In the Mexican commercial real estate market, three submarkets stand out as true giants in the industry. Apodaca in Monterrey, Cuautitlan, Tultitlan, and Tepotzotlan (CTT) in the metropolitan area of Mexico City, and Ramos Arizpe in Saltillo are the regions with the most significant industrial areas at the national level. These submarkets account for 20% of Mexico's industrial space, representing approximately 17 million square meters, according to SiiLA.

Apodaca, CTT, and Ramos Arizpe have become strategic locations for companies looking to expand in the country due to their location, infrastructure, connectivity, and skilled workforce. They are also known for their ability to withstand economic challenges, with increasing absorption rates and records of new inventory.

As of the third quarter of 2023, these regions accounted for 23% of the national gross leasable area (GLA) absorbed, with nearly 1.3 million square meters occupied.

Most of the absorbed properties were of high quality or Class A, especially those under 5,000 square meters and those between 5,000 and 10,000 square meters. This reflects the diversity of demand for equipped and efficient facilities that can reduce operating costs with technology and locations near the U.S. border and high-density urban areas.

Throughout this year, the three submarkets have demonstrated their resilience to the challenges of the industrial market.

Apodaca, CTT, and Ramos Arizpe reached new historic highs this year in market prices per square meter, indicating that stability and demand in these submarkets remain strong in a context where limited supply, high demand, and factors like location and quality drive price increases.

It is important to note that the industrial real estate sector in these regions has remained strong this year, in part because gross absorption has remained stable, and net absorption, driven by tenant retention and new leases, has remained positive, either since 2019, as in the cases of Apodaca and Ramos Arizpe, or for the past 12 quarters, as in the case of CTT.

However, the vacancy of industrial spaces reflected important trends.

In Apodaca and CTT, vacancy rates ticked slightly in 2023 due to the delivery of new inventory. Nevertheless, the trend indicates that the downward adjustment will continue over time. On one hand, Apodaca recorded its second-lowest level of the year in September, at around 1%, and its second-lowest level since records have been kept. On the other hand, CTT recorded its lowest level of 2023 in September, at 1.1%, similar to the second quarter of 2022. It is worth mentioning that, starting from this last date, the vacancy rate in CTT began to tick slightly due to the delivery of new inventory.

In the case of Ramos Arizpe, the vacancy rate dropped below 1%, its historical low since SiiLA started monitoring the region.

New Inventory and Tenants

The delivery of new inventory in the three submarkets has been relatively consistent and has begun to pick up. In fact, in Apodaca and Ramos Arizpe, a new record could be set this year thanks to the arrival of companies in the manufacturing, automotive, and electronics sectors, which accounted for between 65% and 70% of absorptions between January and September 2023.

During this period, Apodaca added over 266,000 square meters of new inventory, and Ramos Arizpe added nearly 250,000 square meters. This volume of additions is the highest recorded in the first nine months of any year since 2019.

In contrast, CTT incorporated approximately 190,300 square meters, a less dynamic volume than in previous years but with an upward trend. These spaces are ideal for consumer goods and transportation & logistics companies. In fact, according to SiiLA, more than 70% of absorptions in this region were made by companies in these sectors.

Apodaca, CTT, and Ramos Arizpe will continue to grow thanks to factors like nearshoring and the demand for last-mile spaces driven by e-commerce. SiiLA will continue to monitor these and other industrial submarkets in Mexico. For more information, explore SiiLA REsource or contact us at contacto@siila.com.mx.