Newmark Bullish on Industrial Real Estate in Mexico CityBy Fernando Mares | Fri, 07/15/2022 - 17:12
While the national construction industry is struggling, the industrial real estate sector of the Valley of Mexico and Toluca area is bullish about its prospects, since available spaces in industrial areas managed by the company have reached historical minimums and new parks are therefore likely to materialize soon.
According to Newmark, four out of nine industrial parks in the area reported an occupancy rate of 100 percent in 1H22. This, the real estate solutions provider says, proves the high level of demand in the market and the need to build more industrial hubs, as well as to expand the existing ones. “Availability levels in the industrial corridors lead us to not just increase construction and accelerate planning for our 13 industrial parks, but it also fosters expansion at the already existing areas. The industry is the driver of growth of the real estate industry in the current environment,” said Vianey Macías, Market Analyst, Newmark
The company highlighted the Tepotzotlan market, which has shown a stable occupancy with no available space during 1Q22. Overall average availability was 3.5 percent in 2Q22, which was lower when compared to 2021, when available spaces represented 5.9 percent on average.
Newmark reported that its A-class industrial inventory was more than 13 million m², a higher number than the 12.5 million in 2021.
Prices per square meter have increased. During 1Q22, each square meter cost US$5.54/m, while in 2Q22 it was worth US$589/m. This upward trend may continue. “It is expected that by 3Q22, an important quantity of our inventory will be added due to the high space demand in the area… more planned industrial parks or plants will be added. Regarding prices, it is possible that the upwards trend will continue due to the current economic indicator, as well as the high prices for construction materials,” said Macías.
The market absorption indicator, which looks at newly contracted spaces, reported -98,586m² during 1H22. The company said that it does not represent a market decline, but incorporations reflected in the region to date. “Even if the market absorption indicator shows negative numbers, the real industrial market boom is reflected in its activity, which has reached 500,000m²,” Newmark stated
The company reported that in markets like Guadalajara, Jalisco, the availability rate is 19 percent, and in Queretaro 25.8 percent. Both indicators are moving downward. In markets like Saltillo, Coahuila, the availability rate is just 2.9 percent.