October closes, kicking off the last quarter of 2022, and the Mexican industrial market continues to experience favorably the effects of nearshoring that are revitalizing all markets on the northern border of the country.

With almost 375 thousand square meters of industrial gross demand during the month of October, Monterrey occupies the first position with 116 thousand square meters, followed by México City and Tijuana with 54 and 52 thousand square meters, respectively.

Gross demand has not only been marked by manufacturing but also by the logistics turn that is part of the closure of industrial warehouses in markets such as Guadalajara that seek to expand their offer of industrial warehouses for storage and distribution of goods.

During the month of October, various projects in execution were also completed, such as those registered in Monterrey for 69 thousand square meters, as well as Ciudad Juárez and Tijuana, which each completed 40 thousand square meters.

Although these markets show significant dynamism in construction and in meeting project delivery deadlines, they still continue to show extremely low vacancies with 1.46% for Monterrey and 0.21% in the case of Ciudad Juárez and 0.62% in Tijuana, at closing. October 2022. This is the result of many speculative projects being absorbed or closed prior to the completion of the work. We are also facing an increase in speculative supply that could generate a better balance in these markets towards the end of the quarter.

In the case of Mexico City, although it did not incorporate new works to the inventory, it did start with almost 45,000 square meters that will become available approximately in the third quarter of 2023. Another seasonal phenomenon of Good End and Christmas sales occurs in the capital of the country, various movements of ship deliveries, for which we saw almost 34 thousand square meters of vacancies registered in October.

In the case of Monterrey, new works for 69 thousand square meters also began, although vacancies in this market are below 12% of gross demand, while in the rest of the markets vacancies are practically nil.

At the end of October 2022, the start of new constructions is also reported in Reynosa with 29 thousand square meters, Guadalajara with 25 thousand square meters and Saltillo with another 8 thousand additional meters that supported the increase in inventory in their respective markets, although many of these areas became occupied.

In the markets of the Bajio there has been a lot of activity on the demand side, which exceeds 48 thousand square meters, which represents about 13% of the national total. The greatest activity of gross demand in the region is registered in Querétaro, which is greater than 33 thousand square meters, which indicates that it will be able to maintain a similar rhythm at the end of the quarter if we compare it with what was registered in 4Q 2021. Both Querétaro and Guanajuato announcements of new investments were registered in October that we will be able to see reflected in the rest of the year.

The months to come will bring great challenges such as the increase in prices of construction supplies and land that impacts on finishing the ships that are built on time and within the planned costs. With inflation in the order of 8.53% in the first half of October 2022, according to the Bank of Mexico, the scenario can affect or favor the results of an operation, the latter case being the one that corresponds to those who maintain their leases indexed or adjusted for inflation.

With the previous result of the gross demand for the first three quarters of the year already exceeded by 15% that registered in the same 9 months of 2021, it is expected that this percentage will remain or rise slightly as is expected in general terms higher rental increases in the presence of markets with very few vacancies, although some markets such as Tijuana vacancy has begun to react to the strong presence of new offers.