The Mexican economy is running 6 consecutive quarters with growth in Gross Domestic Product or GDP, after reporting a 1% increase at the end of the first quarter of 2023. If the comparison is made with the fourth quarter of 2019, the last period prior to the pandemic, we are facing an expansion of 1.8%.

Regarding the interest rate and inflation, the Governing Board of Banco de México in the last meeting held on May 18, 2023 approved the increase by 50 basis points in the target for the Overnight Interbank Interest Rate at a level of 11.00%, while the National Consumer Price Index continues to slow down to close in May 2023 at 5.84%, thus spinning 4 consecutive months down.

Of interest: Querétaro ranks fourth in industrial demand nationwide

While the Mexican peso advances strengthened and reported $17.12 pesos per US dollar in mid-June. The main analysts agree that towards the end of the year the balance could tip and again maintain the scenario of $18.00 pesos per dollar as a result of the impact of the restrictive monetary policy on the economic activity of the American economy. 

With this panorama, the exposure to currency hedging is a key factor for the management of industrial portfolios.

In the midst of this macroeconomic panorama, the industrial real estate sector in Mexico continues to receive requests for new investments or expansions from companies that are already established in the country. 

The presence of the phenomenon of the relocation of productive processes or nearshoring has been a trigger in the search for industrial spaces, mainly in the northern markets and specifically those bordering the United States, bringing industrial vacancy to levels with historical lows.

Such low vacancies make it difficult to find industrial buildings, which affects the growth in demand. Tenants who do not locate options travel longer distances and can opt to choose new markets as has happened in the case of Bajío with unsatisfied demand in some markets in the north of the country.

Developers attentive to the rhythm of the market continue with the advance of 5.2 million square meters nationwide, drawing up various strategies. In the search to generate a solid operating and financial performance, the main portfolios that operate in the country have increased not only their net profitable areas but also their footprint by adding more markets to their original coverage.

Consult here: Kloeckner Metals invests 40 million dollars in a new plant in Querétaro

Other developers who were traditionally dedicated only to administration are stepping up and starting to get involved from the start of the project, acquiring land and coordinating industrial construction.

In markets such as Mexico City or Tijuana, where there is a significant presence of the logistics component, we see various developers leaning their options towards the reconversion of old industrial buildings and also exploring the possibility of vertical development for the industrial segment in the case of some specific sectors.

Markets with high exposure to manufacturing and to the automotive sector in particular require a quick response to have industrial warehouses that can house auto parts suppliers that make up this chain. 

The arrival of new vehicle assemblers in Mexico and the expansion of operations of those already operating in the country is generating great pressure that will be strongly reflected in demand towards the second half of the year.