LABOR AND INFRASTUCTURE
In the past, Mexican labor has been referred to as cheap and
low quality. Recently this has changed; Mexican qualified
labor is now another one of the key elements in providing
productivity for investors, (seen as high quality labor)
delivering high quality production at a reasonably low cost.
Ford in Hermosillo, Nissan in Aguascalientes, and VW in
Puebla demonstrate a few of the success stories, because of
their productivity in assembling high quality vehicles.
With an estimated population of 120 million, in 2013, México
is the second-most populated country in Latin America after
Brazil. Forty percent of the population is comprised of the
age range 25-54 and 18. 1 percent from ages 15-24, meaning
Mexico possesses a considerable labor force. The average
education is equivalent to junior high school. Also, México is
graduating close to 90 thousand engineers and technicians per
year, more than countries like Germany, Canada, or Brazil.
In terms of connectivity, México has an extensive railroad
system, as well as a very large highway network. The
railroad system connects to almost any city within the
United States and it is operated mainly by two large carriers:
FerroMex and Kansas City Southern. Local carriers serve the
Seaports play an essential role in México´s international
trade. Ports in the Gulf of México, as well as the ones in the
Pacific Ocean, are used by many international companies as an
alternative to congested ports in the United States, mainly the
ones on the West Coast. The time required to unload a container
in a Mexican port is a fraction of the time taken in the U.S.
There are more than 350 industrial parks in the 32 Mexican
states. Most of these parks meet international standards
in urbanization as well as construction facilities. Many
international industrial real estate players are present in
México: Prologis, Prudential, Macquarie, and Ridge compete
alongside local developers in expanding their footprint and
attracting new investments.
México is a developing country. Thus, most of its Class A and
B facilities are only eight years old, on average. Most of its
demand is for new buildings or build-to-suit. Average vacancy
rates are 4 percent in the secondary and 8 percent in the
primary markets. Lease rates have remained constant in recent
years because of capital availability in the market, the creation
of the Mexican REIT´s and the flow of foreign investment in
The largest activity in the last 12 months has been in the
markets of México City, Toluca, the Bajio Region (Queretaro,
Celaya, Leon, Aguascalientes and San Luis Potosi), and
Saltillo; some other markets like Tijuana, Cd. Juarez, and
Monterrey have been gaining speed since the beginning
México has been growing at a very constant rate in recent years
and is expected to continue to grow at an even faster pace for
at least the next 10 years because of its newly instated energy
and tax reforms. Opportunities to do business in México exist
and are expected to increase considerably in the years to come.
In real estate, we will to continue to see exponential growth
in industrial parks, office buildings, and retail to supply the
growing demand. Expansion and transfer of operations of
foreign companies for manufacturing operations in México are
going to be seen more often — most of them coming from the
United States and Canada.
This is an opportunity for all SIORs to expand their territory;
most of their current clients might have or will wonder where
to expand, and most likely México is going to be one of their
top choices because of proximity, potential growth, and all the
advantages mentioned in this article.