International Inbound Demand, Growing Domestic Sectors Boost Business Travel in Mexico

MEXICO CITY — As business and group travel recovers in Mexico and international inbound travel resumes, hoteliers are pivoting to take advantage of growing bleisure trends and getting their hotels in the best shape to attract returning business travelers.

“Starting in the middle of the pandemic, we recovered some business travel,” said Mauricio Elizondo, director of development for Mexico-based Grupo Posadas, which operates hotels across nine brands in Mexico. “’Suit and suitcase’ travelers went to our upscale hotels, but our midscale hotels had the best business travel recovery because these were people who needed to be out installing software, attending training, visiting plants. We have more than 150 midscale hotels, and in March we had occupancy of around 66% in those hotels.”

Elizondo spoke on a panel about business travel demand at the 2022 Mexico Hotel and Tourism Investment Conference here, presented by HVS.

Elizondo said the company’s upscale hotels in March achieved around 62% occupancy, which will grow “as travelers realize they can start reinstating meetings and group activities.”

Business and group travel in Mexico falls into several major buckets, including corporate travel, summits and conventions, then fairs and exhibitions, said Alejandro Ramírez, CEO at Business Travel Consulting. That third bucket has fared well because often large-scale trade shows and expos have used outdoor space.

All other types of business and event travel are slowly coming back, driven by what Ramírez called “the white-collar sector and the boots-and-helmet sectors.”

“We’ll start to see more events,” Ramírez said. “The second quarter is looking better, and we may close the year with 80% of this type of travel returning.”

Business Travel Drivers

Demand drivers for business-type hotels throughout Mexico have been growing in recent years in part due to the United States-Mexico-Canada Agreement, growing demands for manufacturing operations and the country’s expanding energy sector. Mexico City’s new international airport, Felipe Ángeles International Airport, also opened in late March, opening additional airlift into the region.

“The United States-Mexico-Canada treaty helped generate a pipeline of industrial projects, and fiscal incentives in the recovery have had positive effects in Mexico,” said Lorea Arnoldi, senior project manager for HVS.

Like most other developed countries around the world, leisure travel is outpacing business travel now, but Arnoldi said the country’s business-heavy cities, like Mexico City and Monterrey, are seeing occupancy grow and more development interest.

Embracing Bleisure

Oscar Chávez, director of franchise sales and development in Mexico for IHG Hotels & Resorts, said that like the rest of the world, Mexico saw inbound international travel dry up at the start of the pandemic.

“We created new safety and security strategies to incentivize business travelers to return sooner,” he said. “We tried to support business transient and corporate travel, and we marketed to them a lot because we knew they were sitting at home in front of their computers.”

Chávez said 85% of the company’s Mexican portfolio are business hotels, so the return of international travel has been “a breath of fresh air.”

Alex Mai, vice president of development for the Caribbean and Latin America at Radisson Hotel Group, said the bleisure trend that intensified during the pandemic is evident in Mexico, too.

“This mix of business and leisure is really helping us get the shoulder nights,” he said. “We need to develop the services to add value to hotels to allow these types of customers to stay with us and combine pleasure and business.”

Part of that comes in activating hotels more efficiently.

Chávez said that prior to the pandemic, IHG had been adjusting hotels and operations to be more efficient and make the best use of space. That practice has helped optimize returns for owners and make hotels more appealing to different types of travelers.

“We restricted some space in Holiday Inn Express and downsized the building to be more efficient,” he said. “Crowne Plaza and InterContinental hotels are readapting ballrooms to have more activated space. If restaurants have high tables, then after breakfast we can turn these into areas where people can work. This gives the investor the best opportunity, gives the business traveler the space they need and it’s inventive.”

Operations Costs

Hoteliers may struggle to balance operating costs with profitability, speakers said. The practice of restricting or stopping guest services to maintain profitability isn’t as widespread in Mexico as it is in the United States, speakers said.

“In group business, we continue to see Mexico have an advantage,” Elizondo said. “We have good labor here at competitive prices, very different from the labor picture in the U.S. There you stay in a hotel charging $300 to $400 and they don’t clean the room, everything is closed and you have to go to Starbucks.

“In Mexico, it’s different,” he said. “There’s good labor and in all our brands we provide daily housekeeping.”

Elizondo said the goal for 2022 is to recover rate enough “that will allow you to provide continued service at the margin you want.”

Business Hotel Transactions

In the near term at least, the development strategy for opening business-centric hotels is through conversions, speakers said.

