Tijuana's industrial market is sized at just over 7.6 million square meters, of which 65.7 thousand square meters have vacancies at the end of 3Q 2021, representing 0.9% of vacancies.

This amount below 1% is a very low indicator for the average that we could consider healthy between 3 and 5% in a market where there is a balance between supply and demand, which generates a reasoned projection of the rental price in the short horizon and medium term.

The low level of vacancy directly affects the increases in rental prices that have seen accelerate significantly since March 2021 where the average rental price was $ 4.89 per square meter per month until the rental price registered at the end of September 2021 of $ 5.48 per square meter per month.

The variation in the average rental price has registered an increase of 6.1% since the beginning of the year and 11% if we compare it with September 2020. The rental price in this border market is very close to that of the capital of the country, only for 20 cents under.

Check here: Monterrey at the forefront of industrial demand in Mexico as of 3Q21

This intrinsic situation of this market will have to be spiced up with rising inflation at the national level that directly impacts the costs of basic inputs such as steel and concrete and which goes in the same direction of making inventory replacement more expensive.

Faced with such a low vacancy scenario, there will be more than one applicant for the same space, which makes the negotiation tilt towards the offeror.

When we analyze the vacant spaces in detail, we find few options where there is a single warehouse of 20 thousand square meters, another two in the order of 10 thousand and a little more than half a dozen sizes between one thousand and 7 thousand square meters that represent a scarce supply given the size of demand that this market handles and that only in 3Q 2021 was 264 thousand square meters.

Of the total 404.8 thousand square meters of industrial buildings that are progressing in various construction phases, about 45% will be available, most of them in early or mid-2022 and there would be about a dozen options ranging from 7 to 27 thousand square meters and that could absorb some of the looming demand.

Of interest: Tijuana reaches 7.6 million square meters of inventory

Of the total projects under construction that are not available, 65% correspond to BTS, with very few speculative projects that can take advantage of and satisfy the demand that will be generated in the short term.

What is a plus point is the presence and competence of developers with extensive experience in the industrial segment, including Prologis, ATISA, Vesta, FINSA, Grupo El Florido and IAMSA.

Other developers have also increased their commitment to this attractive market, among which we can mention Artha Capital, RMSG, CPA and Fibra Upsite, among others.

In the remainder of 2021 and the first semester of 2022, it is anticipated that the demand for BTS and speculative spaces will continue to advance due to the advantages of infrastructure, connectivity and location close to the United States, making Tijuana a commercial opportunity for investors and developers of industrial real estate.