At the end of the second quarter of the year, with the electoral results of June 6, investors perceive greater certainty from an alliance of political forces and proof of this was the stable behavior of the main macroeconomic variables, which foresee no changes relevant in the short term.

Externally, the consolidation of Mexico as the first supplier of the United States, displacing China, is a fact one year after the entry of the T-MEC, a period in which 10 billion dollars entered the country according to sources from the Ministry of Economy.

This political-economic panorama directly reflected its impact on the industrial real estate market in Mexico, since during the period April-June 2021 the fundamental indicators showed positive behavior in most of the markets or regions of the country.

According to the figures corresponding to 2Q 2021 from the Solili real estate information platform, during this period expansions of industrial space were reported for companies already established in the country, accounted for as new investments and belonging to different sectors of the economy.

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During the April - June 2021 period, the demand for national industrial space had a quarterly increase of more than 35%, although if the figure for this period is compared with the same for the previous year, it is slightly more than double.

In Q2, the sum of total gross demand in the country was 1.7 million square meters. According to Solili's estimates, this indicator was expected to grow approximately 15% during the quarter, however, the increase was more than double than was projected. For its part, the net demand totaled a figure close to 900 thousand square meters. This shows that the industrial market in Mexico is going through one of its best moments.

Despite the fact that industrial demand is very active, it should be noted that the greatest growth in this indicator is concentrated in the main markets of the country.

Monterrey was positioned this quarter as the main demand for industrial space at the national level, since according to Solili figures, the gross demand for Q2 was 313 thousand square meters, doubling the figure of the previous quarter and almost three times the amount reported in the same period of the year 2020.

Mexico City, which traditionally concentrates the highest demand in the country, during this period was placed in second place with a total of 288 thousand square meters, reporting a quarterly increase of 10% and 60% per year. According to the size of the demanded spaces, they mainly concentrated on two types, the first of 20 to 30 thousand square meters with 41% and from 5 to 10 thousand square meters with 27%.

Other cities that reported high levels of demand were Guanajuato, Tijuana, Querétaro, Saltillo and Ciudad Juárez; which exceed 100 thousand square meters. Together with Monterrey and Mexico City, they represent in proportion more than 80% of the value at the national level.

Regarding the new offer indicator, that is, spaces that finished construction and became part of the existing inventory; During Q2, the Solili platform reported a figure of 762 thousand square meters. The markets with the most significant values were Monterrey, Saltillo, Ciudad Juárez, Mexico City and Tijuana; which in total added 588 thousand square meters to the existing inventory, about 80% nationwide.

The states of the Bajío area added 92 thousand square meters of new offer that represented 12% of the total, Querétaro with 40 thousand square meters and Guanajuato with 36 thousand square meters of new industrial buildings.

The vacancy in general terms reduced its gap in most markets with a decrease of 30 basis points. Guadalajara mainly stands out with a vacancy of 2.5%, which reflected a downward adjustment of 90 basis points, a product of the absorption that was totally inclined towards vacant spaces in a period where the new offer was nil.

Tijuana continued with the lowest rate nationwide with 1.4% in existing vacant properties, on the other hand Guanajuato has the highest rate close to 9%. The main industrial capitals such as Mexico City and Monterrey, also reported downward adjustments with contractions of 10 and 60 basis points, respectively.

During the period, the construction of 1.2 million square meters began in which Monterrey, Mexico City, Saltillo, Guanajuato and Aguascalientes concentrated 60%.

The start of new construction in the quarter represents 72% of the demand, which indicates an important correlation between indicators in terms of inventory replacement, although it was not possible to reach the level demanded by the demand.

In Monterrey, they started 244 thousand square meters of new industrial buildings, followed by Mexico City with almost 169 thousand square meters. Monterrey has multiple class A projects under construction for more than 250 thousand square meters, where 57% are tailor-made projects and 43% are speculative, with a wide range of surfaces ranging from 4 thousand to 27 thousand square meters available.

The vacancy nationwide reached 461 thousand square meters. The Mexico City market stands out, representing 46% of total.

The rental prices in general maintained an upward trend, with 7 cents above the previous quarter and 9 cents more than what was registered a year ago. The cities of Saltillo and Puebla had the largest increases of 30 and 20 cents, respectively. Only Mexicali reverses the trend registering a decrease of 20 cents on the dollar.

With an industrial inventory nationwide that maintained the growth rate of 1% quarterly and almost 5% annually, the trend for the remainder of the year points to most markets continuing with a reduction in vacancies and an increase in rental prices in the face of a demand that will continue to rise.

Read: Solili National Industrial Real Estate Report 1Q 2021

These results are the quantitative reflection of public and private investment policies, such as the agreement on the construction of the new multimodal land border crossing Mesa de Otay II or the announcement of investments for 118 million dollars from the railroad company Kansas City Southern of Mexico , recently merged into Canadian Pacific Railway Limited.

The pending task for Mexico is directed to the management of labor, environmental and energy issues established as commitments of the T-MEC, which are essential for the offer to be developed with the guarantee that investors demand.

These factors are undoubtedly key for Mexico to maintain its position gained at the end of 2020, as the ninth economy in preference to Foreign Direct Investment.

In a scenario where the penetration of electronic commerce will increase accompanied by the increase in the use of new technologies, industrial demand projects a growing trend in the remainder of 2021 and the following year.

The lessee values more than ever the proximity to the client, which allows them to meet delivery commitments and that the properties have the technological improvements that align them to improve their productivity, where efficient logistics and distribution translate into faster shipments with savings in costs.

If the indicators of the industrial real estate market for the first half of 2021 are taken as a reference, the economic context through which the country is passing, the progress in vaccination in Mexico and the main economies worldwide, as well as the reactivation of the industry manufacturing, which had been hampered by the global health crisis; A second semester is expected with good results for the industrial real estate sector, even higher than those of 2020, a year that despite the pandemic showed better performance than 2019.