VACANCY STILL LOW, CLASS A ASKING AT NEW HIGH
While the previous two quarters saw record high levels of net absorption, Q3 2019 slowed but closed in positive territory and was 212,000 sq. ft. larger than Q3 2018 net absorption. Year-to-date, 2019 net absorption was the highest seen since CBRE began tracking the market, 10,000 sq. ft. above of the previous record of 2.9 million sq. ft. set in 2015.
Market-wide and Class A vacancy rates ticked up quarter-over-quarter due mostly to the delivery of vacant speculative (spec) space. However, rates remained at historic lows. Compared to Q3 2018, market-wide rates fell by 210 basis points (bps), Class A by 160 bps, and Class B by 270 bps.
The lack of space that has caused market activity to slow has started to place upward pressure on Class B asking rates. Class B product, which holds 60% of all available space in the market, saw a quarterly asking rent increase of $0.13 per sq. ft. and an annual increase of $0.10 per sq. ft. The completion and delivery of three new vacant spec spaces to the market pushed Class A asking rents $0.19 per sq. ft. above Q2 2019 and $0.43 per sq. ft. higher than Q3 2018. This marked yet another new record high for Class A asking rents.
DEMAND STRENGTHENS AS MARKET AWAITS SUPPLY
CBRE tracks user demand for space in the Juárez Industrial Market. Following several quarters of declining, but above average demand, Q3 2019 saw a resurgence. Quarter-over-quarter, user demand increased by 950,000 sq. ft. and by 200,000 sq. ft. year-over-year. The majority of demand for space is from tenants who already have a presence in the Juarez market and want to continue expanding.
Q3 2019 saw the delivery of six spec projects: five new buildings and an expansion. Of the 950,000 sq. ft. of space delivered, more than half was preleased. At the end of Q3 2019, 12 projects remained under construction. One build-to-suit and two spec projects broke ground during the quarter.