Skip to main content
PGIMPGIM
  • Contenuto in inglese

    • Megatrend
    • Le migliori idee annuali
    • Serie OutFront
    • Ricerca di portafoglio
    • Outlook di mercato trimestrale
    • Eventi di mercato
    • Soluzioni all’avanguardia
    • Eventi e Webinar
    • Videoteca
    • Podcast
  • CONTENUTO IN INGLESE

    • Investimenti ESG
    • Investire negli alternativi
    • Investire nei mercati emergenti
    • Gestione del rischio
  • Alternativi

    • PGIM Private Alternatives
    • PGIM Private Capital
    • PGIM Real Estate
    • Montana Capital Partners (PE)

    Azioni e reddito fisso

    • PGIM Fixed Income
    • Jennison Associates

    Soluzioni

    • PGIM Quantitative Solutions

    Per la distribuzione

    • PGIM Investments
  • Contenuto in inglese

    • Clienti che serviamo
    • Rapporti istituzionali
    • Sedi globali
    • Contattaci
  • Contenuto in inglese

    • Panoramica
    • Leadership
    • Storia
    • Inclusione e diversità
    • Sedi globali
    • Contattaci
    • Abbonamento alla newsletter
    • Richiesta di informazioni
  • Contenuto in inglese

    • Lavorare in PGIM
    • Opportunità di impiego
  • CONTENUTO IN INGLESE

    • Sala stampa
    • Comunicati stampa
    • Sulla stampa
    • Fatti e cifre
    • Relazioni con i media
abstract
Annual Best Ideas

Compelling Opportunities in Industrial Markets on the U.S./Mexico BorderCompellingOpportunitiesinIndustrialMarketsontheU.S./MexicoBorder

16 gen 2025

  • Download PDF
Condividi
  • Mail
  • LinkedIn
  • Twitter
  • Copy URL
  • Print

Condividi

After global supply disruptions at the beginning of this decade, manufacturers have further diversified their supply chains to provide consistent access to U.S. consumers. They are motivated by potential labor and transport costs savings, improved supply chain resiliency, and favorable tax and tariff regimes. These investments are creating a compelling industrial investment opportunity now on both sides of the Mexico and United States border.

The growth in border industrial demand is occurring alongside heightened uncertainty about U.S. trade policy that is unlikely to fade soon. While tariffs and a looming renegotiation of North American trade relationships create risks around our bullish base case for border industrial markets, we believe there are too many advantages of locating manufacturing facilities in Mexico that serve the U.S. market to cause manufacturers to reverse course, even if tariffs are higher. One mitigant is to invest on both sides of the border.

Mexico's Industrial Market Benefits from Regionalization (Nearshoring)

The case for institutional investment in Mexico industrial is well established, due to a decades-long expansion in export growth to the United States. This is directly linked to “nearshoring” of manufacturing operations, as companies reduce their reliance on manufacturing in China. Since 2016, Mexico has captured 30% of China’s lost market share of U.S. imports, more than any other country. 

Mexico is a preferred destination because labor is inexpensive and widely available, and supply chains are well established after decades of investments. The risk of tariffs is partially offset by depreciation in the Mexican peso, which further lowers costs of doing business in the country.

The resultant surge in demand for industrial space in Mexico has not been matched by supply, causing rent growth to spike. As shown below, rent growth at the national level has been above 15% for three consecutive years. Those 15%+ years are unlikely to be repeated, but we still expect elevated rent growth through the rest of this decade. 

Industrial Rent Growth

Sources: Costar, CBRE. U.S. Department of Transportation, PGIM Real Estate. As of January 2025.
Forecasts are not guaranteed and may not be a reliable indicator of future results.

It is important to note that industrial rents in Mexico are U.S.-dollar denominated, and typically backed by multinational tenants with low credit risk. This means that while there is additional country risk for international investors as opposed to investing in the United States, currency and tenancy risks are mitigated.

