Nearshoring—the practice of taking in-house production and value chains in-house—is a driving force in North American commercial real estate (CRE). As companies shed off-shore production in favor of locations in Canada, the U.S., and Mexico, demand for workforce infrastructure, logistics centers, and industrial property is escalating. Consequently, nearshoring is redefining value chains, generating economic growth in target locations, and opening new windows for investment in CRE. Dov Hertz, an expert in commercial real estate development, discussed nearshoring and its impact on shaping the marketplace.
The Real Estate Boom
Nearshoring is generating a record boom in demand for North America’s real estate for industries. With companies wanting to drop long-distance value chains and insulate themselves from worldwide disruption, companies are investing dollars in warehouses, factories, and distribution centers in consumption clusters near them.
“The demand for real estate for industries is booming with companies wanting to go in-house,” affirms Dov Hertz. “The transition is generating a boom in modern factories, distribution centers, and logistics parks, specifically in key U.S.-Mexico corridors.”
Industrial development in U.S.-Mexico corridor locations such as Laredo, El Paso, and Tijuana, is taking off at a breakneck velocity with manufacturers opening operations to capitalize on reduced cost and increased efficiency in value in the value chain. Meanwhile, locations in America such as America’s Midwest region, and in locations such as Texas and Arizona, are seeing an explosion in new development for industries to serve nearshoring-fuelled demand.
Redefining Logistics and Value Chain Networks
Nearshoring is not an instance of moving factories but one of rearchitecting networks of whole supply chains for efficiency and resilience. That transformation creates a high demand for new platforms for logistics, fulfillment buildings, and transportation infrastructure in key locations in North America.
“The success of nearshoring is contingent on logistics,” Hertz explains. “We’re seeing increased investment in infrastructure for supply chains, including high-tech distribution buildings and smart warehouses with automation and AI capabilities. Business owners prefer locations with high connectivity for transportation and access to high-class talent pools.”
Dedicated logistics corridors, such as the I-35 highway, between America, Canada, and Mexico, become hot locations for real estate. Port terminals, spurs for rails, and cargo airports witness similar investments, with companies looking for hitchless integration with nearshored operations and in-country markets.
Opportunity for Commercial Real Estate Investor
Nearshoring, with its continued momentum, is a goldmine for opportunity for investors and builders in commercial real estate. Industrial property is one of the most in-demand categories of assets, with companies and logistics companies bidding for buildings in key locations. Developers respond with spec industrial development, upgraded warehouse buildings, and redevelopment of older buildings for reuse.
“For investors, it’s a gold age for investing in industrial real estate,” Hertz observes. “Nearshoring creates long-term demand for high-class real estate for industries, and smart investors capitalize on the demand for modern infrastructure for logistics.”
Nearshoring extends commercial real estate not only in industrial buildings but also in sectors in general. The creation of additional jobs in nearshored locations creates demand for workforce housing, office buildings for supply chain management, and even retail development for emerging workforce communities.
The Future of Nearshoring in CRE: Looking Ahead
With geopolitical uncertainty, increased labor costs abroad, and renewed concern for secure supply chains, nearshoring will shape North American commercial real estate for years to come, Dov Hertz concludes. Government incentives for in-country production and infrastructure investments drive the trend, too.
“The nearshoring revolution is in its infancy,” Hertz concludes. “We will have even deeper investments in real estate for industries and for logistics, and mixed-use development for vibrant business clusters in a decade’s time. The impact will have a profound and lasting impact in North America’s commercial real estate marketplace.”
Where security, efficiency, and in-region supply chains matter most, nearshoring is redefining commercial real estate development. From thriving clusters of industries to reimagined corridors for logistics, nearshoring holds a big opportunity for investors, developers, and companies looking to shape North America’s real estate future.
Similar article:
Dov Hertz Shares
Commercial Real Estate Development Insights on Recent Podcast