Over the last year we have been able to observe the increase in rental prices in the main Mexican industrial markets, such as Monterrey, Reynosa and Tijuana, which exceed their average rental values by more than 30% annually. This trend also extends to markets such as Guadalajara, which registered increases of 26%, or Chihuahua, Querétaro and Saltillo, whose rental prices have grown close to 16% in the last year.

Various factors combine to boost or slow down price increases, among them are the increase in demand, the decrease in industrial vacancy, inflation, the exchange rate and interest rates that will be applied to financing.

Check here: Industrial construction in Tijuana exceeds record level with 600 thousand m² in August 2023

In the case of the accumulated gross demand at the national level between January and August 2023, there is still a gap close to 12% for the figures for the months that have passed in 2023 to reach those recorded in the same period of 2022. However, above the national average there are markets such as Tijuana, Mexicali and Aguascalientes where the figure exceeds the accumulated record from last year, which generates pressure for price increases.

Regarding vacancy, we are faced with levels as low as in the case of Tijuana  and Mexico Cityo, which close the month of August 2023 with 1%, or Chihuahua, Tecate y Puebla, close to 0.6%. These low levels also prevent demand from developing, which in turn has to extend its search radius to new markets.

Regarding inflation, the National Consumer Price Index (INPC) presented a variation of 0.55% compared to the previous month, which leads to general annual inflation at 4.64%, when a year ago inflation was around 8.7%.

However, according to the Mexican Chamber of the Construction Industry, prices in the construction sector continue to soften their rise and in June 2023 general inflation stood at 1.89%, the lowest rate in three years.

Of interest: Decline in CDMX industrial vacancies persists during September 2023

The exchange rate of the Mexican currency is located at $17.4 pesos per dollar at the beginning of October, when a year ago this rate was around $19.7 pesos per dollar. This difference affects portfolios that set their rents in dollars and whose income is impacted, which can lead to rent adjustments in new ones that become available on the market.

Finally, the reference interest rate in Mexico has remained at 11.25% for the fourth consecutive time, extending the inflation target of 3% to 2025. This latest announcement from the Bank of Mexico would be favoring investors by creating greater certainty about the cost of money to finance the industrial investments in their portfolios.