The northern Mexican border has seen a steep decline in factory and warehouse leases amid growing concerns about how the outcome of the U.S. presidential election will affect the manufacturing industry, reported The Wall Street Journal.
Mexico benefited from a booming industrial real-estate market since the creation of the North American Free Trade Agreement in 1994, which developed a unified market between the U.S., Mexico and Canada, according to the report. The agreement allows U.S. manufacturers to take advantage of the cheap labor, low costs and more lenient business regulations found in Mexico, WSJ reports.
Republican presidential candidate Donald Trump previously called for the U.S. to pull out of NAFTA — a move that could significantly hinder the manufacturing industry, experts say, according to WSJ.
If NAFTA was abandoned, "on the Mexican side of the border a lot of the facilities will go vacant, rents per square foot will drop substantially," said Tom Fullerton, PhD, an economics professor at the University of Texas at El Paso. "It's not hard to imagine about a 30 percent to 40 percent vacancy rate collectively on both sides of the border."
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