“There are opportunities to buy, but I haven’t seen much,” Chávez said. “Beach markets are better, but in the city, it all depends on the perspective of the investor. He could have lots of available cash and may want to invest in bricks rather than in refurbishment.”

Elizondo said the majority of Posadas hotels opened this year will be via conversions. New-builds are still happening, but the process takes longer, he said.

“In the last month, we’ve seen four or five examples where we could have good profitability in an asset that already exists in a city,” he said. “This is going to be very active.”

 

Source: CoStar

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Manufacturing and R&D: How did Mexico Become the Rising Star on the Global Stage?

GlobalAutoIndustry.com’s latest Audio Interview “Manufacturing and R&D: How did Mexico Become the Rising Star on the Global Stage?” features Gary Swedback. Mr. Swedback is CEO of NAI Mexico and NAI PanAmericas, part of the NAI Global network, a leading industrial and commercial real estate firm. NAI Mexico operates 25 offices across Mexico and Latin America, and works with many global customers, including those in the auto industry. Gary Swedback is a sought-after speaker on Mexico & Latin America industry and business issues.

Visit Global Auto Industry and consult the complete interview.

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Ciudad Juárez es la cuarta ciudad con mayor demanda industrial

Durante el 2021, Ciudad Juárez se posicionó en cuarto lugar en cuanto a la demanda bruta industrial acumulada, informó Solili en un comunicado.

Este mercado industrial fronterizo, solo fue superado por Monterrey, CDMX y Tijuana.

Ciudad Juárez, con más de 612 mil metros cuadrados de demanda anual, es reconocido como un destacado centro de manufactura y transformación.

Su condición fronteriza ha sido de vital importancia para el impulso de su actividad exportadora.

Demanda bruta industrial aumentó 183% durante el 2021

El último trimestre del 2021, la demanda bruta superó los 121 metros cuadrados registrando un incremento de 183% con respecto al mismo trimestre del 2020.

Esto, derivado de solicitudes de empresas de giro manufacturero, logístico, automotriz, médico, industria plástica, electrónica, y shelters.

Durante este trimestre, culminó la construcción de seis inmuebles que adicionaron cerca de 90 mil metros cuadrados, con el 95% ya ocupados.

Con un inventario que supera los 6.7 millones de m2, las empresas buscan presencia en Ciudad Juárez, a la hora de elegir un sitio industrial en México.

Este mercado, altamente diversificado, favorece que corporativos globales logren obtener un desarrollo eficiente de proveedores gracias a dos elementos:

  •         Superficie que oferta en renta
  •         Cantidad de desarrolladores que allí se asientan

Desarrolladores muestran interés por espacios clase A

Parte de las empresas ya instaladas en la zona han presentado un mayor interés por los espacios clase A. Por tal motivo, la vacancia actual en esta categoría cierra el trimestre con 0.4 por ciento.

En años anteriores, había una oferta de espacios disponibles con alta presencia de inmuebles Clase B.

Sin embargo, en la actualidad este perfil ha ido mutando derivado de los nuevos inversionistas y desarrolladores que han lanzado una oferta de mayor calidad.

Al cierre de 2021, las nuevas construcciones suman 277 mil m2 en su totalidad Clase A, concentrando el Corredor Sur el 57% de los espacios disponibles.

Como respuesta a la actividad de arrendamiento, los desarrolladores han detonado este último trimestre ocho nuevas edificaciones clase A.

Con estos nuevos proyectos, el mercado suma 93 mil metros cuadrados, de los cuales el 80% se encuentran disponibles para arrendamiento.

Se prevé que el 2022 mantenga el interés de los desarrolladores que conocen del potencial de poseer inmuebles industriales en esta importante entidad.

 

Fuente: Inmobiliare

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China is on a Global Warehouse Spree

Between January 2020 and December 2021, Chinese firms doubled the number of overseas warehouses they operate from around 1,000 to over 2,000, according to figures reported by state media.

A series of recent policy documents makes clear that China intends to continue expanding that international network of warehouses.

For example, the overarching 14th Five-Year Plan released last year explicitly calls on the government to “encourage the construction of overseas warehouses.” An industry-specific five-year-plan focused on promoting “high-quality foreign trade,” published in November, is even clearer on the strategic role warehouses should play, saying China should “rely on overseas warehouses to establish a new foreign trade logistics network” and “optimize the layout of international supply chains.”

