Latin American Industrial Real Estate: A Comparative Analysis of Brazil, Mexico, and Colombia's Markets
- Countries monitored by SiiLA show common patterns and varying maturity levels
Despite the cultural and geographical proximity of some Latin American countries, the industrial assets markets showcase distinct scenarios. Brazil, Colombia, and Mexico, nations under the scrutiny of SiiLA, exhibit unique characteristics and shared traits in this sector.
The largest Latin American players, Brazil and Mexico, feature similar data points analyzed and accessible on SiiLA's Market Analytics platform. For instance, both territories demonstrated stability in the vacancy rate throughout 2023.
As per the latest data from the platform, the average vacancy rate for monitored industrial properties in Brazil is 9.80% for classes A+, A, and B. In the second quarter of 2023, it stood at 9.35%, and in the first quarter, it was 9.81%. In Mexico, the most recent average was 1.92% in 3Q23, 1.88% in 2Q23, and 1.96% in 1Q23.
Despite the Mexican vacancy rate being lower than in Brazil, the market sizes differ significantly. Brazil's monitored industrial inventory is around 24 million square meters, while Mexico's analysis encompasses 84 million square meters, considering logistics warehouses, BTS properties, standalone assets, and factories.
In the Hispanic country, industrial product companies constitute the major tenants, accounting for 55.3%. Conversely, in Brazil, consumer goods companies take the lead, representing 33% of the market.
Logistics Real Estate Market is Thriving in Colombia
Colombia, a neighbor to Brazil, stands out for its concentration of logistics developments. Despite its smaller size compared to other monitored countries, the industrial real estate market in Colombia is experiencing rapid growth.
The vacancy rate for Colombian industrial real estate is 2.93%. In the second quarter, it was 3%, and in the first quarter, 4.7%. In total, the country boasts a stock of 4,432,340 square meters, with an increase of 127,000 square meters since the beginning of the year.
Since SiiLA commenced monitoring the country in the fourth quarter of 2020, the Colombian market for industrial properties has grown by 44.06%. In the same period, the growth in Brazil was 31.84%, and in Mexico, it was 50%.
In addition to the similar growth in inventory, the average asking rents are also comparable. In dollars, the average in Brazil is $4.88 per square meter, in Colombia, it's $4.46, and in Mexico, it's $5.52.
"The industrial market in Latin America is solidifying, drawing significant investors and tenants. The regions monitored by SiiLA are on par with vacancy levels seen in the United States, which currently hovers around 4.5%," assesses Giancarlo Nicastro, CEO of SiiLA.
