With more than four decades of experience, Grupo GP, a leading construction and real estate development company based in Monterrey, Mexico, has continually maximized its opportunities to expand as a business. Rachel Hartman reports on this solid company and its underlying strategies for maintaining balanced growth.
When clients approach Grupo GP, a leading construction and real estate development company that specializes in developing industrial and residential properties, they find a one-stop shop for all that they need. “We’re a very flexible company,” says Armando Garrido, director of the real estate development division. “We can come up with solutions for just about any need, from development issues to construction plans and even licenses and permits. We’re able to offer such a complete service because we have everything the client needs right within our walls.”
With notable projects under its belt, including the metro system line II in Monterrey and Nuevo León’s first industrial park, Grupo GP has become a leading company in the construction and real estate industry in Mexico’s northeastern region. The company currently consists of four divisions: construction, real estate development, housing, and urbanization. These four branches work together to provide integrated solutions for both the private and public sectors.
The company’s origins date back to 1966, when it started out solely as a construction company. Shortly after it began operations, the city of Monterrey hit a growth boom. As the city’s public and private sectors expanded, Grupo GP grew alongside it.
According to Garrido, as the years passed, the company began branching out into other areas. “Grupo GP became involved in business activities related to construction, such as real estate,” he says. “Opportunities that provided good work came up, and company officials were able to grab on to them.” The company’s first official step into the real estate development industry took place when it built the first industrial park in the state of Nuevo Leon in 1986.
The company has strong ties to ING Real Estate. This partnership has helped the real estate division of Grupo GP to develop industrial parks, and backoffice buildings. “We really have covered almost every aspect of development,” Garrido explains. “We’re only missing tourism developments, which we aren’t involved in right now.”
One of the characteristics that makes Grupo GP stand out from other firms is its vertical integration strategy. “We have a structure that allows us to work on every aspect of development projects, from the conception stage to the selling end,” Garrido notes. “We even have an area dedicated to renting and selling the finished properties.”
Grupo GP currently owns a large area of land in the state of Nuevo León, Tamaulipas and San Luis Potosi. In addition to its land reserves, it has a department that oversees the designing phase of projects, including the architectural and engineering aspects. Recently, Grupo GP opened a new ISO 9001:2000 certified division, GP Servicios, to oversee the administration and maintenance of real estate assets.
To describe how having everything under one roof has helped Grupo GP rise in its industry, Garrido points to the company’s ability to participate as a third party in projects. “Other developers do not have the structure that we have,” he explains. “They often send part of their projects to us, which we take on as a third party.”
The strong vertical integration system is also appealing to clients. “An international client can come to our company and know that we can provide a complete solution,” Garrido notes. This is often helpful, as it saves foreigners the time involved in taking care of many steps they may not be familiar with, such as getting the necessary building permits and business licenses from the government.
By keeping so many of the processes in-house, the company is able to optimize costs and schedules when working on a project. This is an additional benefit to clients. It also has helped the company’s finance department.
In recent years, this strong organizational system has brought on periods of significant growth for Grupo GP. From 2005 to 2007, sales doubled for the company’s real estate development division. In terms of income, Garrido says that the company has grown at an annual rate of more than 35 percent since 2005.
Having a solid balance sheet has allowed the company to continue operating during the recent economic slowdown. “We have a very healthy and very sound financial position,” explains Garrido. “We’ve had a number of situations where clients ask for a project, and then find they do not need it, due to the current market. We’ve been able to help them adjust the project plans. In some cases, we’ve even finished the construction ourselves and rented out the properties.”
Recently, Grupo GP has been honored with the Social Corporate Responsibility Award. It also has an established history of carrying out projects that benefit the community.
Currently, the company has looked into the possibility of taking on construction projects related to the 2009 national infrastructure plan. As Garrido notes, the government is setting up grants for various infrastructure projects. Grupo GP may head up one or more of these grants, which cover projects such as water treatment plants, interstate highways, and a metro system extension.
In the coming years, Grupo GP has plans to continue building its business, one project at a time. “We’re not aiming to become the number-one constructor or real estate developer in the country,” Garrido explains. “Our mission is to participate in projects on a selective basis. We want projects that bring a good return to our shareholders and that generate lasting benefits to the community.”
To maintain balanced growth, company officials plan to keep a diverse portfolio. “We want to be involved in large, important projects,” says Garrido. “At the same time, we want to keep carrying out smaller projects, which serve as a strategy for us to generate income in the short run.”
The company is also looking beyond its state borders, and turning its focus to the national level. “There’s a strong need in the real estate development industry for companies that are able to professionally manage the developments they complete,” says Garrido. “We have a services division, GP Servicios, that meets that need, and want to launch it into different areas.” Company officials have spotted opportunities in places such as Mexico City, Cancún, and Cabo San Lucas, among others.
At the forefront of the company’s vision for the future is the wellbeing of the community. Grupo GP has helped build up Monterrey during the last four decades. As it takes its operations to a national level, Grupo GP plans to provide improvements throughout the country. This is a strategy that has continually benefited not only the community, but the company as well.