Meanwhile, three separate policy guidance documents focused on foreign trade development, issued by the state council between last July and last month, also emphasize (link in Chinese) the need to “cultivate a number of excellent overseas warehouse enterprises,” including with direct support from Chinese embassies and consulates around the world.

Why are global warehouses important to China?

On a purely logistical level, having overseas warehouses helps Chinese businesses get their goods to foreign buyers more quickly and cheaply.

Instead of shipping products only after a customer places an order, firms can dispatch their wares directly to overseas warehouses, clearing the customs process even before orders are made. When a customer makes a purchase online, the product can then be immediately shipped out to them from a nearby warehouse. In the lingo (link in Chinese) of China’s warehousing business, this is referred to as “products going ahead of orders.”

According to a 2020 trade report (link in Chinese) on China’s distribution and warehousing industry, overseas warehouses are estimated to reduce cross-border e-commerce logistical costs by 20-50% compared to retail direct mail, and reduce freight time from 20 days to 3-5 days.

On a broader strategic level, Chinese policymakers and industry experts regard domestic-owned and operated overseas warehouses as an important element of China’s competitiveness in foreign trade. That’s especially the case as the country’s ministry of commerce last month warned of “unprecedented” (link in Chinese) challenges to China’s foreign trade, including uneven global economic recoveries from the pandemic, ongoing supply chain disruptions, and efforts by other countries to reshore supply chains and reduce reliance on China.

For Chinese businesses, the pandemic-fuelled boom in global e-commerce—which is forecast to continue in the coming years—presents an opportunity to further grow their global footprint and market share.

China Business News, a publication operating under the Chinese ministry of commerce, described (link in Chinese) the covid-related supply chain disruptions of 2020 as a “baptism” that sparked “extensive and profound changes” in the cross-border e-commerce industry, leading to a “qualitative leap” in the development of overseas warehouses.

But competition in e-commerce is heating up. The 2020 Chinese warehousing trade report specifically named e-commerce giants Amazon, Walmart, and eBay as formidable competitors in the cutthroat cross-border shipping industry. That’s not to mention firms like shipping behemoth Maersk that are also making major investments in e-commerce.

At the same time as Chinese firms are setting up more warehouses around the world, they are also tapping into a network of warehouses operated by global real-estate logistics giants like GLP. Chinese brands currently account for around 10% of GLP’s total warehouse leasing volume in Europe, according to the firm.

But being able to rely on China’s own network of global warehouses offers its own strategic advantages. As Chinese state media outlet People’s Daily put it last January (link in Chinese), overseas warehouses “have become a new station for ‘Made in China’ to ‘go out’.” Or, in more direct terms (link in Chinese): “With overseas warehouses, Chinese goods will have even better sales!”

Source: MSN News

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¿Qué beneficios brindan Parques Industriales a usuarios?

En Bienes Raíces tenemos un dicho – Location, lotacion, location — y es que es lo más importante al tomar una decisión respecto RE es evaluar siempre la ubicación. En el sector Industrial, las empresas se encuentran con la opción de ubicarse dentro o no, de un Parque Industrial, en el norte, en el centro o en el sur del país. 

Por eso es necesario entender que es un Parque Industrial y que beneficios brinda a los usuarios localizarle dentro de uno.

Los Parques Industriales son complejos que otorgan espacios a empresas para llevar a cabo sus operaciones en condiciones adecuadas de infraestructura y servicios; y cuentan con una administración a la que se otorga una cuota para su correcta operación.

Estos espacios aseguran que existe una factibilidad adecuada en términos de uso de suelo, sobre todo para organizaciones que no están familiarizadas con los asentamientos urbanos y los procedimientos para regularizarlos; este factor es determinante.

Además los parques industriales, ofrecen servicios in situ para sus clientes, es decir, los inquilinos pueden encontrar instalaciones, permisos y servicios en términos de electricidad, agua, drenaje, luz, gas, seguridad y accesos. Los inquilinos deben formalizar los tramites necesarios para iniciar las operaciones en sus plantas.

Otra ventaja de un parque industrial es usualmente su ubicación, pues buscan tener la mayor conectividad posible, esto significa accesos, carreteras y en algunas ocasiones ferroviarias. 

Dentro de un proceso de arranque de operaciones o reubicación de un proyecto, se deben considerar estos y otros factores clave para que asegurar el éxito de las empresas. NAI Mexico, cuenta con  la experiencia y el personal para acompañar a nuestros clientes en el mercado inmobiliario industrial. Si tu organización esta evaluando o se encuentra dentro de un proceso como este, no dudes en contactarnos.

