Introduction

Mexico is a country with a great geostrategic location which enables it to trade with multiple different markets, and it is one of the countries experiencing significant and constant growth of its manufacturing sector thanks to its location, favorable laws and regulations, an abundance of skilled labor, and an overall low cost of production. The country has been attracting investments from a number of industries with textiles, electronics, medical devices, and automotive industries attracting the biggest number of investors.

There are multiple manufacturing zones in the country, and each has its own advantages and downsides when compared to the others. It is crucial to get acquainted with these differences so that the investor can choose the one that fits their needs, ambitions, and budget the best. There are many aspects to consider before choosing the perfect location for investment like costs of labor and real estate, transportation network, and laws and regulations, to name just a few.

In this article we will try to compare a specific aspect of two extreme examples of Mexico’s manufacturing zones, namely, Tijuana and Mazatlán, with the former being an established player on the manufacturing scene, and the latter an up-and-coming and developing manufacturing zone. While there are many differences, as well as similarities between the two, in this article we will focus specifically on industrial real estate in Tijuana vs. Mazatlán, so read on to find out more!

Tijuana

With its location right next to the border of the United States, and the state of California, Tijuana has long been an industrial hub that attracts investment and skilled labor.

Its transportation network is well-developed and offers all investors quick, easy, and most importantly, cheap access to the North American market.

Tijuana has a number of options for industrial real estate, from specialized industrial parks/zones to numerous individual facilities, but thanks largely to an increased number of businesses deciding to invest in Mexico’s manufacturing zones, the supply is growing slower than the demand for these facilities. Of course, this results in an increase in prices, for both renters and buyers. Real estate companies have reported an increase of 14% in leasing rates in 2023, which brought the rates to $.75 per square foot per month.

It is increasingly more difficult to find an affordable industrial space in Tijuana, and it’s almost impossible to do so quickly.  Even new builds now have an extended lead time of almost eight months, because of the higher demand.

Mazatlán

In contrast to Tijuana which has been an industrial hub since its Maquiladora program began in the 1960s, Mazatlán has only recently started to diversify its economy from fishing and tourism to manufacturing. This city on Mexico’s Pacific coast offers easy access to Central and South American markets, while still having access to the North American market through its ports, so it has seen a huge influx of investment, which still hasn’t resulted in a shortage of industrial real estate.

Mazatlán is currently experiencing a small building boom, with many industrial parks being built or planned for building. Considering that its industrial real estate was adequate already, these new industrial zones ensure that the city will be able to cope with all the prospective investors moving their production to Mazatlán. Mazatlán’s lease rates are significantly cheaper than Tijuana’s at $.6 per foot per month, which when you consider that the lead time for new construction is also shorter, means that many manufacturers will find Mazatlán a better choice moving forward, as it is a quickly developing zone where the already good infrastructure keeps improving rapidly.

Conclusion

Mexico is an important name on the world’s manufacturing map. It has a phenomenal geostrategic location, laws and regulations that favor manufacturers, an abundance of skilled labor, and cheap overall costs, which constantly keeps drawing in new investments.

There are many different manufacturing zones within the country, all with their own uniquenesses, advantages and disadvantages.

Tijuana and Mazatlán are two industrial zones that differ in many aspects, from their location, and costs, to the markets that they gravitate to. In Tijuana, the industrial infrastructure is very well developed, but there is a shortage of real estate as the city can’t build fast enough to satisfy the ever-increasing demand, which inevitably results in higher lease rates and longer waiting times, and that’s something every potential investor must realize.

In Mazatlán, the situation is different. There is enough industrial real estate to satisfy the demand, and there’s more getting built every month, which of course, results in lower prices and waiting times.

It’s ultimately up to every investor to get familiar with the specificities of each of these manufacturing zones. The final decision shouldn’t depend only on the availability of industrial real estate, but on factors like market focus, supply chain requirements, and budget considerations, but we do believe that this insight into Industrial real estate in Tijuana vs. Mazatlán will be a good starting point for research.