Weekly Review I March 27, 2024

GENERAL SITUATION IN MEXICO

RELEVANT NEWS

DEVELOPERS ACCELERATE INDUSTRIAL BUILDINGS CONSTRUCTION IN EARLY MONTHS OF 2024

The number of industrial buildings construction starts recorded a 15% annual growth in the first two months of 2024, which represents a strong start to the year and bodes well for a promising cycle for the industry, according to real estate data platform Solili.

According to the company’s analysis, construction began on a total of 705,000 square meters (m2) of space for industrial operations in Mexico during the first two months of the year.

“This volume of industrial construction reflects not only the confidence of investors in the Mexican market, but also the growing demand for industrial space by national and international companies,” the report said.

The accelerated development of real estate for logistics and manufacturing activities in the country is the

result of demand generated by the reconfiguration of global supply chains, a trend known as nearshoring.

Monterrey, Nuevo Leon, is one of the most attractive destinations for companies seeking to bring their production processes closer to the United States, which is why the city of Monterrey leads the detonation of new projects with the construction of 232,000 m2 of industrial buildings, according to Solili.

It is closely followed by Mexico City, with 173,000 m2; for its part, Queretaro rises to third place in this list, with the launch of 147,000 m2 of industrial buildings.

“This momentum is expected to continue throughout the year, with new investments and projects that will further strengthen the industrial real estate sector in Mexico and contribute to the national economic development,” the platform added.

RELEVANT NEWS

OFFER RECONFIGURATION

As part of the reconfiguration of the industrial market, industrial developers have sought to adapt to the needs of companies attracted by nearshoring. One notable trend is the size of these spaces in each region.

Although the average area of buildings delivered in 2023 was slightly smaller (-2%) than those already existing in the country, the behavior of supply was heterogeneous at the national level, according to the company SiiLA.

The decrease in the size of industrial buildings in the Central and Bajio regions can be attributed to the diversification of demand, where they were 19% and 33% smaller, respectively.

On average, the industrial buildings delivered in the Bajio region had a gross leasable area (GLA) of 11,000 m2, while in the Central region the average was 14,500 m2.

On the other hand, the increase in the size of industrial properties in the northern markets can be explained by the strength of manufacturing and exports, especially to the United States.

In terms of new inventory in 2023, SiiLA data shows that industrial buildings delivered in the Northwest averaged 11,500 square meters, which is 32% larger than the spaces existing before that year.

SOURCE: EL ECONOMISTA

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

March 20-26, 2024

TAX CONFLICTS

• Grupo Salinas tax lawsuits: Antonio Martinez, head of the Tax Administration Service (SAT), provided fiscal details regarding Grupo Salinas, noting a significant increase in tax debts from 38 to over 63 million pesos due to fines and surcharges. Grisel Galeano, Federal Tax Attorney, shared Grupo Salinas’s legal arguments, anticipating a resolution within 120 days. After a failed negotiation between President Lopez Obrador and Ricardo Salinas, the government will defer the case to the judiciary. Lopez Obrador emphasized support for tax-compliant entrepreneurs and announced public disclosure of case details on a government website.

• Jugos del Valle lawsuit: Lopez Obrador mentioned the judicial case related to Jugos del Valle, in which the Value Added Tax of 20 billion pesos was refunded. Currently, the government is considering the possibility of trying to recover this refund, which would amount to 14 billion pesos.

U.S.-MEXICO RELATION

• Texas SB4 Law: Regarding the entry into force of SB4 in Texas, the President described it as unjust and a violation of human rights. He mentioned that

KEYPOINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S MORNING PRESS CONFERENCE

the government is against it and that a diplomatic response is being prepared by the Ministry of Foreign Affairs. The President mentioned discussions about the issue within the security cabinet. The Minister of Foreign Affairs assured protection for Mexican nationals in Texas and highlighted the unconstitutionality of the law. In terms of Mexico’s response, there’s a migration plan focusing on containment and support at the southern border, backed by the armed forces, National Guard, and state governments. Suggestions were made to the United States regarding regularization for long-standing Mexican migrants and financial aid for Central American countries. Additionally, there’s talk of suspending sanctions against Venezuela and Cuba and expanding the U.S. program for legal residency.

