Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: A $1 billion warehouse and logistics port is planned for Laredo; RCR Taylor Logistics Park opens in Texas; Volkswagen ends Golf production in Mexico; and Red Sun Farms expands in Pharr.
$1B warehouse and logistics port planned for Laredo
Spurred by strong U.S.-Mexico trade, a Los Angeles-area developer is planning to build a $1 billion distribution center, warehouse and manufacturing port in Laredo, Texas.
The project by Majestic Realty Co. is aimed at developing an 1,850-acre parcel of land in response to demand from companies that want more facilities near the border, Kyle Valley, Majestic Realty’s senior vice president, told FreightWaves.
“Laredo is an extremely important logistics market, not just to the region but to the country,” Valley said.
The project is the next phase of Majestic Realty’s Port Grande Logistics Port, a development that began when the company completed the acquisition of the 2,000-acre site from a subsidiary of Mercedes-Benz in 2015.
“About five years ago, we acquired the old Mercedes-Benz test track facility near the I-35 South mile marker 13, and we’ve now converted that into Port Grande Logistics Port,” Valley said. “We completed phase one earlier last year, which was a million square feet among four buildings, two of which were the largest speculative reconstructed buildings along the U.S.-Mexico border.”
The first-phase buildings at Port Grande include a 366,000-square-foot building and a 423,000-square-foot building, which are both 100% leased, Valley said.
“We have another 1,850 acres to go until we have fully developed Port Grande,” Valley said. “The land, when we look east from our existing Port Grande phase, we’re talking about 100% undeveloped Texas scrubland.”
The long term plan calls for six phases and 14 million-square-feet of spec industrial development, primarily distribution, warehouse and manufacturing space at the port.
Located just east of I-35, Port Grande is 10 miles from the Port of Laredo commercial border crossings, where approximately 60% of all trade between the U.S. and Mexico occurs, according to the Department of Transportation.
U.S. goods and services traded with Mexico totaled $489 billion for the first 11 months of 2020, according to the Office of the U.S. Trade Representative. In 2020, 2.3 million trucks and 239,017 rail containers crossed the border at the Laredo port of entry.
Gerardo Alanis Barrios, CEO of Laredo-based Cold Chain Solutions, said demand for warehouse and logistics space is still tight around the city.
Cold Chain Solutions is a refrigerated carrier and cross-dock operation servicing the consumer packaged goods, refrigerated and frozen food industries in Mexico, Canada and the U.S.
“It is rare to see a warehouse with a for sale or for lease sign,” Barrios said. “I have spoken to several real estate agents in the area and the reality is demand is still greater than supply.”
Ermilo Richer III, executive director of Laredo-based customs broker Richer, said Laredo needs more warehouse space, but 14 million-square-feet could be a little on the high side.
“Warehouse space has been a problem here for the past two to three years,” Richer said.
Matt Silver, CEO of Forager, said from his experience much of the warehousing in Laredo is more short-term and pass-through space.
“Much of what Forager does is transloading, where you have freight sitting somewhere for about no more than two hours, versus with storage or distribution, so I don’t see Laredo becoming a distribution point or a bigger one than it is,” Silver said. “Supply chain leaders, shippers send their cross-border stuff, their airfreight network goes to Dallas-Fort Worth [Airport] because stopping in Laredo causes too many issues with trying to find capacity to pick up in Laredo, whereas Dallas seems to have much more capacity because of where it is.”
Forager is a Chicago-based cross-border logistics technology company founded in 2018. Forager launched SCOUT — the company’s instant cross-border booking and pricing platform — in October 2019.
Silver said he would be surprised if more companies decide to go in and make Laredo more of a distribution hub.
“It would not be what I would recommend. I would tell people to go further into the U.S. to do that,” Silver said. “Laredo is the No. 1 inland gateway [in the U.S.], and as much freight that’s already moving through there, the more demand that you create in Laredo, the harder it can be to move through there and the more expensive it’s going to get. Pushing for more distribution out of Laredo versus letting it continue to move further inland into the U.S., I don’t think that’s the right move.”
Valley said companies have been approaching Majestic Realty about finding more space in the city, continuing “to grow its importance as not just a pass-through market but a distribution market as well.”
“We own five of the six largest buildings in Laredo and they are all 100% leased,” Valley said. “They are leased because other groups don’t have the appetite to build the size of product that we do. The investment community doesn’t see Laredo as a huge capital markets investment opportunity. For us, it’s a no-brainer.”
Valley added Laredo currently has around a “1-2% commercial vacancy” rate.
Majestic Realty is one of the largest privately held developers and owners of master-planned business parks in the U.S., with about 88 million square feet of industrial properties. The company does not sell its projects once completed, acting as long-term property holders instead.
Majestic Realty’s relationship with Laredo dates back to the 1990s, when it built a 500,000-square-foot facility for toy manufacturer Mattel Inc.
“Mattel had moved a lot of the production out of Mexico, importing it up through Port Laredo, being brought up to Fort Worth and then disseminated throughout the country from there,” Valley said.
Majestic Realty aims to make the next phase of the Port Grande project a public-private partnership with the city of Laredo by creating a tax increment reinvestment zone (TIRZ) for the land. The zone would give Majestic tax breaks in return for creating jobs and revenue for the city.
Formal adoption of the development agreement between Majestic Realty and the city of Laredo is expected to take place in February, according to Telco Garcia, Laredo’s economic development director.
Garcia said Majestic Realty has a strong track record, having already brought companies such as GE, Source Logistics and Toyota supplier Yazaki to Port Grande Logistics Port.
“The first five-year phase under this plan — worth some $174 million — will have 2-million-square-feet and create an estimated 850 jobs,” Garcia said.
RCR Taylor Logistics Park opens in Texas
RCR Taylor Logistics Park opened Jan. 15 in central Texas, offering dual Class I rail service from Union Pacific and BNSF railroads.
The 755-acre site is located in the city of Taylor, Texas, about 34 miles northeast of Austin. The logistics park offers transloading, manifest, unit train and storage for national and international firms in the central Texas area.
The rail park’s targeted customer base is nonhazardous industrial and manufacturing from industries such as steel, food, polymer, resin and building materials, according to its website.
Volkswagen ends Golf production in Mexico
Volkswagen has ended production of its Golf hatchback vehicle at its plant in Puebla, Mexico.
The Golf hatchback will continue to roll out of VW’s manufacturing facility in Wolfsburg, Germany. VW said it has stopped producing Golf hatchbacks for the U.S. market and will instead sell the sportier 2022 Golf GTI and Golf R models in North America.
The Puebla plant will instead start production of the Taos SUV later this year.
Red Sun Farms expands in Pharr
Red Sun Farms, a vertically integrated greenhouse vegetable grower, recently announced it is expanding its cold storage facility in Pharr, Texas.
The company is increasing its capacity at the facility by 40,000 square feet, bringing the facility’s total size to 106,000 square feet. The addition is scheduled to be completed by the end of the year.
Red Sun Farms is based in Kingsville, Ontario, Canada. The company owns greenhouses in Mexico, Canada and the U.S.
Borderlands is sponsored by Forager. More information on Forager’s offerings can be found at: https://www.foragerscs.com/.
More articles by Noi Mahoney