The Port of Laredo in Texas has become the busiest port in the United States, with up to 20,000 trucks passing through daily carrying a wide range of goods. As a result of the rapid growth in U.S.-Mexico trade, the demand for industrial real estate in Laredo has skyrocketed, creating a tight market for warehouse space. According to Adrian Ponsen, an analyst at real estate data firm CoStar, developers in Laredo are struggling to keep up with the demand from retailers and logistics companies.
To address the shortage of available storage space, companies like Nippon Express, a Japanese logistics company, are expanding their industrial footprint in Laredo. Nippon Express is breaking ground on two new warehouses in the coming months to accommodate the growing business. The trend of expanding industrial space in Laredo is driven by the reordering of global supply chains, the impact of Chinese tariffs, the new North American trade agreement, pandemic-related disruptions, and recent U.S. industrial policies aimed at promoting regional manufacturing.
The growth in trade at the Port of Laredo has opened up new opportunities for the local real estate market. Rolando Ortiz, COO of real estate firm Killam Development, predicts a dramatic increase in the construction of industrial space in the community. The stock of industrial properties in Laredo has grown by approximately 20% in the past five years, double the growth rate for industrial space in the rest of the U.S. Despite a cooling national market, Laredo remains an exception with less than 3% of industrial real estate space available.
The strategic location of Laredo at the border with Mexico has played a significant role in attracting manufacturing companies that serve the U.S. market. Industrial parks, such as the Pinnacle Industry Center, have emerged to meet the demand for warehouse space. The CEO of Pinnacle Industry Center, AJ Kraus, expects the available property to be leased quickly and anticipates more developments in the future. As the size of industrial buildings continues to grow, with some reaching up to 600,000 square feet, Laredo is transforming into a hub of enormous warehouses.
The industrial real estate boom in Laredo is not limited to the U.S. side of the border. Developers in Nuevo Laredo, Mexico, have also witnessed a surge in demand for warehouse space. Guillermo Fernandez de Jauregui, CEO of Grupo Jauregui, a real estate developer in Nuevo Laredo, has seen significant growth in the past two years. They will soon build their ninth distribution center to meet the needs of improving the supply chain and accommodating the rising volume of goods passing through the region.
Q: What has caused the growth in demand for industrial real estate in Laredo?
A: The growth in U.S.-Mexico trade at the Port of Laredo, along with global supply chain reordering, Chinese tariffs, the new North American trade agreement, pandemic-related disruptions, and recent U.S. industrial policies have contributed to the increased demand for industrial real estate in Laredo.
Q: How has Laredo’s industrial real estate market performed compared to the national market?
A: While the national market for industrial real estate has cooled, Laredo has experienced exceptional growth. The city has less than 3% of industrial real estate space available, compared to 4% to 8% in other major markets in the country.
Q: What is driving the expansion of industrial space in Laredo?
A: The strategic location of Laredo at the border with Mexico has attracted manufacturing companies that serve the U.S. market. The city’s proximity to the port and its role in regional supply chains has spurred the demand for industrial space.
Q: How are developers in Nuevo Laredo, Mexico contributing to the growth in industrial real estate?
A: Developers in Nuevo Laredo have also witnessed a surge in demand for warehouse space. They are expanding their facilities to meet the needs of improving supply chains and the growing volume of goods passing through the region.