We estimate that current pricing for Mexico industrial real estate more than compensates for that country risk, with cap rates about 200 basis points above the U.S. average and a better near-term outlook for rent growth. This makes investment in existing properties attractive, and also supports the case for new development with higher returns expectations.

U.S. Border Markets Can Offer Attractive Risk-adjusted Returns Today

The case for investing in U.S. border markets is less well established, providing a potential advantage to early entrants into markets such as El Paso (next to Juarez), Otay Mesa near San Diego (next to Tijuana), and Laredo (next to Nuevo Laredo with excellent connectivity to the largest northern Mexico industrial concentration around Monterrey).

Until this decade, there was little need for warehousing or further assembly in the immediate border markets. This has changed for at least two reasons:

  1. The 2020 USMCA Free Trade Agreement increased requirements for inputs produced in North America, some of which is produced more efficiently in the U.S.; and
  2. More importantly, the spike in trade flows over the past two years has required more logistics space on the U.S. side of the border. As shown below, freight volumes have doubled in the period since ratification of the USMCA agreement, as manufacturers rapidly increased output to satisfy U.S. demand. U.S. border markets can be directly served by trucks domiciled in Mexico, most of which are prohibited from driving beyond the areas immediately adjacent to the border. The growing logistics capacity in the U.S. border markets provides importers with the option to sort, package, assemble and ship finished goods locally.

Mexico Freight Entering United States by Land Crossing

Sources: Costar, CBRE. U.S. Department of Transportation, PGIM Real Estate. As of January 2025.
No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

Industrial real estate data further support the case for U.S. border market investing. Over the past two years, the El Paso and Laredo markets combined for over 5% of U.S. industrial leasing, versus their historic average of about 1%. 

Returns of the combined markets have also soared since 2019, with a 5-year average annual return of 22% compared to the national average of 15%. Over the past year, when cap rate expansion caused national industrial total returns to decline by 4%, the combined El Paso and Laredo markets were more resilient with a 1% gain.1

U.S. border markets are still priced at a discount, despite recent excess returns. Cap rates in El Paso and Laredo are about 100 basis points higher than the national average, meaning they provide a higher income return while also having upside from further growth in Mexico trade flows. Some of that cap rate premium is justified by the border markets’ lower liquidity and unproven long-term performance, but in our view, they offer attractive risk-adjusted returns today.

The intersection of the evolving global supply chain, labor and transport costs, improved supply chain resiliency, and favorable tax and tariff regimes are creating a compelling industrial investment opportunity on both sides of the Mexico and United States border.

1. National average of 15%, based on NCREIF data.

Visit Website
PGIM Real Estate

A global manager of real estate equity, debt, and securities investment strategies.

Visit Website

Maggiori informazioni
Alpha Opportunities Beyond the Macro Volatility

PGIM’s Best Ideas highlight a host of areas where we believe investors will find promising opportunities.

Maggiori informazioni

Explore more ideas

Not All AAA CLO ETFs Are Created Equal
Annual Best Ideas

Not All AAA CLO ETFs Are Created Equal

16 gen 2025

Not all AAA CLO ETFs are created equally, potentially leading to a wide dispersion in performance—especially during a down-market cycle.

Enhancing Diversification Through Non-Sponsored Direct Lending
Annual Best Ideas

Enhancing Diversification Through Non-Sponsored Direct Lending

16 gen 2025

A diversified portfolio of sponsored and non-sponsored loans can provide investors with a broader range of deals and potentially better performance over time.

Unlocking Liquidity: The Distribution Edge of Lower Mid-market Private Equity
Annual Best Ideas

Unlocking Liquidity: The Distribution Edge of Lower Mid-market Private Equity

16 gen 2025

The era of private equity flourishing under low interest rates, followed by a blend of optimism after the COVID-19 pandemic, has shifted.

Artificial Intelligence: An Accelerating Revolution
Annual Best Ideas

Artificial Intelligence: An Accelerating Revolution

16 gen 2025

Today, the revolutionary impact of AI-driven change is becoming evident in most industries and is accelerating.

