MCALLEN, Texas - With discussions ongoing regarding trade tariffs between the US and Mexico in particular, the industrial development community may be finding itself in a temporary wait and see approach to launching new projects that aren’t preleased.
Certainly, speculative development that was green lighted earlier will move forward as these projects have a momentum of their own.
What is unclear is what tariffs will be implemented and how they will be calculated. Commercial trade between countries is a complex mechanism involving numerous applications of a tariff on a multitude of inbound products. Looking at the CBP website only underscores the complexity. If the Trump administration elects to implement a reciprocal or flexible approach to tariffs, that may be less onerous than a broad, product-based measure.
Recently some large global operators, Hyundai in particular, have announced plans to produce products in the US, homing in on the opportunity to manufacture products to avoid import tariffs and cement a location in the US economy and supply chain.
For example, Reuters reported from Seoul on March 25 that South Korea's Hyundai Steel “will invest $5.8 billion along with Hyundai Motor Group to build a steel plant in Louisiana with an annual capacity of 2.7 million tonnes, the company said in a regulatory filing on Tuesday.”
How does this all unfold and how will it affect industrial development going forward?
It’s too early to tell at this point, more time and information is needed. My guess is that tariffs will eventually work their way into the product and pricing mix. However, how that affects final consumer demand, only the market will tell.
Our friends at Savills Industrial and Logistics Research Team put together a report (see below) that is focused on the Texas-Mexico border trade community. In it you will find how border trade has economically impacted the industrial development community and what the headwinds facing further expansion are.
Founded in the UK in 1855, Savills is one of the world's leading real estate service providers. Its experience and expertise spans the globe, with 700 offices across the Americas, Europe, Asia Pacific, Africa and the Middle East.
The Savills team that worked on the report were Mark Russo, vice president of industrial research, Chris Bauers, research manager, industrial, Deandre Prescott, research manager, and James Cataldo, research analyst, industrial.
Editor's Note: The above guest column was penned by Bryan Cook, an industrial real estate broker and consultant based in McAllen, Texas.
Here is the Savills report:
