Monterrey Industrial Market Benefits from NearshoringBy Lorenzo Núñez | Fri, 08/06/2021 - 10:03
By 2Q2021, Monterrey's industrial real estate market reached a total of 12.3 million square meters (m2) in inventory, which represents 14 percent of the entire country’s market.
Monterrey is Mexico's second largest city, second only to Mexico City, and by the same token it is the second most dynamic industrial real estate market. Monterrey’s strength in the industrial market comes from its manufacturing activity, since, as a border market, it is an attractive exporting hub to the US and Canada, but also for domestic distribution.
According to data from Datoz, the entry into force of the Agreement between Mexico, the US and Canada (T-MEC) accelerated investments by foreign and domestic companies seeking to manufacture their products in Mexico due to the benefits it provides in skilled labor, proximity to the world's largest market (the US), lower or zero tariffs, just to name a few.
The COVID-19 pandemic has had an effect on supply chains, causing disruptions. This has made companies look for other supply options such as nearshoring. Monterrey has been one of the best markets for the T-MEC and nearshoring due to its geography and infrastructure. This has been reflected in the demand for industrial space, which during 2Q2021, the Monterrey market accounted for 33 percent of the rental or sale of industrial space in the country, totaling a gross absorption of 381,885 m2 during the second quarter, representing a massive increase of 347 percent compared to the same quarter in 2020.
The tenants that occupy industrial space in Monterrey correspond to the agribusiness, food and beverage, automotive, auto parts, industrial consumer goods, consumer goods, construction, household appliances, electronics, metalworking, paper and stationery, and plastics industries.
Sergio Mireles, CEO of Datoz, believes that Monterrey is well on its way to overtake Mexico City as these numbers are expected to increase during the second half of the year, which will ultimately position Monterrey as the market with the highest demand in 2021, reaching a historic gross absorption.