Industrial Business Review: Northwest 2Q 2022
2Q 2022 NORTHWEST Index We are Datoz
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Methodology
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Northwest region
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Markets
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Economic outlook
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Summary
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Inventory (ft2)
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Vacancy rate (%)
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Asking prices (USD/ft2/month)
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Gross absorption (ft2)
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Construction (ft2)
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Net absorption (ft2)
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Looking forward
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Glossary
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Legal notice
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Contact
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2Q 2022 NORTHWEST
We are Datoz We combine continuous commercial real estate research with cutting edge software to provide transparency to the industry through impartial and constantly updated market intelligence. Our research team monitors and records real estate activity throughout México, covering 24 markets in the industrial segment, 5 markets in the corporate segment and 14 markets in the retail segment. Research efforts include field verification activities that reinforce our data precision and provide our researchers with physical evidence to support our monthly market updates. Datoz proprietary software allows users to connect online any time and from anywhere. Our suite of products offers the possibility to browse verified available spaces, download property brochures, view details from thousands of lease and sale transactions, customize data-sets, download statistics and indicators in friendly and customizable formats, among many other features.
Methodology We work with an extensive network of market participants and maintain constant contact to update information on a monthly basis. In this manner, we ensure that key market data comes directly from the professionals involved in diverse activities that affect commercial real estate in each and every market. Our researchers verify all collected data and visit markets regularly to corroborate information that can only be validated through physical surveys and on-site inspections. We continuously work to standardize number formats, calculations and ratios in order to present our results in a simple and comprehensible manner. Once data has been thoroughly verified and meets quality standards, it is merged and loaded unto our database, which in turn compares it against other entries pertaining to the same property and market to validate its place in a building’s historic timeline. Furthermore, our analysts continually review our data-sets in order to proactively amend anomalies and in doing so help maintain the highest standards of quality for real estate data in Mexico
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2Q 2022 NORTHWEST
Northwest region
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2Q 2022 NORTHWEST
Markets
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2Q 2022 NORTHWEST
Economic outlook During April 2022, industrial activity continued to accelerate, as all sectors recorded growth in their production levels. Industrial activity grew 2.9% annually and 0.6% compared with the previous month, this was the best result in the last three months. Manufacturing activities were the country's industrial driver, according to INEGI (Instituto Nacional de Estadística y Geografía.) Employment in the manufacturing industry grew 0.1% on a monthly basis during April, and 2.8% annually, according to INEGI. With these figures, employment has risen 11 consecutive months. Consumption registered a 0.8% monthly increase in April 2022. Moreover, when compared to February 2020, just prior to the pandemic, consumption has shown a full recovery of 3.8%, according to INEGI. Inflation continued to rise in June 2022 and reached 7.99%, its highest level since January 2001. This was due mainly to the increases in energy and agricultural product prices, according to INEGI.
Summary 1. The northwest region closed the second quarter of 2022 with a total inventory of 234.6 million ft2, a 5.58% year-over-year increase. 2. By the end of 2Q 2022, the region’s vacancy rate was 3.38%, around 7.8 million ft2, Ciudad Juárez and Tijuana’s vacancy rate stood at 3.06% and 3.38% respectively. 3. The region recorded a gross absorption of 3.95 million ft2 during 2Q 2022, 17.57% lower than the same quarter of 2021. 4. Weighted average lease asking price for industrial space in the northwest region stood at $0.50 USD/ ft2 /month. 5. During the 2Q 2022 construction starts in the region recorded 3.8 million ft2. 6. Net absorption in the region was -1,855,503 ft2.
