06 Feb 2017

Tijuana Industrial Real Estate Update February 2017

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Tijuana Industrial Real Estate Update February 2017

Tijuana is in a state of flux. Looking at thirty years of data while working in this market, there has never been so little vacancy. In 2016, over four million square feet was absorbed by companies like Motor Car Parts & Accessories and Flextronics. Today, given some of the uncertainties with regards to NAFTA and trade in general, some companies are waiting to make major decisions until US trade policy is clarified. This pause in the market could mean opportunities for price easing in some areas.

Nike is now using Flextronics to produce personalized shoes in Tijuana. Better logistics allow Nike to deliver product to customers in the United States more quickly and less costly than can be achieved through Asian sources. As well, Esterline is expanding into a new build-to-suit in El Aguila.

When the Mexican economy suffers, be it based on reality or rumor, it tends to have a positive effect on the Maquila Industry. The recent peso devaluation lowered costs for power, water and labor in Tijuana, at least for the short term. For now, it appears the new administration will be focusing its attentions on Germany. Any broad tariffs are likely to be small and enforced on Asian producers as well.

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