Road Connectivity Analysis: Do Border Crossings Affect Industrial Warehouse Rental Prices in Mexico?

In Reynosa, the general trend indicates that, on average, the rental price of industrial spaces increases by 3.4% for every 10 kilometers further from the Nuevo Laredo bridge. This implies that proximity to the border crossing is less determinant in rental costs than the specific characteristics of each submarket.

On the one hand, the Oeste and Puente Pharr submarkets concentrate most of Reynosa's industrial inventory, with prices close to five dollars per square meter and vacancy rates between 2% and 6%. The high concentration and moderate vacancies suggest high demand that keeps prices competitive. Despite its proximity to the Nuevo Laredo bridge, the Oeste submarket maintains low rents due to its direct connection to Monterrey and the logistical competitiveness of the area, as the road infrastructure to Monterrey facilitates transport, reducing logistical costs. In the case of Puente Pharr, near the "Pharr-Reynosa International Bridge," strong demand driving prices is partly due to the proximity to another key border crossing, which surpasses the effect of the distance to the Nuevo Laredo bridge.

In contrast, San Fernando, further from the Nuevo Laredo crossing and with only 2% of the regional gross leasable area, has average prices of six dollars per square meter and vacancy rates up to ten times higher than in Oeste and Puente Pharr. This suggests a relative oversupply, with slightly higher prices likely related to the specific characteristics of the available inventory and road infrastructure. It's important to note that Highway 101 runs through San Fernando, connecting it to San Luis Potosí and Brownsville, as well as Highways 97 to the Pharr Bridge and 40D to Monterrey, among Mexico's most important roads.

In Monterrey's industrial market, like in Reynosa, rental prices for industrial spaces increase with distance from the Nuevo Laredo bridge. For every additional 10 kilometers, the price rises by approximately 0.13%. However, this trend is influenced by local factors and the characteristics of each submarket, suggesting that distance to the border crossing is not the sole determinant of rental costs.

Submarkets such as Ciénega de Flores and Pesquería, with rental prices above the average ($6.2 per square meter), and Salinas Victoria, with prices below the regional average, are the furthest from the Nuevo Laredo crossing. Prices in these regions depend on their road and logistical connections, encouraging the development of supply that meets demand without generating excessive pressure. These areas stand out for their proximity to Highways 85 and 54, which cross Mexico and connect with Nuevo Laredo, the former directly and the latter via the MEX II Bypass.

On the other hand, submarkets like Apodaca and Escobedo, closer to the center of Monterrey and with better infrastructure than other locations, show intermediate and high prices due to high demand and low vacancy rates. Apodaca, crossed by Highway 54, concentrates 39% of the regional inventory and has a 0.4% vacancy rate. Escobedo and San Nicolás, bordering Highway 85, also benefit from regional competition with sectorized demand driven by strategic road connections to Chiapas and Nuevo Laredo.

Finally, submarkets such as Guadalupe and Monterrey, closer to the urban center with connections to Highways 85, 85D, and 40D, have lower rental prices due to the types of industries and the dynamic supply that tends to stabilize them. These examples illustrate how road networks and each submarket's characteristics dictate the industrial market's performance.

In Saltillo's industrial market, rental prices for industrial spaces remain stable and close to five dollars per square meter, regardless of the submarket and its proximity to the Nuevo Laredo Bridge. This consistency in prices suggests that distance to the border crossing is not a significant factor in industrial rental costs. Instead, price stability and vacancy rates reflect an internal balance between supply and demand, where factors such as infrastructure and accessibility play a crucial role.

Saltillo's submarkets have high demand, with average vacancy rates at most 1%. Part of its appeal lies in the distribution of its urban sprawl, creating a compact industrial region developed around Highway 57. This provides a certain homogeneity of conditions and competition, with excellent logistical accessibility to the Eagle Pass bridge. Companies highly value this and it contributes to the high demand observed in submarkets like Ramos Arizpe and Derramadero.

It is important to restate that, overall, the road infrastructure in northeastern Mexico is a key factor that reflects the regional degree of economic and urban development. Roads and road connections facilitate the transportation of goods and improve accessibility to industrial submarkets, increasing their competitiveness. This robust road infrastructure allows for more efficient distribution and reduces logistical costs, thus attracting higher demand for industrial spaces. This high demand, combined with available supply, directly impacts rental prices. Therefore, submarkets with better road infrastructure tend to have higher rental prices due to their logistical and commercial appeal. This relationship between infrastructure, accessibility, competitiveness, and prices is crucial for understanding and predicting the dynamics of the industrial real estate market in the region.

For more information on the performance and development of Mexico's industrial market, explore SiiLA Market Analytics or write to us at contacto@siila.com.mx.