Claudia Ávila
Executive Director
Mexican Association of Industrial Parks (AMPIP)
/
View from the Top

Industrial Real Estate Attracts FDI

Wed, 11/01/2017 - 15:40

Q: What type of companies are affiliated with AMPIP and what are the benefits of being part of the association?

A: AMPIP’s members are mostly developers and suppliers. Among the developers are construction companies, such as Copachisa, Grumesa or Crocsa and the suppliers include input producers like CEMEX or Kingspan, among others. AMPIP helps parks achieve certifications that make them attractive to foreign companies. AMPIP’s program to promote international best practices in industrial parks helps our members be prepared for new trends in the market. Our alliance with the Commercial Real Estate Development Association (NAIOP), an equivalent US organization, helps us be aware of future trends coming to Mexico. Companies in the US must engage in certain environmental protection practices that are not obligatory in Mexico yet, so we are preparing for the moment they become compulsory. AMPIP also encourages its members to meet the Mexican Standard for Industrial Parks, which provides evidence of compliance with general public regulations and makes them attractive to companies because this standard is similar to that in the US.

AMPIP created the Green Industrial Park Recognition based on PROFEPA’s National Program for Environmental Audit. This recognition works as a stepping stone to PROFEPA’s in terms of regulation compliance. It contemplates the correct management of solid waste, as well as savings in energy and water consumption. AMPIP works closely with PROFEPA and with the German Agency for International Cooperation (GIZ) to implement environmental protection and sustainability practices and detect opportunities for sustainability within parks. Having this certification attracts foreign companies that ask for a park’s administration to provide environmental protection evidence. In terms of security, potential tenants look for parks with international security standards such as the Authorized Economic Operator (AEO) Program. Led by the World Customs Organization (WCO), this certification is part of a new international trend among countries, to avoid possible terrorist activity and other kind of risk, along global value chains.

Q: What are the key factors that influence the size and location of an industrial park?

A: Due to economies of scale, AMPIP’s members focus on huge developments, which is more cost-effective. It is too
costly for a developer to invest US$1 million in a power station, urbanization project or water management facility if they 175 supply a single building. However, if this station supplies 20-100 buildings, the overall costs are reduced for the developer. The costs of labor and other inputs are relatively similar, whether it is a 1,000m2 or a 10,000m2 development. It just makes more sense to go big. Building an industrial park in any random location is not feasible and several factors must be considered: proximity to trade routes, levels of urbanization, availability of skilled labor and even some amenities for foreign investors related to life quality, such as bilingual schools for their children, health services and golf courses. Transportation infrastructure is important when planning an industrial park, yet this depends on the kind of transportation that tenants would prefer. Although large quantities of semi-completed goods pass through the ports, they are not processed near the ports. About 80 percent of manufactured materials in Mexico are transported through land-based logistics channels, mostly targeting the US.

Q: What role does the public sector play in the development of industrial parks in Mexico?

A: AMPIP makes alliances with state governments in order to ease the process of land acquisition and permit facilitation. Many governments are interested in having industrial parks because they attract companies that create jobs in their regions but these developments require a high level of specialization that few people have. AMPIP encourages state governments to find a partner and build these parks together. Since building such a development takes several years, project continuity between administrations is usually jeopardized. AMPIP is fostering a new model among governments. They put land in a trust and facilitate the permits while investors assume part of the risk of urbanization and developments.