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Cos. Find Skilled Workers and Other Draws in Tijuana Market

Tijuana is heating up as a place for industrial companies looking to relocate or expand, according to a recent report by the commercial brokerage firm CBRE.

Joe Smith

“Activity over the last 24 to 30 months has been pretty much at record levels, even going back to the institution of the NAFTA (North American Free Trade Agreement), although during the NAFTA time, the bulk of the users were Japanese or Korean,” said Joe Smith, senior vice president of CBRE with more than 30 years working in the Baja, Mexico, market. “We’re busy, we’re very busy.”

When the price of flat screen televisions plummeted, many of the Japanese and Korean companies that had manufacturing operations in Tijuana closed, but they’re being replaced by U.S. companies — many looking for less expensive alternatives, Smith said.

“Sony’s gone, Panasonic’s gone, JVC’s gone — it’s been more of an exodus of TV users, the large space users,” Smith said.

Replacing them are companies involved in aerospace, medical devices and small electronics companies, along with the vendors that serve them.

In the first quarter of 2018, about 800,000 square feet of new industrial space came on line with about 1.8 million square feet under construction, and about 550,000 square feet of the new space was leased before construction was complete.

“Land is not cheap in Mexico,” Smith said, adding it is often more expensive than property on the U.S. side of the border in California’s Inland Empire or Arizona and Nevada.

“You can get cheaper rent in the Inland Empire, but rent is just one of the factors,” Smith said.

The attraction of Tijuana is that labor is far less expensive, and there’s a ready pool of skilled workers.

“There’s a lot of engineering talent available in Mexico,” Smith said.

It also takes far less time to build something.

“It’s very quick. If you have a zoned property, you can be under construction tomorrow,” Smith said.

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