Last-Mile Logistics: The Key Element for Nearshoring Success

Q: What made Elite Last Mile Industrial Parks decide to focus primarily on Jalisco and what specific niche is the company targeting in the state?

A: We chose to start in Jalisco mainly because we saw a significant unaddressed opportunity here. The state is strategically located about 2.5 hours from the Port of Manzanillo, where goods from Asia arrive in Mexico. It is also about 2.5 hours from León, Guanajuato, and the entire Bajío region, placing Jalisco at the center of important commercial routes.

About five years ago, we noticed an increasing number of large companies setting up in Jalisco, creating demand for buildings ranging from 5,000m2 to 20,000m2, and even larger. However, we also identified a need for smaller warehouses ranging from 600m2 to 3,000m2, which are in high demand but have limited availability. Large industrial parks were often sold and leased quickly, creating a void in the market for smaller spaces. Our focus on smaller footprints allowed us to meet significant market demand that other developers in Mexico had overlooked.

We specialize in last-mile industrial parks, as large companies require their suppliers to be close by to ensure on-time delivery of goods to customers such as Walmart, Amazon, and Mercado Libre. Delays incur penalties, so proximity is crucial. 

Q: What does Elite Last Mile Industrial Park look for when selecting new spaces and locations for development?

A: We are developing in the metropolitan area of Guadalajara, Puerto Vallarta, and La Paz, Jalisco. Soon, we will expand to Nuevo León. The first thing to consider is location, followed by clear and clean legal status of the land, lastly that existing on-premise infrastructure is sufficient. We also assess the interest of the municipality and permitted land use to ensure we can build without issues. Availability of energy and water is crucial. Ensuring these elements are in place is fundamental for our projects to be viable. We take utmost care to analyze these qualities during the purchase process ourselves (hiring third party experts and engineers) such that we avoid all kinds of surprises down the road, we do not take anything for granted or by the seller’s word. 

Q: What strategies has Elite Last Mile Industrial Park employed to solve problems such as energy and water shortages?

A: Our industrial parks require less energy and water compared to larger parks, making it easier to find areas that meet our needs. Our projects fall under the category of non-polluting industrial use, which simplifies matters. About 60% of our projects involve logistics, which does not demand extensive energy. Even in cases where there are industrial processes, the combined energy requirements are modest. This efficiency in resource use makes our operations more manageable. We also encourage our tenants to adopt sustainable practices, such as installing solar panels to enhance energy efficiency.

Q: How does the company ensure that projects are completed quickly?

A: We pride ourselves on developing land within 12 months. During this period, we handle all necessary procedures with the municipality and complete the construction of the industrial parks. This efficiency brings certainty to our clients and enables us to replicate this model in other states and cities. We set a high standard for our construction contractors which they must meet contractually or face penalties and lose future contracts. We also make sure a steady cash flow is maintained to pay our contractors on time and make sure construction work is never stopped. We have a team actively involved with our contractors and their supervisors to ascertain timely and smooth delivery of deadlines and building objectives. The reason we can meet a 12-month deadline is because we internally set one that is closer to 8-months, with ample slack for unexpected delays.

Q: What role do partnerships play in the success of the Elite Last Mile Industrial Park?

A: Partnerships are crucial for us. We collaborate extensively with government bodies and private companies to achieve mutual benefits. These alliances help us adhere to high standards seen in industrial parks worldwide, ensuring we remain competitive and forward-thinking. Our partnership with AMPIP, for example, helps us stay updated with global trends and best practices, making our parks attractive to both local and international clients.

Q: How has nearshoring impacted the company's services and which services are in higher demand?

A: Nearshoring has greatly influenced our operations. Large companies cannot function effectively without having their suppliers nearby. We integrate into this ecosystem by providing the necessary infrastructure for suppliers to be close to their customers. This ensures projects run smoothly and efficiently. Our wide range of modules allows us to meet diverse needs, from a 750m2 warehouse to multiple connected spaces. So far, we’ve had clients from most parts of the world as owners and users of our facilities, demonstrating that we meet their needs not only in theory but in practice.

Q: What challenges does Elite Last Mile Industrial Park foresee and how do you plan to address them?

A: Despite our efficiency, navigating government regulations can be challenging. Although we have good relationships with local authorities, bureaucratic processes can slow us down. We address this by working closely with the government to expedite procedures, ensuring our projects stay on track. Security and legal certainty are also crucial, and we assist our clients by providing comprehensive support, including connecting them with local legal experts. Another challenge lies in finding land that meets all of our requirements of its characteristics, legal standing, marketability, deal flow and acquisition business model; thankfully México is very large and its expanding economy provides many opportunities. These three factors are where me and co-founder Luis Montes de Oca spend the most time on to address.

Q: What does the company expect from the new government of Jalisco and what should the government prioritize to support the industry?

A: The new governor will likely continue the work of the current administration. The real challenge lies with the municipalities, whose relationship we’ve taken great care of developing in advance of their takeover. The state government should push for more efficient processes to expedite development projects. Reducing bureaucratic delays and corruption at the municipal level will help attract more investment by creating a more favorable business environment. Ensuring legal certainty and streamlining regulatory procedures will be key to maintaining investor confidence and supporting the growth of industrial parks, and manufacturing & logistics at large.

Q: What do you expect for the future of industrial parks and how will Elite Last Mile Industrial Park contribute to it?

A: The sector will continue to strive to meet the growing demand for industrial spaces. Companies need these spaces quickly to keep up with their projects and client commitments. If we do not provide the necessary infrastructure, companies may look elsewhere, even outside the country. Nearshoring trends highlight Mexico’s strategic importance in global supply chains, particularly for our neighbors in the United States. By expanding our capabilities, we can support this shift and attract more investment to Mexico, ensuring we remain a key player in the global market.

Elite differentiates itself by being highest quality, shortest delivery and humane. Our premises offer a variety of amenities for workers, managers, semi drivers and owners alike. From beds and showers for drivers to ample and enjoyable common areas for workers, the experience we’ve been able to provide to all stakeholders of our clients is second to none in our format and market. 

Our goal is to replicate our success in Jalisco in other states while still growing our foothold in Guadalajara. We continue exploring and developing opportunities in the State of Mexico and other regions where we see potential (we are in various stages of progress in La Paz, Puerto Vallarta and Nuevo León as well). We look for locations with market conditions similar to Guadalajara’s, which will allow us to meet the high demand for industrial space where smaller footprint warehouses have been overlooked. We will continue to provide the highest quality infrastructure while expanding our presence throughout Mexico.

Elite Last Mile Industrial Parks develops and manages high-quality industrial parks designed for last-mile logistics in Jalisco, including in Guadalajara, Puerto Vallarta, Zapopan, and La Paz.