Nearshoring Surge in Mexico Seeks US CRE Investors

Since the supply chain disruptions of the pandemic and during the ongoing decoupling with China, manufacturers have been reshoring overseas facilities.

Not all of these operations are coming back to the United States. Increasingly, many are “nearshoring”—putting manufacturing and logistics facilities in Mexico.

A Mexico City-based developer has tapped Cushman & Wakefield to find an equity investor to help build a $1.7B cluster of manufacturing and logistics projects in several locations beginning with Tijuana and Monterrey, according to a Green Street alert.

Meor, one of Mexico’s largest developers, is planning to build 18.3M SF overall, which equates to about $98 per SF in terms of project costs.

The first phase of the build will involve three projects in Tijuana and Monterrey, two of Mexico’s largest industrial markets, where occupancy exceeds 99%. Some of the sites are shovel-ready, with land purchased and approvals lined up.

Meor’s development plans also include, in later phases, projects in Ciudad Juarez, Guadalajara, Mexicali and Torreon.

The Tijuana portion, which will be about a third of the overall footprint, is expected to cost $750M, while a smaller facility in Monterrey will cost an estimated $136M. An investor likely will be asked to provide equity for about $300M of the first phase of the project, Green Street’s report said.

Ciudad Juarez, to be built in a later phase, is expected to account for the largest concentration of planned space, about 37% of the portfolio.

According to the developer’s plan, the properties would be leased on a triple-net basis with initial terms ranging from seven to 10 years. The goal is land tenants who are guaranteed by international parent companies.

Leases will be denominated in U.S. dollars, “removing all foreign exchange-related rental income risk across the portfolio,” according to the marketing materials.

Mexico this year surpassed China as the largest U.S. trading partner. Mexican cities are attracting global companies looking to expand in proximity to the U.S. Mexico offers lower labor costs and pricing discounts compared to U.S. industrial properties.

Meor has completed 100 projects encompassing 10.2M SF since 2006, many of which involved teaming with U.S. institutional investors.

The pitch for the portfolio touts an opportunity to establish a “long-term, programmatic relationship” with a premier developer with deep times to “the highly competitive and relationship-drive Mexico market,” the report said.

The Cushman & Wakefield team marketing the Meor portfolio includes James Carpenter, Rob Rubano and Ernesto Sanchez.