Industrial Business Review Northeast 2Q 2022

Industrial Business Review: Northeast 2Q 2022

2Q 2022 NORTHEAST Index We are Datoz

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Methodology

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Northeast region

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Markets

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Economic outlook

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Summary

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Inventory (ft2)

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Vacancy rate (%)

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Asking prices (USD/ft2/month)

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Gross absorption (ft2)

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Construction (ft2)

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Net absorption (ft2)

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Looking forward

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Glossary

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Legal notice

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Contact

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2Q 2022 NORTHEAST

We are Datoz We combine continuous commercial real estate research with cutting edge software to provide transparency to the industry through impartial and constantly updated market intelligence.

Our research team monitors and records real estate activity throughout México, covering 24 markets in the industrial segment, 5 markets in the corporate segment and 14 markets in the retail segment.

Research efforts include field verification activities that reinforce our data precision and provide our researchers with physical evidence to support our monthly market updates.

Datoz proprietary software allows users to connect online any time and from anywhere.

Our suite of products offers the possibility to browse verified available spaces, download property brochures, view details from thousands of lease and sale transactions, customize data-sets, download statistics and indicators in friendly and customizable formats, among many other features.

Methodology We work with an extensive network of market participants and maintain constant contact to update information on a monthly basis. In this manner, we ensure that key market data comes directly from the professionals involved in diverse activities that affect commercial real estate in each and every market.

Our researchers verify all collected data and visit markets regularly to corroborate information that can only be validated through physical surveys and on-site inspections.

We continuously work to standardize number formats, calculations and ratios in order to present our results in a simple and comprehensible manner. Once data has been thoroughly verified and meets quality standards, it is merged and loaded unto our database, which in turn compares it against other entries pertaining to the same property and market to validate its place in a building’s historic timeline.

Furthermore, our analysts continually review our data-sets in order to proactively amend anomalies and in doing so help maintain the highest standards of quality for real estate data in Mexico

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2Q 2022 NORTHEAST

Northeast region

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2Q 2022 NORTHEAST

Markets

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2Q 2022 NORTHEAST

Economic outlook During April 2022, industrial activity continued to accelerate, as all sectors recorded growth in their production levels. Industrial activity grew 2.9% annually and 0.6% compared with the previous month, this was the best result in the last three months.

Manufacturing activities were the country's industrial driver, according to INEGI (Instituto Nacional de Estadística y Geografía.)

Employment in the manufacturing industry grew 0.1% on a monthly basis during April, and 2.8% annually, according to INEGI. With these figures, employment has risen 11 consecutive months.

Consumption registered a 0.8% monthly increase in April 2022. Moreover, when compared to February 2020, just prior to the pandemic, consumption has shown a full recovery of 3.8%, according to INEGI. Inflation continued to rise in June 2022 and reached 7.99%, its highest level since January 2001. This was due mainly to the increases in energy and agricultural product prices, according to INEGI.

Summary 1. The northeast region’s markets closed the 2Q 2022 with a total inventory of 276.2 million ft2, a 3.85% year-over-year increase.

2. By the end of 2Q 2022, the region’s vacancy rate was 3.40%, around 10.5 million ft2. Monterrey’s vacancy rate stood at 4.97%.

3. The region recorded a gross absorption of 3.7 million ft2 during 2Q 2022.

4. The weighted average asking price for industrial space in the northeast region stood at $0.41 USD/ft2/month.

5. During the 2Q 2022, construction starts in the region recorded 1.75 million ft2.

6. The net absorption in the region was 677,837 ft2. .

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2Q 2022 NORTHEAST

Inventory (ft2) The northeast region ended 2Q 2022 with a total inventory of 276.2 million ft 2 of GLA, a growth of 3.85% compared to 2Q 2021. Monterrey, the region's largest market and the second largest on a national scale, closed the quarter with an inventory of 141.9 million ft2.

