The Mexican peso continues to strengthen against the dollar and various analysts are of the opinion that there is still room for the peso to appreciate and continue around 16.7 pesos per dollar.

This appreciation is mainly motivated by the greater entry of dollars into the country, the restrictive monetary policy of the Bank of Mexico and the preference of investors internationals for investing in pesos for the nearshoring opportunity.

As we know, these considerations affect the performance of assets and directly influence the price of real estate rent in sectors such as the industrial sector.

Of interest: Industrial demand in Chihuahua causes vacancy to drop to record lows

At the end of July 2023, industrial rents were increasing, as is the case in the northern markets of the country, which show increases of over 25%. In the case of  Reynosa and Monterrey, it is where we have monitored the highest annual increases above 35%. Tijuana, Saltillo, Mexicali and Chihuahua also combine scenarios of low vacancies with rising prices.

The same is observed in Guadalajara, which already reports an annual increase in rental prices of 17% with a vacancy rate of around 2.6%. The markets of the Mexican lowlands and Mexico City are the ones that maintain more moderate increases and more competitive prices for industrial rents, when compared to the markets on the border.

Check here: Availability in CDMX continues to drop despite the fact that the industrial market continues to expand

These considerations have an impact on the income side, which is mostly referenced to the dollar as the contractual currency, which is why institutional developers look for formulas that allow margins to be maintained for a sustainable operation over time.

If we analyze the inflationary issue, although we are facing a slowdown in growth, increases are still being registered in the main inputs such as cement, steel. However, one of the factors that is gaining more and more weight in the cost structure of industrial activity is the cost of land and infrastructure, which are currently the most critical factors when it comes to competing.

In various projects, developers face decisive challenges in issues such as electricity supply that lead them to increase their investments and contributions in distribution issues, which ultimately affects the total cost of the industrial building. In the remainder of 2023, these will be determining factors that differentiate the main real estate portfolios.