the Bajio

Thu, 11/01/2018 - 14:52

Q: Over half of Vesta’s real estate development portfolio is in the Bajio region. What are the advantages of the area and what is your differentiator?
A: The automotive industry’s growth has concentrated mostly in this region. Since 2008, states in this area have reached GDP growth rates of 4 percent compared to the national average of 2 percent. This economic growth is directly linked to industry’s expansion. Vesta has focused its operations on the Bajio region because of the area’s economic dynamism. We excel at helping foreign OEMs and suppliers set up shop in the Bajio region because of our 20 years of experience working in this area as opposed to other industrial real-estate developers that have focused on northern or central Mexico.
Q: What is Vesta’s strategy to meet the demands of automotive manufacturing companies?
A: Vesta is focused on understanding every link in the automotive supply chain. We understand the infrastructure needs of each company in terms of quality standards, heights, switchyards, electrical power, automation, proximity to other companies and available labor in each regional market. There are different kinds of automotive companies, from OEMs and Tier 1s to automotive-oriented logistics operators. Vesta tries to understand each client to offer solid support.
Almost 30 percent of our automotive clients are OEMs. These include BMW, Mercedes-Benz, Volkswagen, Nissan, GM and Chrysler. Tier 1s such as Voestalpine, HBPO and ZF account for 52 percent of our automotive clients, while the remaining 18 percent are Tier 2 and Tier 3 suppliers. We also have distribution centers oriented mostly to the aftermarket where we support automotive companies, mainly OEMs. We target multinational companies with high credit quality because they can commit to long-term contracts. Aside from OEMs themselves, our ideal clients are multinational suppliers that support several automakers and do not depend on a single automaker to operate.
Q: How does Vesta collaborate with public authorities to promote Mexico as an attractive investment destination?
A: We work closely with ProMéxico and state governments where our industrial parks are located. Vesta often visits a company’s headquarters in Europe, Asia or the US in tandem with government authorities to try and attract foreign investment to Mexico and promote the arrival of new companies to our parks. In some cases, our work with some of these potential clients’ partners and customers increases the allure of our spaces. The COMPAS alliance focused on INFINITI and Mercedes-Benz’s production is located next to one of our supplier parks.
Q: What type of lots does Vesta offer at its industrial parks to cater to its clients?
A: We offer build-to-suit (BTS) and speculative buildings. Each type offers its own advantages. BTS industrial warehouses, for example, are developed specifically to support the needs of clients. But Vesta has set itself apart in the sector of speculative construction. Our buildings anticipate the needs of manufacturing clients and are flexible enough to cater to any client. Furthermore, they can be divided depending on the space that a company needs and are equipped with all the services that a manufacturing company may ask for. Building industrial spaces speculatively also helps us to reduce the risks that the build-to-suit model entails. Of Vesta’s project portfolio, 70 percent of the industrial buildings were developed under the speculative scheme.
Q: How can Vesta support its clients in their logistics operations?
A: By collaborating closely with clients. Not only are the avenues in our industrial parks wide enough for trailers to move efficiently, Vesta also makes sure its clients’ switchyards are built with appropriate concrete, receive constant maintenance and have enough space to park trailers. Our buildings’ roofs must be at least 9.7m high so clients can stow and store goods efficiently, while managing forklifts with ease.