Low Availability for Mexican Industrial Space: Newmark
The US-based real estate company Newmark reported that its Mexican industrial properties reported the lowest level of availability among its Latin American assets during 2H22. The company noted an increase in its inventory and average availability of 5.2% in the region.
Newmark’s inventory reached the 57 million m² milestone and its availability rate continues to go down to 5.2%. The period’s absorption registered a significant recovery when compared to the previous period totaling 2.5 million m², with Sao Paulo and Monterrey as the locations with the most frequently traded properties.
The company follows Banxico’s forecast for 2023, which anticipates a 3.5% growth. The company associates this with an increase in public infrastructure investment, highlighting that Mexico is strategically positioned due to its beneficial geographical location and trade agreements.
Mexican properties account for 34 million m², of which Mexico City represents 13.6 million m². Mexico is by far Newmark’s largest market since it features 11 million m², more than the remaining Latin American market as a whole.
In the case of Mexico City, the market performed well during 2H22 since the company could add over 350,000m² to its portfolio. It is also expected to add another 500,000m² of speculative industrial space.
Monterrey, Newmark’s second largest market, registered 786,000m² gross absorption during 2H22. Space in construction closed 2022 with a new record of 1.16 million m². In terms of availability, the city registered 41,300m², which is 0.5% of the available space.
The company considers 2022 to be one of Tijuana’s most dynamic years in the sector’s history since prices reached historical peaks at US$8/m², the highest in the country. Newmark says that the industrial sector is moving at a lagging pace with low availability (0.9%) as well as spaces under construction that will not be available in the near future.
Guadalajara is the smallest market in terms of total industrial space but the company said it performed well in terms of availability: by 1H22, it accounted for 1.6%, a figure that went down to 0.3% by 2H22. Newmark highlighted that the drop in space availability resulted in an increase in construction for new space by 34%. Prices also went up from US$5.13/m² to US$5.20/m².
Demand for industrial space has increased as companies catering to the North American market look to relocate their operations. However, experts believe they might not have sufficient space.