Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
Tijuana Industrial Real Estate
What’s next?
May 18, 2011
©Maquila Properties, Inc.
All rights reserved
Presented by JP de Kervor
www.maquilaproperties.com
(858) 551.8000
Tijuana Market Overall
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
• Tijuana has about 52 million SF of Industrial Real
Estate
• Currently: 202 buildings down from 219 Buildings 6
months ago, still up from 190 a year
• 9.2 Million SF down from 9.9 Million SF six months
ago and down from 10.7 Million SF a year ago.
• Vacancy Rate is at 18% down from 19% 6 months
ago and down from 20% last year
• Absorption is up – so we are heading in the right
direction.
• Very little new construction as good buildings are
available for sale for much less than replacement
cost
www.maquilaproperties.com
(858) 551.8000
Maquila Properties, Inc
Recent Maquila Properties Transactions 2011
Baja California Real Estate Services
Since 1988
• Energy Labs - 288,000 SF former JVC Building sale.
$10.45 Million
• Jonathan Louis - 111,000 SF Sprinklered Class Bbuilding on Via Rapida. $0.25/SF
• Jaccuzzi - 122,000 SF Class A Blend and extend.
• Samil Foam – Sale of 60,000 SF of the former Jugos
del Valle facility for $1.7 Million off of insurgentes.
• Aris/C-Cor Lease re-up on 92,000 SF.
www.maquilaproperties.com
(858) 551.8000
JVC site
www.maquilaproperties.com
(858) 551.8000
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
Case: Energy Labs/JVC
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Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
Energy Labs, a long time Tijuana manufacturer of HVAC equipment
with 86,000 SF contracted with Maquila Properties to find land and
negotiate a build to suit for a 150,000 SF new building in Otay.
We found that geographically acceptable property would cost about
$6/SF plus about $1/SF for final grading/land prep. Plus Water rights,
electrical installations (2000 KVA) and other costs the land was going
to be $8/SF at least.
The lowest construction bids came in around $25/SF – with a 50% lot
coverage ratio this came to an all in price before IVA of $41/SF
minimum or about $6.2 Million.
The JVC building was much larger, but available for $36/SF including a
69,000 Volt Primary electrical system that will save up to 30% on
consumption costs in addition to $200 k in capacity fees.
EL is now selling the excess land and subleasing the excess 120,000
SF. They will sell the $4-5 million of excess land, and $30-40,000 in
rent revenues from the lease of the excess space.
www.maquilaproperties.com
(858) 551.8000
Where are the buildings?
www.maquilaproperties.com
(858) 551.8000
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
www.maquilaproperties.com
(858) 551.8000
Where are they being leased?
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
www.maquilaproperties.com
(858) 551.8000
Buildings > 100,000 SF
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
• 25 buildings down from 26 buildings 6 months
ago and down from 28 buildings a year ago
• Average asking rent is $0.38 ($0.43/SF in
2007) Most buildings are offering free rent
and other favorable terms.
• Mostly newer Class A buildings
• Mostly owned by institutional investors like
FINSA, CPA, GE Capital, AMB/Prologis,
Verde, Prudential
www.maquilaproperties.com
(858) 551.8000
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
Source: Maquila Properties. Inc. © 2011 -Total inventory of buildings over 100,000 of 4.4 Million SF
www.maquilaproperties.com
(858) 551.8000
Construction
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
• Land Prices as low as $30/SM are available in the
city – many are still asking $750/SM.
• Strong Peso is giving Mexican companies the capital
to do Build to suits.
• 163,000 SF Oxxo distribution at CPA Blvd. 2000
• 60,000 Casa Chapa on Via Rapida
• 120,000 SF Celulosa de Sonora in Monte de los
Olivos
• No new spec building is happening.
• Construction costs are about $25/SF Shell.
www.maquilaproperties.com
(858) 551.8000
Conclusions
Maquila Properties, Inc
Baja California Real Estate Services
Since 1988
• The beginning of 2011 looked good, but the spurt has
fizzled in light of the perceived security issue and
continued US economic weakness.
• The direction is slowly positive as we have stopped
the negative absorption.
• Lower rents and other costs have improved Tijuana
competitiveness vis a vis Asian manufacturers…
• Although the continued strong Peso is not helping the
exporters.
• Land prices are stabilizing.
• Tijuana’s Security situation is improving, but the
reputation is not.
www.maquilaproperties.com
(858) 551.8000
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Tijuana Industrial Real Estate