The industrial real estate market in Mexico went through a scenario in 2021 that registered historical figures of gross demand, managing to exceed just over 6.6 million square meters nationwide, in the midst of an offer that could not keep up with the same growth rate.

This combination of market forces led to the depletion of part of the national inventories, generating a significant contraction in vacancies. If we evaluate the figures at the end of 1Q 2022, the average vacancy at the national level reached 2.8% when this same indicator a year earlier, at the end of 1Q 2021 it registered almost 6%.

If we focus on Monterrey, an entity that achieves the lead in terms of gross demand and during 2021 exceeded more than 1.3 million square meters, we observe the largest annual contraction of vacancy, having registered 6% at the end of 1Q 2021 for move to 2.5% at the end of 1Q 2022.

Check here: Industrial construction in Mexico reports historical figures, totaling 4.7 million m²

In relative terms, the Tecate market was the one that registered the largest annual contraction of 4.1% of its vacancy, going from 4.7% at the end of the first quarter in 2021 to 0.6% in 1Q 2022.

Saltillo, Ciudad Juárez, Querétaro, Puebla and Guanajuato achieved annual reductions of 2.9%, 2.7%, 2.6%, 2.6% and 2.5%, respectively. In other words, at the national level, the downward adjustment of vacancy was constant.

When analyzing the behavior of the construction of industrial buildings at the national level, we also observe a sharp growth of almost double when registering about 2.4 million square meters of buildings that were built at the end of the first quarter of 2021 and that happens to report little more than 4.7 million square meters at the end of 1Q 2022.

However, this impulse of the construction did not manage to reach, neither in amount nor in term, the speed of displacement of the demand, the reason why the gross demand began to consume part of the vacant inventories, which has a decisive impact on the contraction of the vacancy.

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Even with the confidence of investors and developers in the Mexican market, the internal macroeconomic conditions of high inflation and government signals on issues such as energy reform and public investments undertaken have made some markets cautious as they expect to see the evolution of these indicators and signs during 2022.

Mainly the northern and border markets, such as Tijuana and Ciudad Juárez, have reached critical vacancy levels close to half a percentage point, so we can anticipate a significant increase in their rental prices for the immediate future to the extent that the speed incorporation of the new supply does not keep pace with the demand.

The conditions that throughout 2021 impacted the growth of industrial demand, on the manufacturing and logistics side, are still maintained in the short term, which makes us anticipate that increases in rental prices and even more severe contractions in vacancy are a constant in the two quarters ahead.