Manufacturing investment drives demand for industrial buildings in Ciudad Juarez
Strong manufacturing dynamism taking place in on the US-Mexico border has created a brisk demand for industrial buildings in Ciudad Juarez.
According to the latest report from industrial real estate company Colliers International, the vacancy rates for industrial buildings in Ciudad Juarez recently fell to 1.8 percent. This figure represents a record high.
Even with the acceleration of construction to house new manufacturing investments, it is a challenge to meet the high demand. Business is so brisk that an industrial building in Ciudad Juarez that is the process of being built is most often spoken for before it is finished.
The recent Colliers report, updated to the third quarter of 2021, indicates that the current inventory is 7.2 million square meters in 555 class A and B industrial buildings in Cuidad Juarez. This number is seven percent higher than a year ago.
However, the vacancy rate fell from four percent in the third quarter of 2019 to 3.6 percent in 2020 and to 1.8 percent in the same period of this year. This represents a high demand, robust occupancy of industrial buildings in Ciudad Juarez, and a healthy and growing manufacturing sector.
Absorption of building space registered a record number from July to September of this year (2021). It totaled a bit under 180 thousand square feet. This was 172.6 percent more or almost triple what was absorbed in the second quarter of the year.
Under construction, 12 class A industrial buildings in Ciudad Juarez have been monitored until September. These new structures will add more approximately 2.8 million square feet to existing industrial inventory in the city.
Colliers’ recent report highlights the fact that eighty percent of market growth is due to the expansion of companies that are already operating in Ciudad Juarez. These manufacturing facilities are predominantly engaged in producing items for home maintenance and parts for the automotive industry. The remaining 20 percent pertains to new companies that are starting operations. In addition to the manufacture of home maintenance products and electronics, the medical device industry also stands out.
An example of the “boom” in the demand for industrial buildings in Ciudad Juarez is exemplified by the activities of Vesta. The company is one of the developers that has “sold out” 100 percent of its buildings. In addition to full occupancy of existing buildings, two buildings that the company currently has under construction are already spoken for.
Mario Humberto Chacón Gutiérrez, Vesta’s senior vice president in the region, has recently communicated that the market for industrial buildings in Ciudad Juarez is unstoppable. This fact is why Juárez is, along with Tijuana, Monterrey and Guadalajara, one of the company’s priorities in the country.
Organizations such as Index (the National Maquiladora Association), the National Chamber of the Transformation Industry (Canacintra) and industrial promoters such as Chihuahua Global have recently highlighted the intense industrial activity that is taking place in the city. This is occurring in spite of the complications that the silicon chip crisis and maritime transport difficulties have unleashed.
Alfredo Nolasco, general director of Chihuahua Global, stressed that even in the midst of the pandemic, Chihuahua and, especially, Juárez continue to attract new investment and jobs. This activity requires the construction of new industrial buildings in Ciudad Juarez.
He communicated that around 30 manufacturing investments were captured by Chihuahua in 2021. The new economic activity is taking place mainly in the automotive, aerospace and electronics industry. Some of the new investment is composed of new arrivals, while component of the new activity comprised of companies that have expanded their existing local production or relocated production lines from other facilities.
He stressed that the pandemic, the tariff war between the United States and China, and the entry into force of the USMCA have made companies re-evaluate their business and growth plans. As a result, Ciudad Juarez has felt a benefit.
According to Fabiola Luna, president of Index, employment generation is expected to continue rising. It is projected that approximately 20,000 new jobs will be created by the end of 2022.
Faced with the “unleashed” real estate market, prices also have registered increases. As of the third quarter, the weighted average rental starting prices were US $ 4.90 per square meter per month for class A buildings and US $ 4.10 per square meter per month for class B industrial buildings in Ciudad Juarez.
The recent Colliers International report also indicates that the state of Chihuahua ranks third in number of active manufacturing establishments with a total of 500. The locals that follow Chihuahua are Nuevo León, with 658, and Baja California, with 930. Although Chihuahua is a strategic Mexican state for the maquiladora industry, Ciudad Juárez houses more than 65 percent of its total industrial buildings.
The National Institute of Statistics, Geography and Informatics (Inegi) has recorded around 330 maquilas in the municipality of Ciudad Juárez, 109 in the city of Chihuahua and 61 in the rest of the state.
The main investments in Ciudad Juarez and the state of Chihuahua come from companies in the United States, Canada, Japan, Taiwan, Germany and France.