The Boom of Industrial Warehouses in Mexico: Market Prices Soar 15% in Three Years

In the past three years, the average market price of industrial warehouses in Mexico increased by around 15%, particularly in the Northern and Central regions. This price increase was mainly due to a reduction in property availability and an increase in absorptions, according to SiiLA Market Analytics. The market price in the commercial real estate sector is an essential indicator for property valuation, project feasibility assessment, buying and selling negotiations, and analyzing market dynamics or competitiveness.

Despite the global economic difficulties aggravated by the pandemic and the price increases of certain construction materials (such as steel) starting in 2020, the industrial sector in Mexico rebounded due to the boost of nearshoring and the strengthening of e-commerce nationwide. Several markets in the North and Bajio regions, such as Tijuana, Guadalajara, and Monterrey, experienced a surge in demand for industrial spaces, which, combined with other factors, led to a widespread price increase.

The Northern region of Mexico saw the highest price increase, with a variation close to 30% between 1Q 2020 and 1Q 2023. This region had the most significant reduction in availability nationwide, and net absorption, which represents the balance between tenants entering and leaving, remained positive and nearly doubled. In other words, the demand continued to increase in the northern states, especially in the border area with the United States, to the extent that the average market price reached historical levels above five dollars per square meter, according to SiiLA data.

After the Northern region, the country's Central region experienced the highest price increase, with a general variation of 16%, reaching a record average of around seven dollars per square meter. In this region, at least in the last three years, the increase in net absorption was the most pronounced nationwide, reflecting the high dynamism and growing industrial demand in the market. The metropolitan area of Mexico City stands out, where there has been significant development of medium and large-sized industrial warehouses, especially in the Zumpango-Nextlalpan corridor, which is gaining importance with the construction of notable industrial parks such as T-Mex Park.

Regarding the Mexican Bajio region, Market Analytics data indicates an approximate 8% price increase since 1Q 2020, driven by investments from automotive, capital goods, and logistics companies. In 1Q 2023 alone, these industries accounted for a third of the absorptions, with the arrival of companies such as Jiangsu Rongtai Industry and Arbomex.

Moreover, for the past three years, availability in the Bajio region has decreased, reaching historical lows in 1Q 2023, below 3%. The arrival and expansion of companies and the gradual reactivation of new inventory deliveries in the region starting in 2022 have contributed to the price increase. By the end of 1Q 2023, the average market price in the region reached a record level above 4.2 dollars per square meter.

Overall, the industrial market in Mexico has experienced increased dynamism and demand that has outpaced the supply of new inventory. This situation has resulted in a widespread over-demand for industrial spaces nationwide, leading to price increases in different regions. To learn more about national trends, visit SiiLA's REsource or contact us at contacto@siila.com.mx.