Industrial Market, a Strategic and Financial Business in Mexico

By: SiiLA México

Consumer habits, the USMCA, nearshoring and offshoring are factors that have benefited the industrial market over the last year. This is due to the accelerated growth it has experienced and the fact that e-commerce is here to stay, making it a favorite among investors.

For RMSG, a company with 16 years of experience in the real estate market and that participates directly in the acquisition, development, maintenance, leasing and management of real estate projects throughout Mexico, it has been no different.

Last Wednesday, February 3rd, at SiiLA Mexico, we spoke with Raul Arroyo, CEO of RMSG, about the company's new development, "Campus RMSG Tijuana", as well as its performance in 2020, expansion plans, financing, certifications and factors that have influenced the exponential development of the industrial asset.

This new development represents an important competition for the industrial market in the area. This industrial park of 35 total acres will consist of five industrial buildings, three of which will be delivered during the first quarter of the year. It seeks to have a high quality approach, with LEED, ESG and C-TPAT certifications, as well as incorporating clean energy and AAA tenants.

One of the transactions in this park is the lease agreement between RMSG and XB Logistics, which will be the tenant of the E1 warehouse within the campus. In order to close this contract, Arroyo mentioned that it was a brief negotiation, initiated in August 2020 and signed in November of the same year. The decisive elements to close the deal were: the location of the park (two miles from the Otay Port of Entry), the quality of the property and the delivery time promised by RMSG, which was 4 months.

The positive results keep adding up for RMSG, which in 2020 leased 1,700,000 square feet. One of its most relevant transactions was for a 600,000 sq. ft. property. However, Raul Arroyo explains that, although the COVID-19 pandemic has posed challenges, RMSG was prepared, as they already had all the necessary technology to face any obstacle and they only focused on finding and obtaining new clients.

RMSG is a company that undertakes different projects in the Mexican territory through public and private investment funds, which began to gain strength with the increase in industrial activity during 2020. It is through this type of projects that they provide better returns to their investors. As it is considered both a strategic and financial business, interest rates have been positive for its investors, which makes RMSG's developments functional and ready to look for tenants that provide security in the future. Likewise, the industrial asset in general represents a niche of great interest for real estate investment by public and private players, even if some of these companies are not related to the line of business.

The year 2021 represents good opportunities for the industrial asset class, and specifically for RMSG, which plans to continue its expansion with new developments in Tijuana, Ciudad Juarez, Monterrey and CDMX. It is worth mentioning that the CEO reiterated that at this time he sees few opportunities in secondary markets due to the positive influence of nearshoring in the main markets.

With regard to nearshoring, significant growth is expected in the next 3 to 4 years, as changes in consumer habits will stabilize over time, which will give the industrial sector an opportunity to reinvent itself and adapt, so Arroyo mentioned that customers are looking for properties with more area and more free height, in order to make better use of storage space.

According to the executive, the industrial asset class will continue to expand in 2021, there will be more changes in consumer habits, such as the growth of e-commerce; likewise, the logistics sector will continue to develop as well as manufacturing. "The rules of the game have changed and the various sectors will continue to adapt. The industrial sector is still the cheapest leasing area to store and sell a product," stated RMSG's CEO.

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