In the next three years, industrial real estate demand will increase in northern cities

Due to the fact that the northern border cities, particularly those in the northwest of the country, are presenting a high demand for industrial real estate spaces, aggressive growth is expected in the next three years, reported Newmark.

Through a report, the real estate analysis company announced that these border cities are currently presenting two main trends, the first is the rise in prices and the second, the decrease in availability.

Prices continue to rise and do not seem to stop for the rest of the year. Low availability of industrial space keeps demand high and industrial growth cannot be stopped because of it,” he stated.

A city that stands out in this situation is Ciudad Juárez, where the prices in Class A spaces are close to 6 dollars per square meter, while those that belong to class B and C are at 5 dollars per square meter.

“Historic points for the Juárez market, being the south of the city, especially the area near the Airport, where construction is concentrated with seven projects currently under construction. The three submarkets in this area (South, Southeast and Southwest) enjoy the greatest availability of land for Build-To-Suit and speculative constructions, with which we will see a continuation of pre-leasing”, reported the analyst from the Research division of markets of Newmark, Genaro López.

Newmark’s report coincides with what was released by the real estate platform Datoz, a company that indicates that the growth in demand from northern cities is impacting prices.

According to Datoz, the northern markets, such as Monterrey, Ciudad Juárez and Saltillo, are the ones that have had the greatest reduction in availability.

In the last year, the availability of spaces in Monterrey went from 1.1 million m2 to 696,585 m2, so its availability rate was 5.40%, when it typically had rates between 8% and 9 percent. This market is also the second with the highest gross absorption, with 267,208 m2 during the first quarter of 2022.

Precisely, the general director of Datoz, Sergio Mireles, commented that there is a strong demand for industrial spaces on the northern border due to its connectivity with the United States.

At the same time, this increase in demand is also due to the fact that there is a slower pace in the start of construction of new works (this behavior is driven by the rise in the prices of construction materials and the energy shortage).

For example, Monterrey had a 78% drop in its construction starts, which explains the downward pressure on its supply of spaces.

“This can cause a shortage of spaces to meet the great demand that continues to arrive in Mexico (…) 2022 is a continuation of the good dynamism of 2021, when absorption records were broken. This is because the pipeline of companies looking for spaces is high, it continues to grow”, assured Sergio Mireles.

growth and stability

Like the other cities, Tijuana is also presenting a high demand for its industrial spaces, however, it has not generated a pronounced rise in prices.

“The growth of Tijuana has not been impacted by the rise in the prices of construction materials, since construction continues and of the properties delivered, 100% were leased in previous quarters.”

Prices throughout the city continue to rise steadily and we can expect this to continue through 2023. Starting prices in Libramiento have reached $6.88 per square meter, a point not seen two years ago in the most coveted submarkets. , like Otay-Alamar.

The company announced that in Tijuana several of the industrial developers are already looking to focus their bank of prospects on international public companies.

“We see interest from new companies that want to settle in Tijuana, both tenants and owners, since with the construction of the OTAY II border bridge and the expansion of the Ensenada port, both projects forecasted for use in 2025, we can expect industrial interest continue to go from strength to strength over the next three years,” Newmark said.

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