• Meeting between the U.S. Ambassador and the Supreme Court President: regarding the meeting between the U.S. Ambassador, Ken Salazar, and Minister President, Norma Piña, the President emphasized that the ambassador has every right to hold such meetings and that a positive relationship has been maintained with both the Biden and Trump administrations.

• Fentanyl production: The President addressed questions regarding fentanyl production in Mexico, stating that while some of it is produced domestically, precursor chemicals also play a role, with similar issues present in the U.S. and Canada. He emphasized that blaming Mexico alone overlooks the broader scope of the problem. The President highlighted efforts to dismantle drug laboratories under his administration. Additionally, he stressed the need for the U.S. to address consumption issues, which he sees as the primary problem contributing to family breakdown.

INTERNATIONAL AFFAIRS

• Spanish enterprises in Mexico: President Lopez Obrador mentioned a meeting between COPARMEX and the King of Spain. He reiterated that COPARMEX is an organization linked to a political party. He criticized how Spanish companies used to do as they pleased, citing contracts Felipe Calderon granted to Repsol for gas without bidding and without penalties for non-compliance. He also mentioned the sale of PEMEX shares to Repsol at a lower price. Following this, he specified Calderon’s employment by Repsol. He also commented on Peña Nieto’s multiple contracts with OHL.

• Repatriation agreement with Venezuela: The Minister of Foreign Affairs of Mexico reported that there is an agreement aimed at repatriating Venezuelans to their country and providing them with a support program. She also mentioned that there are agreements with Venezuelan and Mexican companies, such as BIMBO and FEMSA, to provide them with employment in their home country. She added that in Mexico, agreements have been made with nearly 50 companies to provide employment opportunities for migrants who remain in the country.

NEWS BY STATE

BAJA CALIFORNIA

Pedro Montejo Peterson, president of INDEX Zona Costa BC, anticipates significant growth in the construction of industrial buildings in Tijuana throughout 2024, particularly in the Boulevard 2000 area due to its favorable infrastructure. Plans are in place to develop approximately one million square feet of industrial space, with an expected 80% occupancy rate from established companies in the region seeking expansion, indicating a promising uptick in Tijuana’s industrial sector.

SOURCE: INDUSTRIAL BC NEWS

SONORA

The private economic development agency “Sonora Global (SG)”, headed by its president; Arturo Fernandez Diaz Gonzalez, led this Monday March 25th an initiative in collaboration with the United States-Mexico Foundation for Science (FUMEC) and the National Cluster Council of Software and Information Management Technologies AC (MxTI), through a strategic meeting to establish a Skills Management Committee aimed at developing Competency Standards for the Semiconductor sector.

This meeting is of vital importance due to Sonora’s need to boost competitiveness and innovation in various sectors. The goal is to support and boost job creation, attract investment and strengthen the region’s position in the global hightech industry.

SOURCE: RADIOSONORA

NEWS BY STATE

NUEVO LEON

This Thursday, businessmen and representatives of various organizations met at the Forbes Monterrey Economy and Business Forum: “The Opportunity of a Permanent Investment”, where the strengths of the city of Monterrey as a business engine were highlighted.

“Last year, Monterrey attracted 2,537 million dollars in Foreign Direct Investment, 86% of which came from reinvestment of profits,” said the event’s presenters in the opening speech.

SOURCE: FORBES MX

CHIHUAHUA

The Coordinating Council of Women Entrepreneurs, Index Chihuahua and Canacintra Industrial Women, recognized 80 women, who for their contribution to the industry, have made Chihuahua a leader in development.

Emilia Melendez Villegas, president of Fechac, received the recognition for her career and spoke of the contribution of the 40,000 women who, on a daily basis, work in the maquiladora export industry with the sole objective of improving the community.

