Industrial Real Estate Boom in 4Q21

The industrial real estate industry registered a vital recovery and growth in the last quarter of 2021 by continuously adapting to shortages and restrictions and evolving its e-commerce platforms.

“With the end of 2021, Mexico hopes to regain the dynamism it had prior to the pandemic, when the economy grew at average rates of 2.7 percent,” reads a report by Mexican platform Solili. The platform forecasts a 5.59 percent growth for 2021, following the 8.3 percent contraction registered in 2020.

Mexico’s corporate and industrial markets have recovered unevenly, said Solili. The slowdown in investment was catastrophic for many sectors but changes in consumption habits have benefitted the industrial sector, which has shown the greatest resilience and the most profound transformation.

The platform reported that industrial real estate demand increased in Guadalajara, Saltillo, Mexicali and Queretaro by 7-10 percent. Mexico City and Monterrey continue to lead in demand, showing their fierce dominance on the industry. But costs for construction materials continue to grow, creating barriers for developers on a national scale.

“The average growth of the industrial real estate inventory in Mexico reached more than 5 percent in a market strengthened in the face of the crisis, standing out for its competitiveness and dynamism in the main cities,” states Solili’s national industry report for 4Q2021.

Industrial activity also boomed in Toluca, Cuautitlan, Tultitlan and Tepozotlan, which received major investments, according to Solili as reported by MBN. E-commerce has also increased exponentially with new consumer habits.

Industrial construction is led by Monterrey, after the northern city displaced Mexico City to become the national leader. Tijuana follows both cities with the third spot on the list. Demand for real estate increased 70 percent on an annual scale from 2020, after 2021 registered historic increases in certain markets.

The sector’s continued growth, however, is uncertain. “Key risk factors such as the rapid increase in the prices of raw materials that underpin exports, the scarcity of some inputs such as semiconductors, and the way the government handles the energy issue will allow or not the consolidation of value chains in Mexico, giving the country safer suppliers with guaranteed delivery capacity on time,” said Solili.