 

Fernanda Martinez

[email protected]

Directora Regional para el Bajío

NAI Mexico

 

Luis Miguel Torres

[email protected]

Sales Associate

NAI Mexico

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Global Market Trends & Predictions for the Year – Mexico & The Caribbean

In 2021, Mexico was NFL season tickets, a Premier League football match, the Met Gala, and a Formula1 race, all rolled into one. The sign said ‘sold out’ and yet global firms kept arriving to the standing room-only country, hoping for admission. Owners of industrial real estate across the country found themselves in the right place at the right time. Most major markets saw historically low vacancy rates ranging from .5% to 5%, as a result of strategic perspective shifts from global players.

Despite the pandemic and rising fuel costs, Mexico was almost perfectly positioned for a record spike in demand for industrial real estate. Some markets saw 40-100% increases in leasing while a lack of inventory required many global operators to delay expansion or new entry for 6-12 months. By Q3 2021, most industrial transactions were registered as new build-to-suit construction, to lease or own. This has required longer lease terms,
averaging 7-10 years, at lease rates which escalated 10-20% during the last 18 months.

Medical, aerospace, and automotive sectors initially slowed during 2020, but rebounded by 2021, while logistics and fulfillment sharply escalated. Scores of new fulfillment operations expanded into Mexico, often leasing more than 100,000 square feet. These range from existing firms to new operators from US, Canada and Europe, as well as a large influx of Pacific Rim-based companies entering Mexico to avoid future tariffs and duties, and US firms reshoring from China.

Office and retail sectors have paralleled the US experience during the last 18 months. Construction has slowed, and land-lords are working to retain tenants and rebalance their portfolios.

The unique selling point of Mexico continues: Labor rates are a fraction of the US market, real estate values and prices are still competitive, and the ability to ship overnight to US markets greatly enhances the competitive advantage. Global industrial operators will turn the corner on 2021 and continue the same pace into 2022, as strategic planners in board rooms in Asia, Europe and the US plan further record investment, and leverage Mexico’s continued strategic advantage as a major industrial platform for all of North America.

If you want to consult the full Global Market Trends & Predictions for the Year by NAI Global, Click Here.

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Border corridor sees spike in jobs, international trade and sales tax collection

El Paso, Las Cruces,and Juarez add a combined 35,000 year-over-year jobs in October, Hunt Institute says.

The jobs are coming back to the Paso del Norte region.

El Paso, Las Cruces, New Mexico, and particularly Juarez, Mexico, saw an uptick in employment in October. El Paso added 8,900 jobs in October, led by growth in services, trade and transportation, the University of Texas at El Paso’s Hunt Institute for Global Competitiveness reported on Tuesday.

The same three sectors fueled job growth in Las Cruces, which added 2,300 jobs. Juarez gained 23,900 jobs led by its signature manufacturing sector.

Juarez is home to more than 300 U.S.-run manufacturing plants and the Mexican government has designated many as essential businesses, which has spared them from COVID-19 shutdowns. Juarez has seen year-over-year employment gains for the past 15 months, according to the Hunt Institute’s December 2021 report.

But whereas El Paso’s manufacturing sector remains stagnant, it leads all major Texas cities when it comes to growth in sales tax collections, the report states.

El Paso collected $93.5 million in sales taxes during the first 10 months of the year, a 20.3 percent increase compared to pre-pandemic 2019 levels. It also collected $16 million more over the same period in 2020.

El Paso also was among the top four in the Southwest border in terms of international trade. El Paso’s ports of entry recorded an increase of 11.2 percent in trade during the first 10 months of 2021 compared to 2019, the Hunt Institute reported.

EL PASO, Texas VIA (Border Report) –

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Mexico could benefit from China’s exclusion from supply chains

The chunks metal being worked on do not look terribly special. But the factory of Aerospace, a chemical-processing firm in Tijuana, hints at Mexico’s importance to global supply chains. These are components, from tray tables to door parts, for aircraft made by companies including Boeing, Cessna and Lockheed Martin. BAP applies surface treatments to the pieces, from submerging them in big vats of chemicals to meticulous work done by hand, before shipping them north.