Navigating the Nexus: The Intersection of Insurance and Private Markets
Annual Best Ideas

Navigating the Nexus: The Intersection of Insurance and Private Markets

16 gen 2025

The maturation of private markets has led to profound change across the global investment landscape.

Uncovering Opportunities Across Emerging Markets
Annual Best Ideas

Uncovering Opportunities Across Emerging Markets

16 gen 2025

Investors have historically favored emerging markets for their high growth potential, relative inefficiency and diversification benefits.

Rethinking ‘Safe’ Withdrawal Rates
Annual Best Ideas

Rethinking ‘Safe’ Withdrawal Rates

16 gen 2025

Perspectives on portfolio withdrawal rates by integrating spending flexibility and an outcomes metric that better captures the anticipated retiree sentiment.

Important Information

For Professional Investors Only. Past performance and forecasts are no guarantees or reliable indicators of future results. All investments involve risk, including the possible loss of capital. Diversification does not assure a profit or protect against loss in declining markets. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

These materials are for informational or educational purposes only. This information is not intended as investment advice and is not a recommendation about managing or investing assets or an offer or solicitation in respect of any products or services to any persons prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. In providing these materials, PGIM is not acting as your fiduciary. These materials represent the views, opinions and recommendations of the author(s) regarding the economic conditions, asset classes, securities, issuers or financial instruments referenced herein. Certain information has been obtained from sources that PGIM believes to be reliable as of the date presented; however, PGIM cannot guarantee the accuracy of such information, assure its completeness, or warrant that it will not change. This information, including projections and forecasts, is current as of the date of issuance (or an earlier referenced date) and is subject to change without notice. PGIM has no obligation to update such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy or accept responsibility for errors. PGIM and its affiliates may develop and publish research that is independent of, and different than, the recommendations contained herein.

The investments and returns discussed herein do not represent any PGIM product. This material is not intended to be used as a general guide to investing or as a source of any specific investment recommendations. Distribution of this information to any person other than the person to whom it was originally delivered is unauthorized, and any reproduction of these materials, in whole or in part, or the divulgence of any of the contents hereof, without prior consent of PGIM is prohibited.

Collapse section
  • Approfondimenti

    • Megatrends
    • Le migliori idee annuali
    • Outlook di mercato trimestrale
    • Eventi di mercato
    • Soluzioni all’avanguardia
    • Eventi e Webinar
  • Temi di investimento

    • Investimenti ESG
    • Investire negli alternativi
    • Investire nei mercati emergent
    • Gestione del rischio
  • Clienti

    • Clienti che serviamo
    • Rapporti istituzionali
  • Chi siamo

    • Panoramica
    • Leadership
    • Storia
    • Inclusione e diversità
    • Global Locations
    • Contattaci
    • Abbonamento alla newsletter
  • Lavora con noi

    • Lavorare in PGIM
    • Opportunità di impiego
  • Sala stampa

    • Le ultime notizie
    • Comunicati stampa
    • Sulla stampa
    • Relazioni con i media
PGIM
  • Termini e condizioni
  • Centro sulla privacy
  • Guida per l’accessibilità (in inglese)
  • Informativa sulla regolamentazione del Regno Unito
  • Informativa sulla regolamentazione dei Paesi Bassi
  • Centro preferenze cookie

Riservato a investitori professionali. Tutti gli investimenti comportano un rischio, inclusa la possibile perdita di capitale.

Il presente materiale è solo a scopo informativo ed educativo e non deve essere interpretato come consulenza in materia di investimenti o un’offerta o sollecitazione in relazione ai prodotti o servizi a persone a cui è vietato ricevere tali informazioni ai sensi delle leggi applicabili al loro luogo di cittadinanza, domicilio o residenza. PGIM è la principale attività di gestione patrimoniale di Prudential Financial, Inc. ed è la denominazione commerciale di PGIM, Inc. e le sue controllate a livello globale. PGIM, Inc. è un consulente per gli investimenti registrato dalla US Securities and Exchange Commission (“SEC”). La registrazione presso la SEC non implica un certo livello di abilità o formazione.

