Q1 2024: A Slight Increase in Availability Sets Trends in the Mexican Industrial Market

During the first quarter of 2024, in Mexico City, Monterrey, and Reynosa, a reduction in the arrival of new tenants was observed, accompanied by an increase in tenant departures and a decrease in new inventory delivery. This dynamic, where supply decreases more slowly than demand, caused a rise in availability. Especially in Monterrey and Mexico City, which lead in inventory, the weak start to the year, marked by scarce new inventory delivery and limited absorptions, contributed significantly to the nationwide vacancy rate increase.

The same occurred in Ciudad Juarez, while in Tijuana and San Luis Potos, similar dynamics were observed with a decrease in tenant arrival and retention but with a rebound in supply, which also increased availability. It is important to highlight that Ciudad Juarez and Tijuana experienced significant deliveries of new spaces throughout 2023 and the first quarter of 2024 after two or three years with few deliveries.

Additionally, Guadalajara and Guanajuato stood out for leading the deliveries of new inventory. In both areas, although tenant arrivals increased and tenant retention strengthened, the growth of supply exceeded that of demand, resulting in an increase in availability. However, in Guanajuato, the increase was more moderate compared to other regions due to a tighter balance between supply and demand.

In Mexicali, the increase in tenants, along with not-so-pronounced retention and a moderate rise in inventory, led to an increase in availability. In Queretaro, although initially, the arrival and retention of tenants boosted demand above supply, an eventual increase in supply caused a rise in availability. On the other hand, Aguascalientes and Saltillo stood out for reducing their availability: in Aguascalientes, the combination of more tenants and better retention, along with a decreasing supply, lowered availability, while in Saltillo, the lesser arrival of tenants and the increase in departures, along with a reduced supply, balanced and decreased availability.

With these variations observed in the early months of the year, what can we expect for the upcoming quarters? Traditionally, the third and fourth quarters of the year show a more robust market dynamic than the first two. This cyclical pattern, evidenced year after year, suggests that the increases observed in the vacancy rate during the first quarter could stabilize and reverse as we move toward the more active months of the year. This cyclical trend supports the expectation of increased industrial space absorption and an improvement in market conditions, especially in those regions that have shown increases. Therefore, although the initial outlook for the year reflects certain contingencies, the history and cycles of the market anticipate a strengthening towards the end of the year, continuing the dynamics of recovery and growth in the industrial real estate sector.

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