Relocation of companies in Mexico will boost the real estate sector
According to a report, the relocation of companies in Mexico or nearshoring could boost credit in the Mexican commercial real estate sector.
According to the credit rating agency Fitch Ratings, the relocation of many companies can allow the real estate sector to flourish in many states of Mexico.
In this sense, the relocation of companies to Mexico allows for commercial real estate developments in Mexico due to occupancy rates and rental growth.
However, on the other hand, the relocation of companies to Mexico drives more real estate projects.
“Companies will need to balance growth with maintaining healthy credit metrics and ratings in the context of weakening global economic conditions and growth,” Fitch Ratings analysis states.
Relocation of companies in Mexico
Furthermore, Fitch Ratings emphasized that Mexico will be one of the main beneficiaries of “nearshoring,” which refers to the relocation of companies.
It specified that the global realignment of supply chains, their relocation in North America, the world’s largest market, and the Mexico, United States, and Canada Agreement (USMCA) are key factors.
They pointed out that Mexican investor groups encourage developers to move to acquire and build new industrial properties.
This relocation includes “exceptionally high” occupancy rates of nearly 98%, according to data from the Mexican Association of Industrial Parks.
Similarly, it highlighted that the vacancy rate is low, at up to 2.9% in May.
The rating agency also noted that foreign direct investment (FDI) grew by 48% year-on-year in the first quarter.
Meanwhile, the Ministry of Economy reported, with preliminary figures, that it amounted to $29.041 billion.
In contrast, it pointed out that the sector, in its goal of meeting the demand for industrial space, will face some challenges in Mexican territory.
Some of these challenges include the lack of adequate infrastructure, security concerns, and inconsistent regulatory framework.
“The cost of addressing some of these risks may increase investment requirements and exert certain pressure on profitability and capitalization rates,” it detailed.
The relocation of companies in Mexico will continue to have an impact on all sectors of the economy.
Also read: The Mexican peso opens with losses.
