Industrial rental prices are the result of various factors where the most important are the balance of supply and demand and cost inflation, since when replenishing inventories the premises of investment profitability must be reformulated, which leads to redefining prices to keep the business model current.

Some markets in the midst of the pandemic faced a scenario of low costs at first, as a result of the decline in demand, but gradually they escalated until they reached the levels we see today in Mexico where inflation at the beginning of October was 8.41 % with the projection of returning to close to 10% once Banxico issues its bulletin on November 10 with the corresponding adjustment.

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When we analyze the percentage increase in industrial rental prices between January and October 2022, the first places are occupied by Puebla with increases of 24.4%, Mexicali with 20.5%, Ciudad Juárez with 17.8%,  Tijuana with 17.6% and Monterrey con 15.6%.

In turn, these markets have been accompanied by significant downward adjustments in vacancy, as is the case of Monterrey, which decreased 1.52 percentage points, while Puebla and Mexicali registered the same downward trend with adjustments of 0.81 and 0.17 percentage points. respectively.

Now, in the cases of Ciudad Juárez and Tijuana, vacancy was so extremely low that the speculative constructions that were completed and were left free for rent managed to increase vacancy in these entities by 1.2 and 0.1 percentage points between January and October 2022, to close in October 2022 with 0.42% and 0.62%, respectively.

Another determining factor is the high demand for industrial land with infrastructure in line with the new requirements of potential tenants, and it is there where developers with the greatest expertise and financial capacity will be able to respond to demand.

Of interest: It is the El Salto submarket that has the highest industrial rental prices in Guadalajara

Many requirements lean towards an infrastructure that allows supply of both water and electricity that meets new environmental, sustainability and governance criteria guidelines, with the so-called ESG criteria that add more elements to the final cost of the ship, although in the long-term increase the competition of these options.

Mexico, even in circumstances of high inflation, has the advantage of grouping elements that are close to the United States, with a legal framework that is implemented through the T-MEC and multiple other signed agreements, and the competitive cost of its labor force.

Under the scenario of the operation of the free market rules, we can anticipate that we will continue for the rest of the year and 2023 in the face of strong competition that, although in the short term it anticipates higher rental prices, in the medium term it could tend to soften these increases. Product of the strong competition and institutionalization that the Mexican industrial market has achieved in recent years.