LaSalle Looks South of Border with $300M Fund

The economic crisis has gone global, but real estate investors with funds on hand are still plunking down cash in desirable markets like Mexico, where LaSalle Investment Management will invest heavily through a new fund. Launched in 2007, LaSalle Mexico Fund just closed with $300 million in equity that, with leverage, will allow for the acquisition and development of $600 million in assets. “It is a good time to invest in Mexico given the continued demand for quality real estate in the Mexican market due to the favorable demographics and the existing inventory,” Eduardo Güémez, CEO Mexico, LaSalle Investment Management, told CPN. The fund will focus on the acquisition, repositioning, development and redevelopment of hotel, industrial, office, residential and retail properties. And locations across the entire country will be considered. “We believe there are opportunities throughout Mexico and the specific geographies to be tackled depend more on the demand drivers and vary by asset type,” Güémez said. LaSalle is not alone in its assessment of Mexico’s real estate market and the desirable investment opportunities it presents. According to a report by real estate services firm Cushman & Wakefield Inc., the market is faring fairly well in the midst of the international economic downturn, partially due to the fact that properties had not been previously overvalued as they had in the States. Certain real estate sectors are still relatively strong. The hospitality market boasts an average occupancy rate of 65 percent, and continues to attract investors. In late March, Starwood Hotels & Resorts Worldwide Inc. announced it would open the St. Regis Kanai Resort & Residences near Cancun in 2011, and LaQuinta Inns & Suites presently has 12 projects underway in Mexico. And in Mexico’s industrial sector, the Cushman & Wakefield report concludes, low vacancies are being maintained by the manufacturing industry, which is growing increasingly competitive with the devaluation of the country’s currency. Additionally, as per a report by real estate services firm Grubb & Ellis, the outsourcing of U.S. manufacturing jobs to Mexico has boosted the logistics industry, thereby maintaining demand for industrial space. In February, leading distribution center provider ProLogis secured a nearly 95,000-square-foot lease in a building at ProLogis Park Pharr Bridge in Reynosa, bringing the then six-month-old building’s occupancy level up to 100 percent, and the company closed a lease deal for approximately 85,000 square feet in a new 106,000-square-foot facility at El Puente Industrial Center. Of course, Mexico’s real estate market hasn’t gone completely unscathed–retail vacancies are on the rise and the slowdown in various industries has led to an increase in office sublease space, according to the Cushman & Wakefield report. But with an objective of focusing on long-term opportunity, LaSalle’s Mexico Fund will not be deterred by current numbers.