Wednesday, May 22, 2024

‘Nearshoring’ fuels boom in construction of industrial parks in the Bajío region

Construction and development of new industrial space in the region known as el Bajío — which includes Aguascalientes, Guanajuato, Querétaro, and San Luis Potosí — is booming, pushed in large part by nearshoring in the car manufacturing industry. As of the end of September, 455,000 square meters of industrial space was reportedly under construction, an increase of  36% compared to the same period of 2021.

Rodrigo Folgueras, regional head of the real estate consulting firm CBRE in the Bajío region, said that the expansion of logistics companies which settled in the region during the COVID-19 pandemic is expected to continue as industrial construction recovers. Folgueras expects to see strong growth from Querétaro-based companies in particular, he said. He also noted that much of the growth in the Bajío region has been driven by the expansion of companies already in the area.

Folgueras said that the demand from automotive and light manufacturing industries will continue thanks to the region’s advantages in location, labor force, and infrastructure. He added that “nearshoring,” which is currently happening at the Mexico-U.S. border, will also occur in the Bajío region.

“It is foreseen that nearshoring, which has attracted investments in the Mexico-U.S. border industrial markets, will also happen in the Bajío, particularly from companies within the automotive sector, which constitute an important cluster in the region,” said Folgueras.

A woman at work in a vehicle manufacturing plant in Guanajuato.
A woman assembles a car dashboard at a manufacturing plant in Guanajuato. Gobierno de Guanajuato

Aby Lijtszain, CEO of Traxión, a transports and logistics Mexican company, said during a press conference that nearshoring in Mexico is directly related to merchandise transportation between Mexico and the U.S., and that it constitutes 25% of Traxión’s revenue.

According to Forbes México Magazine, companies in developed countries are betting on nearshoring to increase efficiency and reduce costs. Companies looking to transfer their operations closer to their main destination markets in response to continued supply chain disruptions — such as the Russia-Ukraine war and COVID-19 policies in China — are turning to Mexico.

Héctor Guerrera Herrera, Deputy Minister of Trade and Industry in the Economy Ministry celebrated the recognition Mexico has obtained from companies already established in Mexico owing to nearshoring in comments at the 2022 Annual Meeting of Industrialists. “Relocation of companies has mainly happened in the north and the Bajío area,” he said.

According to CBRE, the Bajío is one of the top areas in the country in terms of  land availability for building industrial warehouses — almost as much as northeastern industrial powerhouses like Monterrey, Nuevo León, and Saltillo, Coahuila.

Folgueras also said that Guanajuato and Querétaro are the most sought-after states for industrial space, a trend driven mainly by manufacturing companies over the last three quarters.

At the end of the third quarter, both amounted to 80% of the net absorption , or net change in the supply of commercial space available. That 80% represents 200,000 square meters that are mainly occupied by companies in the automotive, aerospace, warehousing, transportation, and food and beverage industries.

During the fourth trimester of 2021, the industrial corridor with the largest construction area was León, Guanajuato, with more than 55,000 square meters to be delivered by the end of 2022.

According to the Economy Ministry, the Bajío region, which includes 19% of all industrial space in the country, totaled US $2.7 billion of foreign direct investment (FDI) in the first semester of the year, surpassing by 9% the amount collected in the same period of 2021.

While the influx of foreign direct investment has increased, the gross investment amount is close to that of 2019 when the region received $2.1 billion, but still lower than 2018 when the gross amount reached $4.7 billion.

With reports from El Economista

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