SOURCE: DIARIO MX

NEWS BY STATE

AGUASCALIENTES

According to the latest INEGI indicators, construction companies in Aguascalientes will maintain their growth momentum in 2024.

At the national level and as of January 2024, the entity contributes 1.1% of the total production value of the construction sector.

SOURCE: LIDER EMPRESARIAL

QUERETARO

Micro, small and medium-sized industrial companies (MSMEs) have positive expectations for 2024, due to the fact that the relocation of supply chains is generating business opportunities, said the president of the Association of Industrial MSMEs of Queretaro (Amiqro), Cuauhtemoc Acevedo Toledo.

Therefore, Amiqro is developing a strategy to facilitate the arrival of companies that decide to set up in the state.

SOURCE: EL ECONOMISTA

NEWS BY STATE

GUANAJUATO

Guanajuato is the third largest market in industrial space inventory with 8 percent nationally and the first in the Bajio with 37 percent, according to CBRE Research’s Industrial and Logistics Market Insight 2023 report.

Net absorption of industrial and logistics space reached 5 million m2 in 2023, a growth of 16 percent versus 2022; construction closed the year with 3.5 million m2 and increasing starting prices.

SOURCE: TV4 NOTICIAS

SAN LUIS POTOSI

In order for San Luis Potosi to continue strengthening ties of cooperation and exchange in the areas of culture, education, health, economy, tourism and investment, the head of the State Executive Branch, Ricardo Gallardo Cardona, held a meeting with Graeme C. Clark, Canada’s ambassador to Mexico.

During the meeting held at the Government Palace of San Luis Potosi, the Canadian community recognized the state as a potential for the development of economic, cultural and educational projects, as part of bilateral agreements that enhance the growth of the state.

SOURCE: EL UNIVERSAL

NEWS BY STATE

CDMX

Mexico City has attracted a record amount of Foreign Direct Investment (FDI) totaling $43.593 billion between 2019 and December 2023, marking the highest investment in its history. The capital accounted for over 30% of the country’s total FDI in 2023. The Industrial Zone of Vallejo emerged as the second-largest destination for FDI in Mexico City. Manufacturing, particularly in electrical, electronic, and pharmaceutical sectors, attracted significant investment, with the United States, Spain, and Canada being the main investing countries. Additionally, 4,348 new businesses opened in the city in the first three months of 2024, covering various sectors such as cafes, taco shops, and grocery stores. Moreover, 26,791 jobs were created during this period, contributing to the overall 903,000 new jobs generated in Mexico City from January 2019 to the first quarter of 2024.

SOURCE: EL ECONOMISTA

STATE OF MEXICO

During the Holy Week vacation period from March 24 to 30, an increase of 9% in income is expected for various recreational, cultural, and hospitality-related activities in Toluca, State of Mexico. This increase is anticipated to benefit 86,385 companies employing 552,515 residents. The National Chamber of Commerce, Services, and Tourism (CANACO-SERVYTUR) of the Toluca Valley forecasts an economic impact of 7 billion pesos, surpassing the previous year’s projections by 500 million pesos.

SOURCE:

PLANA MAYOR

INVESTMENT NEWS

NORTH

GRUPO BAFAR

Grupo Bafar announces the groundbreaking of a new industrial park complex in Ciudad Juarez, Chihuahua with a 250 million dollars investment.

YOKOHAMA

The Japanese tire manufacturer announces an investment of 380 million dollars in Saltillo, Coahuila. The jobs details remain unconfirmed.

NATIONAL MERCADO LIBRE

The e-commerce company announced an investment of 2.45 billion dollars to expand its logistics network and digital transaction systems.

ARCA CONTIENTAL

The Coca-Cola bottling company will invest 558 million dollars in Mexico to expand its production chains and distribution capabilities.

SOURCES: FORBES MEXICO, MEXICO INDUSTRY, MEXICO NOW, CLUSTER INDUSTRIAL