Before the pandemic, a series of factors were already shaping the dynamics of the industrial real estate sector, among new trends and adverse conditions.
According to Claudia Ávila Connelly, CEO of Asociación Mexicana de Parques Industriales Privados, A.C. (AMPIP), since the recovery of the industrial market after the first global economic crisis in 2008-2009 and up to 2019, the leasing of industrial buildings showed healthy annual growth, with rising rents and a low vacancy rates, which was largely driven by high flows of Foreign Direct Investment (FDI) in manufacturing to Mexico, which was in step with the growth of the U.S. economy.
Now new realities have emerged, which have caused the market to undergo profound changes and face unprecedented challenges to adapt to. An example of the above is e-commerce, which has brought about a change in how space is used, decreasing retail store floor space and increasing storage services (fulfillment centers) in industrial buildings with non-standard heights.
In addition, from the consumer’s perspective, the aforementioned change became a new way of purchasing products, i.e., buying online, with an infinite supply of products and immediate delivery.
Without a doubt, Big Data emerged as one of the biggest technological contributions for decision making, which starts with a massive data collection that is processed with intelligent tools and then transformed into strategic information allowing for a standardized management of portfolios and customer portfolios that also identified new business opportunities with a better understanding of the market.
The robotization of production processes is one of the factors that is changing industrial space occupation due to adjustments in the workforce and the type of facilities required, such as the height of industrial building, for installing and maintaining robots.
Nowadays, environmental care is a trend related to the company vision that is cannot be ignored and is one of the most significant in the evolution of the offer of industrial spaces. For example, smart buildings that help save water or energy, even large projects for waste management or clean energy generation have shown a dramatic drop in operating costs while improving customer and tenant experiences and creating new business opportunities.
To this end, another relevant factor is social responsibility with a perspective that goes beyond the renting of industrial spaces. This modality takes into account the impact of each project on the community where it is implemented, as well as health and welfare matters for those who use the industrial park buildings and common areas.
Integrity has also become a corporate value that and part of how competitive companies are, since governance culture helps to reduce risks and increases efficiency in the proper assessment of asset value, contract management and the acquisition process, providing customers, creditors and shareholders with greater confidence.
The aforementioned trends have appeared in the United Nations’ 2030 Agenda for Sustainable Development and is one of the pillars on which the Road Map entitled “New Generation of Intelligent and Sustainable Industrial Parks, Road to 2030”, instituted by Mexican Association of Industrial Parks (AMPIP), is based.
There are situations that concern the industrial real estate sector in the short term that have generated a high level of uncertainty in the economy, with little probability of forecasts in the face of an uncertain future. This is because the Covid-19 pandemic emerged at a time of great volatility in international markets and geopolitical tensions due to the undeclared trade war between the United States and China.
In Mexico, the entry into force of the Trade Agreement between Mexico, the United States and Canada took place during the disruption of global supply chains.
In addition, at the individual level, isolation and social distancing as preventive measures to avoid coronavirus infection gave rise to new habits, such as working at home with the support of digital voice communication platforms, wireless audio and buying basic products online, which has generated new employment opportunities to expand last mile capacity and infrastructure.
At the company level, production plant closures and decreased operations at borders, airports, highways, trains and seaports have had an impact on the demand for essential products and the disruption of input supply in global supply chains, affecting jobs, industries and consumption.
The need for survival must therefore encourage, with a sense of urgency, the adoption of new technologies that will help meet today’s challenges.
Given this, Big Data helps generate information for the traceability of health and possible human infections, identifies supply and demand for consumption and production chain supply, monitors speculation on essential product prices, manages the flow of people in stores for maintaining social distance and ensures cargo transport movement throughout the country.
In addition, the digitalization and automation of border crossing procedures can speed up the movement of supply chains by reducing time and procedures at customs. Similarly, the use of drones and autonomous vehicles can strengthen the distribution of essential protective supplies and food staples.
One of the great challenges for industrial parks is health and safety protocol compliance for admissions, as well as regular disinfection measures for warehouses and vehicles.
Undoubtedly, risk management and the ability to develop plans when facing uncertain situations will be the new skills that will increase the value of individuals and companies, that is, embracing resilience as a new skill for dealing with changes by allowing the business to adapt to new market conditions and trends.
Oradel Industrial Center has the infrastructure and security that companies require when establishing their manufacturing operations in Mexico, so they can be confident that their workers will have all the services they need.