New Majestic CEO Looks To Southern Border As Industrial Cycle Rolls On
As congestion mounts at major U.S. ports, leading to lengthy shipping delays and jockeying for land near the water, newly promoted Majestic Realty CEO Reon Roski is looking elsewhere for her company's next development play.
Specifically, she's looking at land borders as a way to circumvent snarls at the ports.
Majestic Realty has projects underway in San Diego’s Otay Mesa and in Texas, especially in the border city of Laredo.
“It really is a logistics play in that it is important to us to be near freeways, new airports, the movement of goods,” Roski said of her company's strategy for 2022 and beyond.
Especially after the incredible snags in the supply chain that began during the first two years of the pandemic and continue today, Roski said she expects the demand for moving goods through Mexico and South America to increase.
“We think there will be big growth between Mexico and America,” Roski told Bisnow.
Otay Mesa is California’s busiest truck crossing and earlier this year a modernization project added more commercial lanes to the city’s border crossing between Mexico and California. Additional upgrades that will allow for more trucks to pass are underway now, the San Diego Union-Tribune reported in April.
Texas officials announced earlier this year that a new interstate highway and trade corridor would be constructed from Laredo to Canada. About $139B in imports pass through the city every year.
Twice, Laredo has briefly surpassed Los Angeles as the top port of entry for goods into the country. Roski says Texas as a whole is “a big growth opportunity” for the company.
Majestic, which bills itself as the nation’s largest privately held development company, has also expanded its portfolio in Phoenix, where it has been active for years, and in Reno, which Roski noted is well-located at just a day’s drive from Los Angeles and Seattle. The company's national footprint totals 87M SF.
Before her June promotion, Roski spent 25 years at Majestic, a company her grandfather founded. Trained as an attorney with extensive experience in real estate, Roski joined Majestic's board in 1997 and became senior counsel and a managing director in 2007.
As the appetite for warehouses spreads across the U.S., Roski said that Majestic is only interested in adding new markets, not turning away from any.
“We pretty much pick Class-A locations and markets,” Roski said. “Those have all been really good markets for us over the years and we are still looking for new development and new dirt to buy [there].”
Even for industrial developers, which have enjoyed a long stretch of high demand and rising rents, economic conditions look troubling. Rising interest rates, an unpredictable stock market and the specter of a recession all hover over the real estate community.
But Roski said that as a privately held company, Majestic has more flexibility on decisions of when to deploy capital or start certain projects than other companies might, giving them more resilience. She also sees a silver lining in a potential recession.
“Usually, in the cycles, it’s the most profitable time for us — the downturn,” she said. “One of the things that makes a successful development for us is buying the property at the right price and during recessions, usually, prices go down for real estate. We can get big tracts of land a lot easier and the economics work out.”
No matter what lies ahead, Roski said she isn’t planning on making any big changes to the core strategy originated by her grandfather in the 1940s.
She described Majestic as conservative in the way it approaches projects and finances them, constructing a couple of buildings at a time and financing each building on its own.
“I'm just going to stay the course because what's worked for 75 years is still working,” Roski said.
