The industrial real estate market in Tijuana performed well during 2Q 2024, driven by a renewed demand for built-to-suit (BTS) industrial buildings for lease and sale, as well as subleases. This follows three quarters of weak numbers.
From April to June 2024, Tijuana recorded a total gross absorption of 1.7 million square feet (ft²) which was 145% higher than the previous quarter when only 690,000 ft² were in demand. So far this year, Tijuana has achieved a gross absorption of nearly 2.4 million ft² in industrial buildings.
Demand for BTS in Tijuana
Fifty percent of the demand for industrial spaces in Tijuana’s industrial real estate market came from built-to-suit (BTS) buildings, both for lease and sale. Even though there were only three transactions—two for lease and one for sale—these represented a gross absorption of more than 840,000 ft² during 2Q 2024.
The BTS buildings, developed for Agroindustry, Electronics, and Logistics sectors, were in Florido / Boulevard 2000 and Central / El Lago submarkets. The largest building was for an Electronics company, a BTS sale of approximately 460,000 ft².
With these projects, BTS also drove new construction in Tijuana, as 2.2 million ft² started construction between April and June, with 36% being BTS and the rest speculative buildings. During this quarter, Tijuana surpassed construction activity from the previous two quarters.
Subleases in Tijuana
Even though it is not highly significant in terms of size and number of transactions, a particular trend is emerging in Tijuana’s gross absorption, which is through subleasing industrial spaces.
Silvia Gómez, an industrial analyst at Datoz, explained that during 2022, there was a high demand for industrial spaces in Tijuana driven by nearshoring, as various companies leased large spaces due to their production process needs. However, with the current production adjustments, these large spaces are no longer necessary, and companies have started offering the unused space for sublease in order to reduce costs.
In this context, one sublease transaction was recorded in Tijuana during 2Q 2024, specifically in Ciudad Industrial for a company in the Metalworking sector.
The analyst mentioned that while these types of operations are rare, there is a clear sublease trend in Tijuana over the last few quarters, and this will likely continue in the upcoming periods.
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