Industrial Report. Americas Research. Northeast Mexico 4Q 2013

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1 Industrial Report Americas Research Northeast Mexico 4Q 2013

2 Northeast Mexico Industrial Overview The Northeast markets have had a considerable rise in activity. The Monterrey Metropolitan area has registered a total absorption of 6M sq.ft due to the large on-going projects such as Mondelez with 1.4M sq.ft. This market has important BTS projects on sale that have a significant impact in the market s absorption rate. Total building stock is at a low, encouraging developers to evaluate the possibility of new building construction and causing lease rates to register some adjustments. Ciudad Juarez is also a market that has seen recent activity. Vacancy rates are close to reaching single digits; numbers we have not seen since Lease rates begin to rise and buildings with 180,000 sq.ft or more are highly sought after. The Saltillo/Ramos Arizpe/Derramadero market continues to grow as it has been doing for the last few years. Due to major automotive projects, this market maintains very conservative vacancy rates, allowing lease rates to remain in favorable conditions for landlord. Other markets however, such as those in Tamaulipas (Reynosa, Matamoros and Nuevo Laredo), are struggling to maintain constant activity. The activity recorded in Reynosa is mainly from expansions or relocations by companies already located in the area. Nuevo Laredo continues to be a key logistics hub, but activity seems just moderate with no recent important projects. In general, the Northeast markets reflect important activity and we expect good a good forecast for 2014.

3 3 On Point Northern Mexico industrial report 4Q 2013 Northeast s Overview City Lease Price Stock Available Net Absorption Vacancy USD / Sq. ft. / (Sq. ft.) (Sq. ft.) (Sq. ft) year Chihuahua 17,002, , , % 4.00 Ciudad Juarez 61,266,280 6,868,929 3,138, % 4.20 Matamoros 17,610,917 1,418, , % 4.20 Monterrey 97,926,730 7,168,218 6,011, % 4.60 Nuevo Laredo 8,665,000 1,115, , % 3.60 Reynosa 29,377,813 2,537, , % 4.16 Saltillo-Ramos A. 22,756, ,251 2,983, % 4.60 North s 254,605,928 20,871,363 14,157, % 4.19 Northern Mexico Property Clock 4Q 2013 Bottoming Chihuahua Nuevo Laredo Monterrey Saltillo -Ramos. A Cd. Juarez Reynosa Matamoros

4 4 On Point Northern Mexico industrial report 4Q 2013 Northeast s Overview 120,000,000 Total Stock 100,000,000 80,000,000 Sq.$ 60,000,000 40,000,000 20,000, Chihuahua 15,645,849 15,700,000 15,700,000 15,705,000 16,022,000 16,466,000 17,002,369 Ciudad Juárez 57,000,049 60,000,000 60,172,000 61,042,000 61,208,000 61,237,140 61,266,280 Matamoros 15,010,499 15,994,000 17,241,000 17,244,000 17,481,917 17,481,917 17,610,917 Monterrey 82,000,080 88,556,000 89,380,000 92,021,000 94,350,153 95,779,609 97,926,730 Nuevo Laredo 8,000,007 8,360,000 8,610,000 8,665,000 8,665,000 8,665,000 8,665,000 Reynosa 28,000,030 28,829,000 28,866,000 29,041,000 29,206,374 29,206,374 29,377,813 SalEllo - Ramos A. 14,917,391 16,950,000 17,635,000 18,729,000 19,731,415 20,442,508 22,756,819 Sq. % Net Absorp/on 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Chihuahua 699, , ,000 1,109,000 1,067, , ,795 Ciudad Juárez 3,607,804 1,500,000 2,390,000 3,175,000 2,490,472 2,382,149 3,138,515 Matamoros 564,998 1,790, , , , , ,390 Monterrey 3,923,596 5,560,000 3,046,000 5,425,000 4,799,332 4,088,683 6,011,181 Nuevo Laredo 863, ,000 1,012, , , , ,076 Reynosa 2,253, ,000 1,432,000 1,582,000 1,412,765 1,525, ,818 SalEllo - Ramos A. 1,588,581 1,910,000 1,023,000 1,755,000 1,328,752 1,777,272 2,983,016

5 5 On Point Northern Mexico industrial report 4Q 2013 Northeast s Overview 6.00 Average Lease Rate USD/ s.f. / year Chihuahua Ciudad Juárez Matamoros Monterrey Nuevo Laredo Reynosa SalEllo - Ramos A % Vacancy Rate 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Chihuahua Ciudad Juárez Matamoros Monterrey Nuevo Laredo Reynosa SalEllo - Ramos A.

