ULI Arizona News

Program Recap: Arizona & Mexico – Crossroads of Real Estate and Commerce

By Peter Madrid | MadridMedia

When it comes to the economic impact felt by Arizona with our neighbor to the south, the numbers speak for themselves.

Mexico is Arizona’s largest trading partner. Our two-way trade was $15.4 billion in 2017. That represented $7.9 billion in exports and $7.9 in imports. And with a growing demand for e-commerce by a young generation of consumers in Mexico, the economic impact in Arizona could be even greater.

Commercial real estate brokers who work on both sides of the border shared their insight – and made lofty predictions – at ULI Arizona’s September main program, “Arizona & Mexico: Crossroads of real estate and commerce.”

Sharing their expertise with moderator Mike Patterson of Spencer Fane LLP were: Jose Pablo Martinez Buentello, Project Manager, SkyBridge Arizona; Lyman Daniels, SIOR, President, CBRE | Mexico; and Arizona’s trading partner in Canada, Carolynne Hunter, Vice President of Supply Chain and Logistics, St. Clair Technologies, Inc.

Arizona SkyBridge, a planned 360-acre aerospace, logistics, and industrial park at Phoenix-Mesa Gateway Airport, represents endless opportunities for trade between Arizona and Mexico, Martinez Buentello said. U.S. and Mexican officials predict it will create approximately 6,500 jobs after final build out.

“It is strategically located in the Southwest and within 2,000 miles to more than 90 percent of the U.S. and Mexico,” he said. “It could help account for $94 billion in economic spending in the next 15 years.”

With a new president in office after a clean election and a smooth transfer of power, Daniels said Mexico is poised to see its economy accelerate and grow.

“Mexico City is one of the fastest-growing office markets in the Americas,” Daniels said. “While it used to be about two decades behind the U.S. commercial real estate market, it’s now about five years behind and growing.”

On the industrial side, Daniels said 35 percent of demand in Mexico City is for e-commerce business. On the office side, he said co-working, although years behind the U.S., represents 5 percent demand in Mexico City.

Hunter’s Canada-based firm, which makes electrical systems such as wire harnesses, has operations in Chandler, Nogales (Arizona), and Guaymas, Sonora, Mexico. Moving some operations to Mexico gave St. Clair Technologies access to a skilled workforce.

“Manufacturing in Mexico is much like it is in the U.S. and Canada,” Hunter said. “We moved to Mexico 23 years ago because our product is incredibly manual and hard to automate. Each program is to a 100th of a milliliter. It still takes hands to move product.”

While NAFTA negotiations and tariffs instituted by the Trump administration could have unforeseen implications, one thing was certain among the panelists: Arizona needs strong economic relations with its trading partners, primarily Mexico.

“At its current rate of growth, it’s projected Mexico’s economy could be in the top 5 and eventually pass Brazil,” Patterson said. “Mexico has more free trade agreements with the free world than any country on the planet. China is buying up Mexico; buying all over Mexico. It’s a booming economy and we need to be in on that game.”

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