How Does Monterrey Balance High Demand and Maintain Stable Prices in the Industrial Market?

Despite being Mexico’s most in-demand industrial market, Monterrey has maintained relatively stable prices due to a balance between supply and demand, intense internal competition, and effective land management for development.

In this market, the average rental price is nearly six dollars per square meter, with the submarkets of San Nicolás, Monterrey, Escobedo, and Santa Catarina being the most expensive, reaching up to nine dollars per square meter.

Rigoberto R. Rico is the Director of Operations at Quanta Computer in Monterrey, Nuevo León. Photo: SiiLA.

By: SiiLA News

09/11/2024

Despite being the most in-demand industrial real estate market with the most extensive inventory in Mexico, Monterrey is neither the most saturated nor the most expensive region in the country. This is due to a balance between supply and demand, coupled with internal competition and the availability of land suitable for development projects, which has kept relatively stable prices.

According to SiiLA, in Monterrey, absorption rates often exceed the delivery of new inventory. This excess demand, which could have driven a constant and significant rise in prices over the last five years, has been mitigated by several key factors.

On the one hand, the balance is maintained through a highly dynamic supply that includes the delivery of large volumes of inventory distributed in large-sized warehouses, and intense market competition, especially in the automotive, electronics, and capital goods sectors, which occupy 41% of the gross leasable area. On the other hand, the availability of industrial land, which is neither as scarce as in the Mexico City metropolitan area nor as limited or fragmented as in other northern regions like Ciudad Juárez, Mexicali, and Tijuana, has allowed for continuous development without causing extreme price fluctuations.

Currently, the average rental price in Monterrey’s industrial market is nearly six dollars per square meter. Although this value is slightly lower than at the beginning of the year, prices in the region have increased at an average quarter-over-quarter rate of 2% over the past five years.

The Most Expensive Submarkets in Monterrey

Monterrey’s current rental price is slightly below the national average.

Monterrey’s industrial real estate market spans approximately 16.8 million square meters, distributed across nine submarkets. San Nicolás, Monterrey, Escobedo, and Santa Catarina stand out as the most expensive, with average rents of $9.0, $6.6, $6.3, and $6.2 per square meter, respectively.

Interestingly, Escobedo, Monterrey, and San Nicolás are among the smallest submarkets in the region, while Santa Catarina is one of the largest. The first three are contiguous and closer to the capital of Nuevo León than Santa Catarina. However, their proximity to the Saltillo industrial market provides access to key transportation routes connecting Nuevo León with Nuevo Laredo in Tamaulipas—home to the country’s most important land border port—and, to the west, highways linking Santa Catarina with Coahuila and the border via Eagle Pass, Texas. This connectivity reinforces the strategic position of these locations in the northern industrial corridor and contributes to the rise in rental prices.

The remaining submarkets range from $5.2 to $6.0 per square meter. Apodaca, Ciénega de Flores, and Pesquería hover around $6.0, while Guadalupe and Salinas Victoria have average prices of $5.7 and $5.2, respectively.

Beyond price, Santa Catarina—where Tesla’s “gigafactory” has spurred the arrival and expansion of companies—along with Monterrey and Salinas Victoria—where the slowdown in new inventory and strong demand from large companies like Bosch, Quanta Computer, and Sunon have bolstered investments over the past year—are the only submarkets with rental price increases in 2024, recording hikes of 23%, 20%, and 10%, respectively.

In contrast, other submarkets like Ciénega de Flores, Escobedo, and San Nicolás have shown price stability, reflecting a balance between supply and demand. On the other hand, in Apodaca, Guadalupe, and Pesquería, price reductions ranging from 1% to 7% indicate an adjustment, in some cases linked to supply outpacing immediate demand and, in others, to declines in absorption.

Data analyzed by SiiLA Market Analytics indicates that Monterrey remains a competitive industrial market, with prices that, although varying between submarkets, reflect a healthy balance between supply and demand. In this regard, it’s important to note that the stability and moderate growth in some submarkets suggest that the region will continue to be a key area for industrial development in Mexico, offering opportunities in established and emerging submarkets.

For more information on national real estate market trends, explore SiiLA REsource or contact us at contacto@siila.com.mx.

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