160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0

La Laguna

Matamoros

Monterrey

2021-06-30

Nuevo Laredo

Reynosa

Saltillo

2022-06-30

Vacancy rate (%) By the end of 2022, the northeast region had a vacancy rate of 3.40%, which is equivalent to 10.5 million ft2. This rate decreased 82 basis points compared to 2Q 2021. Monterrey had one of the nation’s highest vacancy rates during 2Q 2021, but by the end of 2Q 2022 the rate contracted drastically and closed at 4.97%.

0

1

2

3

4

5

6

7

8

La Laguna Matamoros Monterrey Nuevo Laredo

Reynosa Saltillo

2021-06-30

2022-06-30

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2Q 2022 NORTHEAST

Asking prices (USD/ft2/month) In 2Q 2022, the weighted average lease asking price for industrial space in the northeast region stood at $0.41 USD/ft2/month, an increase of 5.19% year-over-year. Monterrey recorded an asking price of $0.44 USD/ft2/month, an increase of 10% compared to 2Q 2021.

0.50 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10

0.05 0.00 La Laguna

Matamoros

Monterrey 2021-06-30

Nuevo Laredo

Reynosa

Saltillo

2022-06-30

Gross absorption (ft2) During 2Q 2022, the northeast region accumulated a gross absorption of 3.7 million ft2, 46.46% less than in 2Q 2021. Monterrey, one of the nation’s most dynamic markets, had a 64.07% decrease in absorption, with 1.6 millon ft2 absorbed during the quarter. Saltillo, La Laguna and Nuevo Laredo also had slight declines in activity.

5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 La Laguna

Matamoros

Monterrey 2Q-2021

Nuevo Laredo

Reynosa

Saltillo

2Q-2022

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2Q 2022 NORTHEAST

Construction (ft2) By the end of 2Q 2022, Monterrey, Saltillo, and Reynosa registered construction starts totaling 1.75 million ft2. Speculative buildings accounted for 67% of the space under construction, while 33% were build-to-suit (BTS) projects.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

La Laguna

Matamoros Monterrey Nuevo Laredo Reynosa

Saltillo

2Q-2021

2Q-2022

Net absorption (ft2) In the second quarter, the northeast had a net absorption of 677,837 ft2. Monterrey was the only market in the region with negative quarterly net absorption of -442,602 ft2. Saltillo had the highest positive net absorption with 427,275 ft2.

La Laguna

Matamoros

Monterrey

Nuevo Laredo

Reynosa

Saltillo

600,000 400,000 200,000 0 -200,000 -400,000 -600,000 2Q-2021

2Q-2022

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2Q 2022 NORTHEAST

Looking forward During the second quarter of the year, demand for industrial space decreased considerably in the region and while asking lease prices have steadily climbed and will most likely continue to do so in the upcoming months.

Although demand for industrial space has been lower compared to the first half of last year, the interest of foreign companies looking to start operations in these markets continues as evidenced by reports of advance negotiations and site-selection projects reported by owners and brokerage agencies throughout the region. Furthermore,many companies that already have operations in this region are looking to expand.

A significant indicator that stands out for 1Q 2022 is that 73% of buildings under construction correspond to build-to-suit (BTS) projects compared with only 33% during 2Q 2022. This may be a growing trend as more investors seek to begin speculative projects in the months to come. This change is directly correlated to decreasing vacancy rate in combination with strong demand for industrial space.

Glossary Inventory: sum of the area of all buildings type A, B and C according to most developers and institutional brokerage companies at the last day of the period.

Availability rate: available area divided by inventory at the last day of the period.

Asking price: weighted average asking price weighted by the available area at the last day of the period.

Gross absorption: sum of leased, subleased and sold area during the period.

Net absorption: gross absorption minus the sum of the following areas during the period: available area because of a move out and build-to-suit building area.

Construction: sum of the following building areas during the period: build-to-suit, speculative and own construction.

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2Q 2022 NORTHEAST

Legal notice The material presented in this document by Datoz Real Estate refers to information collected from the market and provided by trusted sources. The contents shall be exclusively informative without legal value or effect or of any other nature, so Datoz Real Estate is not responsible for any damage that results from or may derive from the use or misuse that is made of these contents. For more information about this report or any other investigative material of Datoz consult our website www.datoz.com.

Contact

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