Mexico has long been a hub for manufacturing. Toyota, a Japanese carmaker, has had a plant in Tijuana since 2002. Honeywell, an American industrial giant, opened one in 2010. But increasingly the country is moving into higher-value processes. It now accounts for 3-4% of aerospace imports to the United States, up from 1.5% in 2010. By contrast China’s share, which was the same as Mexico’s a decade ago, is now just 1%. American sanctions on China and tariffs on Chinese goods explain much of this change, as well as rising wages in China and the difficulty of doing business there. The trend has accelerated recently. Pandemic-induced border closures, increased freight costs, and consumers’ demands for instant gratification have all nudged firms around the world to consider shortening their supply chains.

“This is a golden opportunity for Mexico,” says Helen Wang, a consultant. The country has some natural advantages, not least a long land border with the United States. Mexico is party to fully 23 free-trade deals. Manufacturing wages are lower than in China. A survey this year by the American Chamber of Commerce of Shanghai found that a fifth of its members were considering moving some work out of China; more than a third of those who were thinking of moving were looking to Mexico.

In Tijuana the mood among many Mexican businesspeople is optimistic. Several big firms have expanded recently. Panasonic, a Japanese electronics company, opened a plant in 2018 to make cables for aerospace. Other companies are diversifying into logistics and distribution. In September this year Amazon, an e-commerce giant, opened a warehouse there, though the company denied that it would use it to serve customers in the United States.

In addition to aerospace, the manufacturing of medical devices and other electronics is booming. “We are doing things [in Mexico] that once would have had to be done in Japan or Germany,” boasts Eduardo Salcedo, the manager of the local operations of Össur, an Icelandic medical-devices company. “We have guys running a million-dollar machine with their right hand and another one with their left hand.”

Chain reaction

The result is that the richest part of the country, by the border, is becoming even better off. “Northern Mexico is growing at similar rates to Asia,” says Luis de la Calle, a consultant who used to work at Mexico’s economy ministry. Elsewhere, however, the picture is mixed. FDI fell from 3.1% of GDP in 2018 to 2.3% in 2019, compared with 3.7% in Brazil or 6.2% in Vietnam.

And despite its proximity to the United States, Mexico has its shortcomings. Business parks provide world-class facilities but the infrastructure outside—from roads to ports—is of poor quality, says Mr de la Calle. Businesses complain of problems obtaining inputs. The likes of Panasonic and Össur import many of the materials they need. Similarly Össur nearly pulled out of Tijuana because it could not find a company to apply chemical processes to its products, which include prosthetics. (BAP eventually stepped in.)

Some of the causes of Mexico’s problems are outside its control. When the government of the United States talks about “near-shoring”, it really means onshoring, says Bill Reinsch of CSIS, a think-tank in Washington. It can be protectionist in negotiations with Canada and Mexico. USMCA, the revised trade deal agreed in 2020 between the three countries, is stricter than its predecessor, NAFTA—indeed it was negotiated in part to preserve manufacturing jobs in the United States.

But Andrés Manuel López Obrador, Mexico’s populist president, has not helped. In 2018 his administration replaced one of the most business-friendly (if corrupt) governments in Mexico’s history, that of Enrique Peña Nieto. Mr López Obrador, in contrast, seems to enjoy unnerving investors.

Soon after taking office he cancelled a new airport for Mexico City, after the diggers had been working for three years, at a cost of at least $5bn. In 2020 he also pulled the plug on a $1.4bn investment in a new factory by Constellation Brands, an American brewer, which was near completion. He has weakened independent regulators by absorbing them into government or slashing their budgets.

Mr López Obrador is also reversing his predecessor’s opening of the energy industry to private firms and favouring inefficient state-owned outfits. Along with making electricity dirtier and less reliable, this sends forbidding signals to investors. In November the boss in Mexico of General Motors (GM), an American carmaker, said the company would not invest further in the country without laws that promote renewable energy. Earlier this year GM had said it would invest more than $1bn to make electric cars in Mexico from 2023. Last year Tesla, a leading maker of such cars, considered opening a factory in Mexico but opted instead for Texas. Although Tesla did not explain its reasons, Elon Musk, its boss, has grumbled about the Mexican government’s closure of some of the factories of its suppliers during covid-related lockdowns.

Mexico risks “shooting itself in the foot” by not taking advantage of shorter supply chains, says Michael Camuñez, who started a series of meetings to boost the economic relationship between Mexico and the United States during Barack Obama’s administration. (Mr López Obrador and President Joe Biden relaunched this “economic dialogue” in September.) Unfortunately it is Mr López Obrador who has his finger on the trigger and, if his past treatment of foreign investors is any guide, seems likely to pull it. 

This article appeared in the The Americas section of the print edition under the headline “Missing links” in the economist

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