Real Estate Demand Surges in Monterrey: Newmark
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Real Estate Demand Surges in Monterrey: Newmark

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Emilio Aristegui By Emilio Aristegui | Junior Journalist and Industry Analyst - Mon, 01/23/2023 - 11:47

Monterrey, Nuevo Leon, saw outstanding demand for real estate in 2022, which led the city to hit one of the lowest availability rates in Newmark’s registers. Prices have increased and construction is forecasted to continue at a fast-pace to meet the surge in demand.

Real estate company Newmark Group reported that demand for Class A space in Monterrey in 2022 exceeded that of 2021, with the cumulative gross absorption totaling 1.27 million m² in 2022. Recorded Class A inventory reached 7.8 million m². In 2021, Newmark estimated a cumulative absorption of 1.26 million m².

The demand for Class A space generated one of the lowest vacancy rates in Newmark’s records, standing at 0.5%. Class A industrial availability registered 41,200 m². In 4Q22, average prices stood at US$5.43 per m² per month, as measured by the weighted rental price. Newmark estimates that the total space under construction could surpass 1 million m², explained Newmark via a press release. 

In 4Q22, gross absorption reached 449,000 m², with municipalities Apodaca and Santa Catarina registering the highest demand with 47.4% and 16.7%, respectively. Class availability reached 41,000 m², which represents a major decrease in comparison to 2021, when it hit 178,000 m². Monterrey’s sharp increase in demand decreased the availability rate from 2.5% at the end of 2021 to 0.5% in 2022. 

The decrease in availability caused a surge in the weighted rental price, which increased in 4Q22 in comparison to 3Q22, from US$4.81 per m² per month to US$5.43 per m² per month. The weighted rental price also increased annually in comparison from 4Q21 when it registered a US$4.27/m² per month. Operations in 4Q22 were divided as follows: 64.0% in rental operations, 33.9% in build-to-suit type operations and 2.1% in expansions of existing warehouses.

The Panorama of the Industrial Market in Mexico found that total industrial real estate inventory accounts for 94.49 million m² in 2022, which was mostly concentrated in Mexico City and Monterrey, with 16% and 15% percent, respectively. “We have seen an increase in the demand for industrial spaces, specifically in the last two years,” said Sergio Mireles, Partner and Founder, Datoz, to T21. Datoz attributed the increase in demand to Mexico’s economic growth, as companies have entered the country and have sought to expand its operations, as reported by MBN. 

Photo by:   Image by piro4d from Pixabay

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