The Peso’s Weight Changes the Story of Real Estate Rents in Mexico
- Industrial rents rose as much as 77% in dollar terms but still lagged construction input costs in Mexico. Office rents fell even further behind.
Building a property and occupying it are part of the same business, even though their prices respond to different forces. Building it requires paying for materials, machinery, and labor, while leasing it requires rents in line with what the market is willing to pay. Construction costs and rents, however, do not always move together, and when the former rise faster, producing new space becomes more expensive relative to the rent it can generate. That difference alone does not determine a development’s profitability, but it does alter one of the relationships that underpin it.
Over the past six years, that gap widened in Mexico City, Guadalajara and Monterrey, three of the country’s major real estate markets.
In the industrial sector, rents rose between 62% and 77% in dollar terms, above the 48% increase in INEGI’s general index of construction inputs. That comparison, however, does not account for the exchange rate’s effect on the peso equivalent. Once converted into pesos, industrial rents reported by SiiLA rose between 27% and 39%, below the 48% increase in construction inputs.
In offices, the difference was even greater. Rents rose between 4% and 39% in dollar terms but, once converted into pesos, fell 18% in Mexico City and rose 3% in Monterrey and 9% in Guadalajara.¹
This means the exchange rate raised the threshold that dollar-denominated rents had to clear to keep pace with construction inputs in pesos. With the peso appreciating about 21% against the dollar during the period analyzed, each dollar of rent came to represent fewer pesos. As a result, rents would have had to rise nearly 89% in dollar terms to match the 48% increase in construction inputs.²
The exchange rate’s effect, however, is not uniform because not all leases in the market are denominated in dollars. Its impact is direct when rent is set in that currency, but it can also come into play when negotiating or renewing leases that use dollar-denominated prices as a market reference. In that sense, converting SiiLA’s series into pesos does not imply that the entire market is dollarized.
Industrial Rents Regained Ground Against Construction Costs
The exchange rate does more than change the interpretation of the cumulative result. Looking at how rents and construction inputs evolved over those six years, the difference between them was not constant either. Between 2020 and 2022, construction inputs became more expensive while the peso equivalent of industrial rents remained virtually stagnant. Over the next two years, rents regained ground against the INEGI index in all three cities, until the two trajectories began to diverge again in 2025.
From then on, the peso’s appreciation contributed to widening the gap again. Between the first quarter of 2025 and the second quarter of 2026, industrial rents rose 14% in dollar terms in Mexico City, 9% in Guadalajara and 3% in Monterrey, while the peso appreciated nearly 15% against the dollar. Because that move exceeded rent growth in all three markets, those increases became declines of 3%, 8% and 13%, respectively, when expressed in pesos, while the construction input index rose 6%.
In Offices, the Gap Never Closed Again
Unlike the industrial sector, offices saw no comparable recovery. After the third quarter of 2020, SiiLA’s reported rents, once expressed in pesos, never again caught up with the cumulative trajectory of INEGI’s construction input index in any of the three markets, even during the years when industrial rents were regaining ground.
The difference also does not depend solely on using 2020 as the starting point. If the comparison begins in the first quarter of 2022, construction inputs rose 21% through the second quarter of 2026, while office rents expressed in pesos fell 12% in Mexico City and rose 8% in Guadalajara and 7% in Monterrey. Even starting in 2024, when the construction input index rose 10%, rents increased just 2%, 9% and 7%, respectively.
Costs and Rents Do Not Adjust at the Same Pace
Overall, the data show that the same economic shift does not necessarily produce the same adjustment in real estate. The peso’s appreciation was common to all three markets and both sectors, but it coincided with different rent trajectories in each case. The exchange rate therefore does not determine the gap between the two prices on its own, but can widen or narrow it depending on how rents evolve.
That means the real estate effect of a macroeconomic variable depends not only on how much it moves, but also on the market it affects. To track rents and other indicators in each market, visit SiiLA Market Analytics or email us at contacto@siila.com.mx.
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¹ The analysis covers the third quarter of 2020 through the second quarter of 2026. The starting point is the first quarter for which SiiLA has comparable data for both sectors across all three markets; the endpoint is the latest complete quarter available for the real estate series. SiiLA rents, expressed in dollars per square meter per month, are the weighted quarterly values for each market. The series denomination does not imply that all leases are denominated in dollars. To compare their evolution in local currency with construction input prices in Mexico, rents were converted into pesos using, for each quarter, the simple average of the three monthly average FIX exchange rates (CF86) published by Banco de México. The construction benchmark is INEGI’s general index of the National Producer Price Index (INPP) for construction materials, machinery rental, and compensation, calculated quarterly as the simple average of its three monthly observations. The rents in pesos and the INEGI index were then expressed as indexes with Q3 2020 = 100. Cumulative changes were calculated between that quarter and Q2 2026. The INEGI indicator measures changes in the prices of these inputs, not the total cost of developing a property.
² The required increase in dollar-denominated rents was calculated using the cumulative change in the construction input index and the exchange rate during the period analyzed. Because the peso value of rent equals its dollar value multiplied by the exchange rate, the required increase was calculated as (1 + change in construction input index) / (1 + change in exchange rate) − 1. Based on the changes observed between Q3 2020 and Q2 2026, the result was approximately 89%.