7 7 On Point Northern Mexico industrial report 4Q 2013 outlook Monterrey Metropolitan Area Industrial Monterrey is the most important market in Northern Mexico. It continues to attract foreign and local investment due to its qualified labor work force and its closeness to the US boarder and easy access to all mayor Mexican markets. In 2013 many foreign companies took advantage of this market s extensive metropolitan area and decided to establish operations with BTS projects, representing 25% of this years absorption. The years most important deal was Interpuerto with a 1,400,000 sq. ft building. Lease rates remain stable and there is no construction planned by institutional developers. Key Indicators Total Stock 4Q13 97,926,730 Availability 7,168,218 Average lease rate (USD//year) $4.60 Vacancy rate 7.3% Monterrey Total absorption 6,011,181 Saltillo Industrial outlook This is a market that is made up of three highly productive regions and is considered as one of the most attractive markets in Northern Mexico. Saltillo has extensive land available that facilitates those companies with BTS needs. In 2013, there was a 3M sq. ft. absorption recorded and 48% where BTS projects. Availability of industrial buildings is low and prices remain above average. Key Indicators Total Stock 4Q13 22,756,819 Availability 988,251 Average asking rate (USD//year) $4.60 Vacancy rate 4.3% Total absorption 2,983,016 Saltillo

8 8 On Point Northern Mexico industrial report 4Q 2013 Reynosa Industrial outlook Reynosa has 3 international bridges that facilitate crossing to the US allowing companies that want to export or import goods to do so in a fast and effective way. During these last few years construction of new buildings has been stopped because of the unchanging absorption rate at about 1M sq. ft. This is very low for this market and is due to the economic crisis and the insecurity issues in Mexico. Key Indicators Total Stock 4Q13 29,377,813 Availability 2,537,001 Average lease rate (USD//year) $4.16 Vacancy rate 8.6% Total absorption 874,818 Reynosa Matamoros Industrial outlook Matamoros shelters approximately 140 maquiladoras dedicated mostly for US export, this represent a great part of the Matamoros economy, including the import-export of the fabricated products in the city. Matamoros has the advantage of having Brownsville, TX as it neighbor as well as Galveston, TX and other important US ports. During 2013, with the help of local government, new companies have established in the area and are taking advantage of the current availability with low prices. Companies already established are also looking to expand. Developers in Matamoros are looking into this recent activity and planning construction of new buildings in the next few years. Key Indicators Total Stock 4Q13 17,610,917 Availability 1,418,244 Average lease rate (USD//year) $4.20 Vacancy rate 8.1% Total absorption 834,390 Matamoros

9 9 On Point Northern Mexico industrial report 4Q 2013 Nuevo Laredo Industrial outlook Nuevo Laredo s economy is based on commercial and industrial importing and exporting between Mexico and United States, and has a complex infrastructure to expedite merchandise flow between those two countries. The constant traffic flow of cargo trucks between the Nuevo Laredo - Laredo, TX border is considered as Mexico s most important. This activity has encouraged logistic companies and customs operations to establish their companies in this market. Rates have remained below what was expected due to low absorption. A new rise in activity is expected for the next couple of years. Key Indicators Total Stock 4Q13 8,665,000 Availability 1,115,620 Average lease rate (USD//year) $3.60 Vacancy rate 12.9% Nuevo Laredo Total absorption 164,076 Chihuahua Industrial outlook Chihuahua is the second most important city in the state for industrial activity. This market has an excellent infrastructure for companies to establish their operations within their 6 industrial parks or vast land available for new developments. During 2013, this market recorded low activity and only had a 150,000 sq. ft absorption, 75% less than in Because of this activity, rates remain below market average. Key Indicators Total Stock 4Q13 17,002,369 Availability 775,101 Average asking rent (USD//year) $4.00 Vacancy rate 4.6% Chihuahua Total absorption 151,795

10 10 On Point Northern Mexico industrial report 4Q 2013 Cd. Juárez Industrial outlook Ciudad Juarez is considered one of the most populated Northern border-cities of the country. Located near El Paso, TX., its population makes it the eighth biggest metropolitan area in Mexico. Throughout the city we can find exclusive industrial zones, which include 17 industrial parks that shelter more than 279 companies. Cd. Juarez is one of the most active industrial markets in Northern Mexico; however, the recent economic crisis and insecurity issues have slowed it considerably. In 2013 we could see a significant spike in activity and because of this new companies, as well as companies already located in this market, are looking for new spaces and taking advantage of the low rates offered in this market. We can see a slight rise in prices, but still without reaching those recorded in Key Indicators Total Stock 4Q13 61,266,280 Availability 6,868,929 Average lease rate (USD//year) $4.20 Vacancy rate 11.2% Total absorption 3,138,515 Cd. Juarez

12 The Northern markets will continue to follow the U.S. economy,and possibly will begin to move faster, generating more business for the manufacturing facilities along the U.S. and Mexico border.

13 About Jones Lang LaSalle Jones Lang LaSalle (NYSE: JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company s investment management business, is one of the world s largest and most diverse in real estate with $47 billion of assets under management. Jones Lang LaSalle Northern Mexico Monterrey Office Tijuana Office Ángel Zúñiga angel.zuniga@am.jll.com Vince Roché vince.roche@am.jll.com Agahira Guevara agahira.guevara@am.jll.com Natalie Ackel natalie.ackel@am.jll.com Calzada del Valle 112 Ote, Col. del Valle, San Pedro Garza García, NL Mexico Blvd. Agua Caliente Colonia Aviación Tijuana, B.C Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

Industrial Market Report

Industrial Market Report Industrial Report Northeast Mexico 1Q 2014 Tamaulipas, Nuevo Leon, Coahuila, Chihuahua Americas Research Northeast Mexico Industrial Overview JLL s Industrial Services is a dedicated team focused 100%