Le informazioni su questo sito Web non devono essere considerate una consulenza in materia di investimenti né una raccomandazione sulla gestione o l’investimento dei risparmi pensionistici. Nel rendere disponibili le informazioni su questo sito Web, PGIM, Inc. e le sue affiliate non agiscono in qualità di fiduciari.

Nel Regno Unito queste informazioni sono emesse da PGIM Limited con sede legale in: Grand Buildings, 1-3 Strand, Trafalgar Square, Londra, WC2N 5HR. PGIM Limited è autorizzata e regolamentata dalla Financial Conduct Authority (“FCA”) del Regno Unito (Numero di riferimento della società 193418). Nello Spazio economico europeo (“SEE”), le informazioni sono emesse da PGIM Netherlands B.V. con sede legale in: Gustav Mahlerlaan 1212, 1081 LA Amsterdam, Paesi Bassi. PGIM Netherlands B.V. è autorizzata dalla Autoriteit Financiële Markten (“AFM”) nei Paesi Bassi (numero di registrazione 15003620) e opera sulla base di un passaporto europeo. In alcuni Paesi del SEE, queste informazioni sono una promozione finanziaria, laddove permessa, presentata da PGIM Limited facendo affidamento su disposizioni, esenzioni o licenze disponibili per PGIM Limited secondo accordi di autorizzazione temporanea dopo l’uscita del Regno Unito dall’Unione Europea. Questo materiale è emesso da PGIM Limited e/o PGIM Netherlands B.V per le persone che sono clienti professionali come definito dalle norme della FCA e/o per le persone che sono clienti professionali come definito nella relativa implementazione locale della Direttiva 2014/65/UE (MiFID II).

In Italia queste informazioni sono fornite da PGIM Limited, autorizzata ad operare in Italia dalla Commissione Nazionale per le Società e la Borsa (CONSOB).

In Giappone, le informazioni sono fornite da PGIM Japan Co., Ltd (“PGIM Japan”) e/o PGIM Real Estate (Japan) Ltd. (“PGIMREJ”). PGIM Japan, un operatore commerciale di strumenti finanziari registrato presso l’Agenzia dei Servizi Finanziari del Giappone, offre vari servizi di gestione degli investimenti in Giappone. PGIMREJ è un gestore immobiliare giapponese registrato presso il Kanto Local Finance Bureau del Giappone.

A Hong Kong, le informazioni sono fornite da PGIM (Hong Kong) Limited, una società autorizzata dalla Securities and Futures Commission di Hong Kong a investitori professionali, come definiti nella Sezione 1 della Parte 1 dell’Allegato 1 dell’Ordinanza sui titoli e sui futures (Cap 571). A Singapore, le informazioni sono rilasciate da PGIM (Singapore) Pte. Ltd. (“PGIM Singapore”), una società autorizzata dall’Autorità Monetaria di Singapore in base a una Licenza per servizi nei mercati di capitali per svolgere gestione di fondi e consulenza d’investimento esente. Questo materiale è emesso da PGIM Singapore per informazioni generali degli “investitori istituzionali” ai sensi della Sezione 304 del Securities and Futures Act 2001 di Singapore (l’“SFA”) nonché degli “investitori accreditati” e di altre persone pertinenti in conformità alle condizioni specificate nella Sezione 305 del SFA. In Corea del Sud, le informazioni sono rilasciate da PGIM, Inc., che è autorizzata a fornire servizi discrezionali di gestione degli investimenti direttamente a investitori istituzionali qualificati sudcoreani su base transfrontaliera.

Prudential Financial, Inc. (“PFI”) degli Stati Uniti non è affiliata in alcun modo a Prudential plc, costituita nel Regno Unito o a Prudential Assurance Company, una filiale di M&G plc, costituita nel Regno Unito. 

PGIM, il logo PGIM e il design Rock sono marchi di servizio di PFI e delle sue entità correlate, registrati in molte giurisdizioni in tutto il mondo.

©2022 PFI e le sue entità correlate.

You are viewing this page in preview mode.

Edit Page