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The Central American Group: Today, Daniel Milla is with us. Daniel is a commercial broker for Colliers in El Salvador. Today, we will talk about trends in industrial real estate in El Salvador, America. Good morning, Daniel. How are you today?
Daniel Milla: Hey Steve, how are you? Glad to be here with you and ready to start.
The Central American Group: Well, listen, before we start, could you tell us a little bit about yourself and Colliers’ operation in El Salvador?
Daniel Milla: Sure. I’ve been in industrial real estate in El Salvador for almost eight years now. Colliers started here in the country last year and is consolidating operations in the Central American region, adding to the almost sixty-five countries it already has under its umbrella. It’s opening offices in all of Central America to consolidate in the region and explore opening opportunities. We’re very happy about that. The expansion mentality of Colliers and the enterprising mentality have drawn me to it. It was one of the reasons that drew me to join the network, and here I am. I have experience in residential real estate and also commercial. So, since Colliers is a major corporate real estate company. It is one of the big four: JLL, Cushman, CBRE, and Colliers. These companies are noticing that many opportunities are opening up here in El Salvador and the region as a whole.
The Central American Group: That’s interesting that you talk about opportunities in industrial real estate in El Salvador. There have been many changes under the current president, and I’m sure you know, given the much-improved security situation in El Salvador, that trends are positive for you there. Can you tell us a little bit about some of those trends?
Daniel Milla: Yes, sure. In the market for industrial real estate in El Salvador, we’re looking at an increase in Build-to-Suit (BTS) projects because we are finding that we currently have a low supply of industrial properties over three thousand meters of roofed space. So, this is a great opportunity to meet demand. We have the full capacity within Colliers to generate these projects and get facilities up and running in six to twelve months in strategic locations nationwide. One of the reasons for that low supply is related to your point about the security increase in El Salvador. A lot of land locations have opened up due to that security increase. This has allowed all of these new locations to open up. They have enormous potential in terms of the logistics corridor that’s being built in the country.
The Central American Group: Have you seen positive changes in El Salvador due to the improving situation? Do you see greater interest in international manufacturers looking for industrial real estate in El Salvador?
Daniel Milla: One of the greatest potentials of El Salvador is not only the geographic location. Because you can get a 2.5-hour flight to major markets in the US and Latin America. And five days by sea, which is a great connection. Our location is great because the times are excellent for connecting to major markets. That’s really important because the security improvement is opening up many locations for industrial real estate in El Salvador. That’s one of the major tools. Also, in El Salvador, the US dollar is a legal tender. This grants monetary stability. Also, there are a lot of tax incentives that can benefit major multinational companies. Like the Investments Law, the Industrial and Commercial Free Zones Law adds a lot of income tax exemptions and value-added exemptions. Also, there is no property tax in El Salvador. And there’s also an exemption on real estate transfer fees for new major multinational companies operating here in El Salvador. We also have Export Reactivation Laws, the International Services Law, and free trade agreements for Central America, the US, the European Union, Mexico, Colombia, Chile, Panama, and Taiwan. The country is ready to receive all these multinational firms, and it’s open for business.
The Central American Group: What kind of manufacturing companies? Could you give us a few examples of manufacturing companies that have looked at industrial real estate in El Salvador and are in the process of looking at El Salvador during this period of improved security?
Daniel Milla: To name a few. For example, Haynes Brands is a multinational manufacturing firm with operations here in El Salvador. Also, Fruit of the Loom and Youngone, which is Korean, are here. All of these are already established here in the country. Some of them are looking to expand their operations. We also have a lot of multinational firms that are within the beverage industry or bottling industry. We also have food industries, plastic, metalworking, paper, cardboard, graphic arts, furniture, and pharmaceutical companies worldwide. We definitely can harbor all these firms and provide them with industrial real estate in El Salvador. This is due to the geographic location of the country and the manual labor and skilled labor available in the country. Companies can work within free trade zones and IPWs, which are inward processing warehouses.
The Central American Group: In terms of companies looking for guidance, what can Colliers do for investors looking to make capital investments and look for industrial real estate in El Salvador?
Daniel Milla: That’s a great question. Because Colliers is a one-stop shop and a multinational firm, we have all the expertise from the Colliers network and the sixty-five countries we’re in. We get assistance from top experts from all over the world. And we can do everything from appraisals to market research, high and better use, and land studies to grant the best and highest use for the best site selection for industrial real estate in El Salvador. Colliers can also provide services in the areas of project management, construction, design, supervision, and site selection. Also, we execute projects from A to Z. That’s from the site selection of the land to the final design of the office, industrial space, or hotel. And we can do that. We’re interested in everything that has to do with real estate, and we’re enthusiastic about it.
The Central American Group: Is there a part of El Salvador or a geographic area in which you see the most activity related to industrial real estate in El Salvador? And if that’s the case, what areas are most active regarding possible new business installation?
Daniel Milla: Regarding industrial real estate in El Salvador, I’d say one of the hotspots right now is Nejapa, which is north of San Salvador and in the central part of the country. The municipality of Ateos constitutes a very important logistics corridor because of its proximity to the Port of Acajutla. The Port of Acajutla is under expansion right now. It will be expanded from 310,000 Teus, which is a twelve-foot equivalent unit, to 910,000 TEUs. That increases the capacity to process more products, which is great news. There are also government incentives and projects to reactivate Puerto La Union, which is on the other end of the country, which will greatly increase the capacity of the import-export situation in the country.
The Central American Group: Can you tell us if there are other investment opportunities we haven’t mentioned thus far that people should consider when looking into El Salvador?
Daniela Milla: Yes, on that point, I’d like to add there’s high investment interest in the country due to government actions from legal and economic standpoints. Also, it’s important to mention that major multinational companies like Google are looking to set up shop here in the country. Additionally, there’s a lot of opportunity for hotel developments on the beautiful Salvadoran beaches and residential and vacation developments. There’s also a terrific opportunity for solar energy projects. El Salvador has one of the highest radiation levels in Latin America. Because of new opportunities, we will add considerable industrial real estate in El Salvador in the coming years. So, everything is looking up.
The Central American Group: Well, it’s wonderful to hear that because El Salvador has had a lot of challenges over the years, and it’s nice to see that things are moving forward in your country. I want to thank you for joining me today. I want to wish you the best of luck and a wonderful rest of 2024.
Daniel Milla: Thank you, Steve. Also, to you. Thank you for the invite. I’m grateful for the time and space.
The Central American Group: All right, well, thank you, and have an enjoyable day.
Daniel Milla: All right, Steve. Nice talking to you.
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