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Industrial-Real-Estate-in-Mexico-Chinese-Company

A CHINESE FIRM'S SUCCESS IN MEXICO

With Real Estate Solutions from PRODENSA

PROJECT
Full startup support in Mexico, starting with industrial real estate
WHAT WE DID
Win-win negotiations to close a real estate deal in Monterrey, Mexico
CLIENT
A Chinese manufacturer serving the home appliance sector in Mexico
TIMELINE
After an extensive search process, deal closed within 2 months of property choice

PROJECT INFORMATION

Company Overview

A Chinese manufacturer of different products, with a contract to provide plastic injection molded components to the home appliance industry in Mexico. 

 

The Need for Expansion

With a strong international presence, the company sought to establish a manufacturing footprint in Mexico to comply with USMCA regulations and enhance its regional supply chain.

 

The client’s expansion was driven by pressure from a primary client, a global leader in home appliances, requiring increased Mexican and regional content to comply with USMCA rules of origin.

The company aimed to:

  • Establish a legal presence in Mexico with approval from the Chinese government.
  • Diversify its global manufacturing footprint for long-term growth.
  • Select a strategic location near its client’s operations in Monterrey, a key home appliance hub in northern Mexico.
PRODENSA EXPERTS

PROJECT LEADERSHIP

Ismael-3
TOUCH
ISMAEL VILLA Sr. Industrial Advisor, SIORExtensive industrial real estate experience from an operational perspective.
ISMAEL VILLA Sr. Industrial Advisor, SIOR
Xu Yu (1)
TOUCH
xu yu executive directorLeadership of more than 30 start up projects in Mexico for Chinese clients.
xu yu executive director
Carlos Alvarado
TOUCH
carlos alvarado VP & Sr. Advisor, PartnerAssisted over 500 foreign investors in Mexico over the last 25 years.
carlos alvarado VP & Sr. Advisor, Partner

PROJECT MILESTONES

REAL ESTATE STRATEGY
SITE SELECTION PROCESS
REAL ESTATE NEGOTIATION

The Real Estate Strategy

A Complex Timeline

Our Chinese client was expanding into Mexico in order to fulfill a contract from their own client, a leading global brand of home appliances. They required:

  • 3 - 4,000 m2 of floor space and some offices
  • A local line of credit or deposit in guarantee

 

 
Timing was Crucial The client had to obtain approval from the Chinese government as well as incorporate a company in Mexico before they could sign a lease.
CONTRACT CONSIDERATIONS Industrial real estate developers in Mexico often require a higher guarantee deposit since contracts celebrated in China carry additional risks.

The Site Selection Process

Location-Focused

They knew they needed to be near Monterrey, in the norther part of Mexico. The search spanned multiple phases and site visits, and was executed in parallel to an operations start up.

  • Closeness to their final client, located in Monterrey
  • Tenant improvements including overhead crane install
The Market was Booming Starting in October 2023, Prodensa conducted several tours of buildings, but the market was competitive and some options were removed from the market.
OUT-OF-THE-Box-thinking The options available on the market were limited, and the client was doing to have to make concessions in their musts and wants for the project.

Real Estate Negotiation

A Creative Solution

Leveraging relationships, PRODENSA located a great option before it even hit the market, and negotiated a win-win deal that streamlined the closing process for both sides.

  • Prior installation of necessary overhead cranes
  • Flexibility in the guarantee deposit to protect cash flow
ALIGNMENT WITH CAPEX When faced with the typical requirement of leaving a fund in a Mexican bank, the client would have trouble sourcing the necessary equipment.
EXCESSIVE SPACE The building exceeded the client's initial space requirements, but the pre-installed equipment and the mutual benefits between the developer and client enabled them to stay within budget.

CHALLENGES

  • Chinese investments need prior authorization by their government, and cannot incorporate until processed.

 

  • Their location strategy limited options, and the market competitiveness challenged the client's timeline.
  • The industrial real estate market in Monterrey had few options for the specific needs of the client.

 

  • The nature of the negotiation with the client and developer was not a simple task.
REAL ESTATE SUCCESS

THE RESULTS

The Chosen Building

Thanks to PRODENSA's strong relationship with local developers, our team identified a building that had not yet hit the market. This enabled the negotiation to benefit both sides, as our Chinese client could take advantage of equipment not yet removed from the facility. Our client benefited from saving time and money on importing and installing the necessary equipment.

In December 2024, the client signed the lease agreement for the building, outside of an industrial park in Guadalupe, within the Monterrey metropolitan area, just about 25 minutes from their main client. The 8,456 m2 building is larger than their original needs, but the negotiation was so favorable that they stayed within budget. In fact, upon learning of their additional manufacturing capacity, awarded them with additional business in Mexico.

The Negotiation

Ismael Villa led the negotiation between the developer and the client. They faced challenges as a new market entrant in Mexico with no local credit history. 

Key aspects of the negotiation:

  • Achieved a reduction of the guarantee deposit, and a favorable payment plan.
  • Full retention of in-place equipment including overhead cranes and electrical infrastructure.
  • Addition of Fire Protection System that meets local requirements.
OUR VALUE

SUCCESS: NEW BUSINESS FOR A CHINESE EXPANSION IN MEXICO

How did we achieve success in the project?
PROJECT MANAGEMENT Beyond real estate, we are project managers with an integral vision and perspective of operating manufacturing facilities in Mexico.  
CREATIVE THINKING Thinking out-of-the-box to find a solution and drive a win-win agreement between all parties involved.  
STRONG RELATIONSHIPS A strong network goes a long way in a competitive market, and thanks to relationships, provided they key to success in this project.  
Cultural Understanding Effective teamwork relies on cultural respect and understanding, and our experienced team bridged any gaps in language and knowledge.  
ADAPTATION Respecting the client's decision-making timeline was important to creating a long-lasting relationship and trust in the overall strategy.  
START UP SUPPORT Supporting the client in their integral operations strategy allowed alignment of the mid- to long-term strategy of our Chinese client.  
Doing-Business-in-Mexico-Map-of-Offices

 

OUR COVERAGE

Why Prodensa?

We have offices throughout the major industrial and business cities in Mexico.

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