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2Q 2022 NORTHWEST
Inventory (ft2) The northwest region closed 2Q 2022 with a total inventory of million 234.6 million ft2. Ciudad Juarez and Tijuana drove this increase by adding over 4.5 million ft2 and 5.5 million ft2. These markets recorded a total inventory of 75 million ft2 and 83.5 million ft2, respectively. 90,000,000 80,000,000 70,000,000
60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0
Chihuahua
Ciudad Juárez
Hermosillo
2021-06-30
Mexicali
Nogales
Tijuana
2022-06-30
Vacancy rate (%) The second quarter of 2022 recorded a vacancy rate of 3.38%, roughly 7.8 million ft2 of available space. Tijuana decreased its rate by 91 basis points and Ciudad Juárez by 19 basis points. Their vacancy rates ended the period at 3.38% and 3.06%, respectively. 0
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Chihuahua Ciudad Juárez Hermosillo Mexicali
Nogales Tijuana
2021-06-30
2022-06-30
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2Q 2022 NORTHWEST
Asking prices (USD/ft2/month) The weighted average lease asking price for industrial space in the northwest region stood at $0.50 USD/ft2/month. In the last year there has been a constant increase in the asking price, in these 12 months it increased $0.06 USD/ft2/month. Tijuana has one of the highest asking rates in the country, currently averaging at $0.59 USD/ft2/month. 0.70 0.60 0.50 0.40 0.30 0.20 0.10
0.00 Chihuahua Ciudad Juárez Hermosillo 2021-06-30
Mexicali
Nogales
Tijuana
2022-06-30
Gross absorption (ft2) During 2Q 2022, the northwest region accumulated gross absorption of 3.95 million ft2, of which Tijuana accounted for 1.5 million ft2, 37% of the region’s total. Tijuana continues to position itself as one of the most dynamic border markets; in 2Q 2022, it exceeded the gross absorption of the previous year by 55.55%. 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 Chihuahua
Ciudad Juárez
Hermosillo 2Q-2021
Mexicali
Nogales
Tijuana
2Q-2022
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2Q 2022 NORTHWEST
Construction (ft2) During 2Q 2022, Tijuana, Ciudad Juarez, Chihuahua and Mexicali recorded construction starts adding up to 3.8 million ft2 of GLA across 20 buildings, a year over year decrease of 1.87%. Construction in Ciudad Juárez reached 1.9 millon ft2. 0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Chihuahua
Ciudad Juárez Hermosillo Mexicali Nogales
Tijuana
2Q-2021
2Q-2022
Net absorption (ft2) Net absorption in the northwest region at the end of 2Q 2022 was -1,855,503 ft2. Ciudad Juárez recorded the most accute negative absorption of the region with -1,532,803 ft2 , while Chihuahua and Hermosillo had positive net absorption of 242,719 ft2 and 159,140 ft2, respectively.
Chihuahua
Ciudad Juárez
Hermosillo
Mexicali
Nogales
Tijuana
1,000,000 500,000
0 -500,000 -1,000,000 -1,500,000 -2,000,000 2Q-2021
2Q-2022
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2Q 2022 NORTHWEST
Looking forward The northwest region continues to increase its inventory in such way that it’s expected to reach or exceed the performance of 2021. Nonetheless, Tijuana’s vacancy rate continues to decrease and is already one of the lowest in the country. This is due to the strength in demand that stems from high impact trends such as nearshoring, e-commerce, and USMCA, that have accelerated the growth of this and other border cities. Tijuana and Ciudad Juarez, the most dynamic markets of the northwest region, continue to position themselves among the nation’s most dynamic markets with the high demand and low availability, wich has led developers to continue working on new speculative projects. Cities such as Chihuahua, Hermosillo and Mexicali, are considered secondary markets, however, the trend in recent quarters has been a steady growth in transactions and new developments, as they are specialized markets in different sectors, such as the aerospace and medical industries, and continue to attract foreign direct investment. It is expected that in the next few years markets such as Mexicali will grow considerably due to its proximity to large hubs like Tijuana, as the aforementioned market has scarcity of industrial land, allowing Mexicali a clear competitive advantage.
Glossary Inventory: sum of the area of all buildings type A, B and C according to most developers and institutional brokerage companies at the last day of the period. Availability rate: available area divided by inventory at the last day of the period. Asking price: weighted average asking price weighted by the available area at the last day of the period. Gross absorption: sum of leased, subleased and sold area during the period. Net absorption: gross absorption minus the sum of the following areas during the period: available area because of a move out and build-to-suit building area. Construction: sum of the following building areas during the period: build-to-suit, speculative and own construction.
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Legal notice The material presented in this document by Datoz Real Estate refers to information collected from the market and provided by trusted sources. The contents shall be exclusively informative without legal value or effect or of any other nature, so Datoz Real Estate is not responsible for any damage that results from or may derive from the use or misuse that is made of these contents. For more information about this report or any other investigative material of Datoz consult our website www.datoz.com.
Contact
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