Monday, May 20, 2024

Guadalajara ramps up construction of industrial space to meet nearshoring demand

To meet the growing demand for industrial real estate space, the city of Guadalajara, Jalisco, has increased its supply by 50% in the first quarter of 2024, according to a report by real estate data platform Solili.

Compared to the first quarter 2023, Guadalajara added 102,000 square meters of new industrial space, of which 70% is currently vacant. 

The real estate fund Meor, which specializes in industrial parks, predicts a demand of up to 13 million square feet in industrial space in the next five years. (Meor)

According to Solili, the average rental price per square meter in Guadalajara in 2024 is US $6.40, an increase of US $0.80 compared to last year.  

The demand was mainly driven by companies in the logistics, parcel and household appliances sector, the real estate analysts reported.

Nearshoring has been credited with driving demand for industrial real estate space in Mexico. In 2023, more than 350 industrial projects totaling 5.6 million square meters were built in Mexico, driven by companies relocating to Mexico. 

In many parts of Mexico, the demand is outstripping supply. Mexico City-based real estate fund Meor recently reported that nationwide, less than 2% of available industrial space is currently vacant, while the figure in the northern region is close to 0%.

Sergio Ríos, former director of investment for the Jalisco Economic Development Ministry (Sedeco), said that if Jalisco develops enough industrial parks to meet demand, it could capture between 30% and 35% of the foreign investment that will come into the country through nearshoring over the next five to six years. Without sufficient industrial space, however, Jalisco would only be positioned to receive 10% of this foreign capital, he explained.

“It will all depend on covering the need for physical spaces with an industrial purpose, that is key,” he said during a recent conference on nearshoring and its opportunities for Jalisco.

Ríos added that due to a shortage of industrial spaces in Jalisco, foreign direct investment in the state declined by 30% last year compared to 2022.

According to data from the federal Economy Ministry (SE), Jalisco was fourth in a list of states receiving the most foreign direct investment (FDI) in 2023, amounting to US $2 billion — 6% of the country’s total FDI. Jalisco came after Mexico City (31%), Sonora (8%) and Nuevo León (7%). 

In 2023, the United States was Jalisco’s top investor with US $777.2 million, followed by the United Kingdom with US $588 million and Germany with US $390.2 million.

With reports from El Economista

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