WESLACO, Texas - A senior executive with Killam Development says demand for industrial real estate in Mexico and the southern US is accelerating with his company receiving inquires from Alaska, Indiana and Illinois.
Rene Alcalá, director of business development, RGV leasing and sales for Killam, was a panelist at the recent State of the RGV Real Estate Forum hosted by the Rio Grande Valley Partnership and RGV First. Killam is developing a large industrial park near the Anzalduas International Bridge in Mission.
“The demand for industrial real estate in Mexico and the southern US is accelerating as we saw with Carlos Marquez’ and Carlos Telles’ presentations,” Alcalá said.
Industrial real estate specialists Carlos Marquez and Carlos Telles were on the same panel as Alcalá.
“Within the next five to ten years we expect to see an interconnected web of manufacturing, assembly, warehouse logistic facilities emerge as these corporations seek to optimize their supply chains,” Alcalá said.
Alcalá asked those in the audience if they remember watching news during COVID and seeing shipping containers stretched out for miles at sea trying to get into the Port of Los Angeles. Supply chains were disrupted and some products were unavailable in the stores, he recalled.
“So that is what we want to avoid. The risk mitigation of having to depend on sea transportation of these products rather than buying land (along the border of the US or Mexico). (It) is a lot easier (to buy landO and a lot more cost effective. The distances are shorter. So those are some of the benefits that we see with near-shoring.”
Alcalá referenced the presentations of Marquez and Telles again when he mentioned the construction of manufacturing plants for electric vehicles and semiconductors. He also mentioned a conversation he had prior to his presentation with Ralph Garcia, vice president for Mexico operations at the McAllen Economic Development Corporation.
Alcalá said the state of Tamaulipas has to get its act together to take advantage of near-shoring.
“We all heard about Tesla and their investment in Nuevo León, the $5 billion facility with the new giga factory. We see Nuevo León, we see Coahuila, we see Chihuahua. We see the numbers. They're focusing a lot on near-shoring and then we see our neighbor Tamaulipas really kind of asleep at the wheel right now and we don't see a lot of push to try and get these (electric vehicle and semiconductor) companies to Tamaulipas.”
The State of the RGV Real Estate Forum occurred before the recent announcement from Tamaulipas’ minister of economy, Ninfa Cantú, that Chinese company Time Interconnect Technology Limited, was making a $40 million investment in a manufacturing plant in her state. The plant will produce cables and accessories for the telecommunications, data center, medical equipment, and automotive industries.
Alcalá contrasted the lack of success Tamaulipas has so far had with near-shoring with that of Nuevo León, which, he said, has been doing really well.
“So I was talking to Ralph before we started the presentation today and I was telling him that this is pretty much an issue for us because with Nuevo León, not only are they attracting these companies to come over here, like Tesla, you have other companies that just signed…” Alcalá said.
“I know the governor was just in Asia last week or two weeks ago. He was also an Asia last month and he's been traveling all over the world to try and get these companies to come closer to set up shop in Nuevo León, Monterrey, Apodaca, San Nicolas. all that area.”
The State of RGV Real Estate Forum occurred before the upheaval in the State of Nuevo León’s leadership. In the past week its governor, Samuel Garcia, announced he was resigning to run for president and then changed his mind.
Alcalá said Garcia is “very bullish" about developing the Colombia International Bridge in Laredo because it is the only port of entry that the state of Nuevo León has.
“That benefits Laredo, which is good. I have nothing against Laredo, my company is from Laredo. But I was raised here in the Valley. I have a soft spot for the Valley, obviously. And we want to see some of that activity over here as well,” Alcalá said.
“I was talking to Ralph about it and asked if we are going to get some of that (near-shoring) activity and Ralph made a good point. He said, remember we got a supplier from Tesla that came in and was looking at the region. There are some companies that would rather open up shop on this side of the border as well. So we can see some of that movement coming to the US.”
Nonetheless, Alcalá said he wanted to see more activity happening in Tamaulipas.
“I would say that we do need to kind of push our neighbors in Tamaulipas to get the ball rolling because we do need some economic development activity in the state.”
“I have actually some numbers that were kind of surprising. In the first quarter of this year Nuevo León, Coahuila and Chihuahua grew 3.4% 2.7% and 3.3% respectively, while Tamaulipas had a negative growth of point 1%.
“So those are all states that are along the border. They’re right there on the border. They're all neighbors. So the one that we need to focus on is obviously Tamaulipas.
“We have Matamoros. We have Reynosa. Those are the hubs. And I think there's a lot we can do from the (RGV) Partnership side, from the EDC (economic development corporation) side of the cities. You know, help our neighbor, Tamaulipas, so that we can capture some of this near-shoring activity as well.”
So is near-shoring really happening or is it just a sexy talking point, Alcalá asked. He then answered in the affirmative.
“We've had some calls and I work with Carlos Telles and Carlos Marquez a lot. They're in our industrial park, and they are not going to let me lie. We've had calls from investors from Alaska, from Indiana, from Chicago, and some of them have not even been to the Valley,” Alcalá said.
“They have seen it on the map but they hear the news. They hear what is going on here and they want to buy land and they want to develop industrial. So that really does show that they are serious, the numbers that you're seeing, the analysis that they're making, tell them that this is something that is real and it's happening.”
Like some of the other developers on the panel, Alcalá said the Valley needs more manufacturing and warehouse space.
“So, to their (the prospective clients from Alaska, Indiana and Chicago) point, I think we need to be ready to capture this. We have a 2% vacancy rate. I agree with Carlos Telles, we're probably going to be less than that by the end of the year. I do think that we're probably going to be at one maybe half percent vacancy,” Alcalá said.
“In our portfolio we have about two million square feet. Right now we have about 60,000 (square feet of industrial space ) and we'll be having 90,000 (square feet of industrial space) come up to market at the beginning of next year out of two million square feet. There is no space available right now so we really need to get going on this and build some spec (buildings) and make sure that we're ready to attract these companies to come over.”
Editor's Note: Thank you to Ron Whitlock and Ron Whitlock Reports for recording Rene Alcalá's presentation at the State of the RGV Real Estate Forum.
Editor's Note: Here is an audio recording of Rene Alcalá's presentation at the State of the RGV Real Estate Forum:
