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The Critical Nature of Cross-Border Industrial Deals

Carrie Rossenfeld Industrial

Colliers International San Diego Region recently hired Raul Carmona as a VP specializing in industrial property sales and leasing in Otay Mesa, Tijuana, Mexicali and Baja California. Carmona will be based in Colliers International’s UTC office in San Diego.

Originally from Tijuana, Baja California, Carmona holds more than 30 years of cross-border manufacturing plant management and property brokerage experience. He served as the director of economic development for the City of Tijuana and was most recently affiliated with Vesta Industrial Real Estate. He is actively involved with the Western Maquiladora Trade Association and American Society of Manufacturing Engineers.

SoCal Real Estate spoke with Carmona about his new role with Colliers and some of the issues of dealing with cross-border industrial transactions.

SoCal Real Estate: What are you looking forward to accomplishing in your new role with Colliers?
Carmona: Colliers has the market-leading industrial team in the San Diego region. and I look forward to expanding our presence in South County San Diego and Northern Mexico. Last year, Baja California was among the top five states in Mexico to receive the highest amount of foreign direct investment and the second among Mexico’s northern border states, with a total of $1.2 billion invested through the third quarter in last year. In the midst of this healthy foreign investment, the border region industrial real estate market is poised for significant growth over the next few years. I’m excited to help grow Colliers’ market leadership in the border region’s rapidly expanding industrial real estate market.

What are some of the issues that you deal with regarding cross-border industrial brokerage?
Completing cross-border real estate deals is an extremely complex process. Our two economies are uniquely intertwined, yet there can be a disconnect understanding each other’s cultural methods of doing business. It’s critical for companies to work with seasoned real estate experts that can help them navigate the process and ultimately achieve success. I’ve worked in both Mexico and the United States for nearly three decades, representing private companies and serving in official capacity as the director of economic development for the City of Tijuana. I greatly enjoy the opportunity to bring together clients with unique cultural backgrounds on both sides of the border to collaborate and create a deal.

What is the value of cross-border commercial real estate transactions to both sides?
Commercial real estate helps foster the powerful import and export business connection between the United States and Mexico. Each year, more than $36 billion worth of merchandise crosses into the United States from Mexico at just the Otay Mesa border crossing. That includes vehicles, electronics, building supplies, and textiles, among many other products. This export and import connection creates manufacturing jobs in the Tijuana area and jobs in the Southwestern United States to further refine and finish products initially created in Mexico. Often times, this manufacturing strategy helps companies to be competitive in the international market, making strategic commercial real estate transactions in this region critical.

What else should our readers know about cross-border transactions?
With an increase in demand for buildings due to new investment legislation and business opportunities in the border region, development of industrial space has gained serious momentum. Specifically, the Tijuana industrial real estate market dynamics are poised for continued expansion. There is currently 1.9 million square feet of new industrial space under construction in Tijuana, 59 percent of which has already been pre-leased. Nearly 71 percent of the industrial space currently under construction is being built to modern class-A global standards. Overall, Tijuana’s market is anticipated to increase by 2.7 percent in 2018, reaching a total inventory of nearly 72.5 million square feet of industrial space.