How One Multinational Overcame Challenges of Real Estate Development in Latin America
By Leandro Rovai
Leandro Rovai is head of Global Knowledge Management within PepsiCo Global Real Estate, which he first joined in 2017 to manage the Latin America portfolio. Originally from Brazil, he is a guest lecturer at SiiLA Academy, where he shares his knowledge with the next generation of real estate professionals in Latin America. In this Site Selection exclusive, he shares his knowledge with us.
Real estate development in Latin America has a unique set of challenges for multinational companies. These challenges range from navigating complex regulatory environments to infrastructure limitations and ensuring sustainability.
One of the primary obstacles multinational companies face in Latin America is the complex regulatory environment. Each country has its own set of laws and regulations governing real estate development, which can be difficult to navigate. In some countries, for instance, obtaining the necessary permits and approvals for construction can be a lengthy and bureaucratic process.
Companies must comply with local zoning laws, environmental regulations and labor laws, which can vary significantly from one region to another. PepsiCo’s experiences in establishing some of its distribution centers throughout the region offer proof of these challenges. The company always must work closely with local authorities to ensure compliance with all regulatory requirements. That requires extensive paperwork, negotiations and, sometimes, overcoming bureaucratic hurdles.
This kind of process can be time-consuming and costly, potentially delaying project timelines and increasing expenses, placing the expected — and approved — financial results at risk of change.
Infrastructure Limitations
Infrastructure in many Latin American countries is often inadequate to support large-scale real estate developments. Issues like poor road conditions, unreliable electricity supply and limited access to water can be a significant challenge.
A good example from PepsiCo is the distribution center in Villa Nueva, Guatemala, located immediately southwest of Guatemala City. The chosen location for this distribution center was strategic due to its connectivity to major highways, facilitating efficient logistics and distribution.
However, ensuring that the infrastructure could support the operation required substantial investment. The company invested in modernizing the facility and implementing advanced logistics systems to overcome these limitations. The distribution center features automated voice command systems for product selection and 29 dispatch doors to streamline operations. These enhancements were crucial for maintaining efficiency and meeting market demands, but they also required significant financial resources and planning.
Another good example is the service mixing center in Puebla, Mexico, that solved logistics challenges with the local market across 29 distribution centers and 15 PECs (product exchange centers) in the central and southeast regions of Mexico.
Mexico is PepsiCo’s largest market after the United States, with 15 plants and more than 250 distribution points throughout the territory. It is the main portion of the Latin America portfolio that earned $11.7 billion in annual net revenue in 2023, supports more than 80,000 direct jobs and operates over 40 production plants in 34 countries.
Economic Instability
Economic instability is another big challenge that multinational companies must face with in Latin America. Fluctuating currency values, inflation and political instability can impact real estate investments.
In Guatemala, these economic uncertainties were confronted while planning and executing the distribution center project during 2019-2020. The company invested $27 million in the facility, a substantial amount that required careful financial planning and risk management.
Economic volatility can affect construction costs, labor expenses and overall project feasibility. Companies must be prepared to adapt to changing economic conditions and develop strategies to mitigate risks. For PepsiCo, this meant ensuring that the distribution center could operate efficiently and sustainably despite potential economic fluctuations.
Since it began operations, the Puebla Mixing Center has directly employed 310 people, 50% of whom are women. With respect to the supply chain, it will contribute to an increase in the company’s storage capacity with 17,000 pallet positions.
Importance of Sustainability
When considering a new project, it is crucial to look beyond return on investment and ensure alignment with the company’s logistics transformation strategy, which aims to enhance customer service levels. This involves generating economic spillover in local communities, improving employee working conditions and achieving sustained business growth. Optimizing logistics conditions to boost customer service and creating sustainable operations by reducing carbon dioxide emissions are essential aspects of this strategy. These were crucial aspects considered in both projects.
PepsiCo’s Puebla Mixing Center in Puebla, Mexico, employs 310 people and will contribute to an increase in the company’s storage capacity with 17,000 pallet positions.
Sustainability has become a critical focus for multinational companies operating around the globe. The distribution center in Villa Nueva exemplifies the company’s commitment to sustainable practices. The facility received LEED Gold certification for its efforts in promoting sustainability, while the Puebla location has LEED Silver, Distinctive A and Fitwel certifications.
These certifications recognize buildings that meet high standards of environmental performance, including energy efficiency, water conservation and waste reduction. PepsiCo’s sustainability initiatives at the facility include the use of energy-efficient lighting, water-saving fixtures and waste management systems. These efforts not only reduce the environmental impact of the facility but also contribute to long-term cost savings and operational efficiency. Sustainability is increasingly important for attracting and retaining customers, investors and employees who value corporate responsibility.
Strategic Location and Market Access
Choosing the right location for real estate development is crucial for multinational companies. Choosing the correct location can provides connectivity to major highways allowing companies to efficiently distribute products to various markets in Central America and other regions. This strategic positioning enhances the company’s ability to respond to market demands and expand its reach.
However, selecting a location that offers both logistical advantages and regulatory compliance can be challenging. Companies must conduct thorough market research and feasibility studies to identify optimal locations for their operations. PepsiCo’s success in Villa Nueva demonstrates the importance of strategic planning and location selection in overcoming real estate development challenges.
Real estate development in Latin America presents countless challenges for multinational companies. PepsiCo’s distribution centers in Villa Nueva, Guatemala, and Puebla, Mexico, serve as a valuable case study in overcoming these obstacles and highlight the importance of strategic planning and sustainable practices.
By investing in modern infrastructure, complying with local regulations and prioritizing sustainability, multinational companies can achieve long-term success in Latin America’s dynamic real estate market.
PepsiCo’s experience underscores the need for adaptability, innovation and commitment to corporate responsibility in navigating the complexities of real estate development in the region.
Leandro Rovai is head of Global Knowledge Management within PepsiCo Global Real Estate.
How LatAm & Caribbean Countries Rank in Global Opportunity Index
Released in March 2025, the Milken Institute’s Global Opportunity Index evaluates the attractiveness of foreign investment opportunities in 116 countries around the world by considering business perception, economic fundamentals, financial services, institutional framework and international standards and policy in each country. Here is how 19 countries in the Latin America & Caribbean region fared in the rankings. Among notable categorical rankings, Costa Rica was No. 18 in economic fundamentals (the highest rank of any LatAm or Caribbean country in any of the categories) and Brazil ranked No. 29 in financial services.
| Country | Rank |
| Chile | 40 |
| Uruguay | 44 |
| Costa Rica | 47 |
| Mexico | 62 |
| Peru | 64 |
| Jamaica | 65 |
| Brazil | 68 |
| Colombia | 69 |
| Panama | 71 |
| Dominican Republic | 76 |
| Trinidad and Tobago | 77 |
| Argentina | 80 |
| Guatemala | 81 |
| Paraguay | 84 |
| El Salvador | 86 |
| Ecuador | 89 |
| Bolivia | 91 |
| Nicaragua | 92 |
| Honduras | 97 |
Source: Milken Institute (2025)
A skyline view of Santiago, Chile, features the Providencia and Las Condes districts with the Costanera Center skyscraper and Titanium Tower against the backdrop of the Andes.
Photo by tifonimages: Getty Images