Northern Border Industrial Properties Take the Lead in Asking Rent Surges

The industrial markets in the north benefited more than any other with the increase in exit prices during 2023. According to SiiLA Market Analytics, while the rest of the country experienced a rental increase of just over 15%, in the markets of Ciudad Juárez, Mexicali, Monterrey, Saltillo, and Tijuana, the combined increase was over 30%.

By the end of 2023, the average rental price in these border markets was $6.50 USD per square meter, whereas in 2022, the rent was close to $4.80 USD, a difference of approximately $1.70 USD. For the rest of the industrial markets, the increase in the same period was only $0.20 USD, mainly because there are markets where prices remained unchanged.

Within the border markets, some have taken better advantage of the high demand for spaces. For example, Monterrey has performed the best, raising its average requested rental price to over $6.00 USD per square meter, when it was $4.60 USD the previous year. On the other hand, Ciudad Juárez, despite having one of the highest average prices in the country, experienced an increase of less than $0.10 USD.

In regional terms, the Northeast markets (Monterrey and Saltillo) have outperformed those in the Northwest (Ciudad Juárez, Mexicali, and Tijuana). The increase in rental prices for the former was double that of the latter during the last year, narrowing the gap between the prices that Northwest markets have over those in the Northeast.

A changing aspect is the difference in prices between high-quality rental spaces and the rest, i.e., Class A versus Class B. For the most recent period, there has been an observed difference of about $0.50 USD in favor of Class A, whereas in the previous two years, this distance was only $0.20 USD. This also shows that incoming tenants have opted for spaces with better features.

The increase in these exit prices can be explained by various factors, such as the rising cost of land or its limited availability, the increase in construction prices, marketing costs, or the services required for these spaces, even a speculative element. However, this increase is more explained by the influx of more tenants this time. Despite the price increase, these companies see greater benefits in establishing themselves in these markets than what it might represent to have them in other markets. SiiLA has observed the movement of multiple variables, especially in recent years, providing a better understanding of the reality of the Mexican industrial market.