Mexico City Industrial Q4 2018

MARKETBEAT Mexico City Industrial Q4 2018 MEXICO CITY INDUSTRIAL Economy Economic Indicators 12-Month 2018 was a transition year for Mexico. The federal government Q4 17 Q4 18 Forecast changed hands to a new party that is viewed with skepticism by Mexico City Employment 4.40M 4.60M big capital, but has pledged to sustain macroeconomic stability. Mexico City Unemployment 5.1% 4.3% The federal budged approved for 2019 lends credence to this Mexico Unemployment 3.7% 3.5% pledge. Also, the major exogenous factor influencing the Mexican economy saw uncertainty reduced, with NAFTA transitioning to USMCA, the new trade and investment Market Indicators (Overall, All Property Types) agreement. 12-Month Q4 17 Q4 18 Forecast Market Overview Overall Vacancy 3.9% 2.7% Lease Activity 20.1M 17.3M Within Mexico City’s industrial real estate submarkets, a Under Construction 5.4M 3.8M moderate but constant increase in domestic consumption and regional trade are the determining factors driving the strength of Class A Average Asking Rent $5.98 $5.61 demand activity; this translates into a 2.7% vacancy rate, a 120- M=Million basis point year-over-year decrease. Overall Lease Activity/Overall Asking Rent Tepotzotlán submarket keeps growing its role as the most 4-QTR TRAILING AVERAGE dynamic area today for industrial real estate in Mexico City; the 20,000,000 $10.00 largest lease of 2018 took place there, Mercado Libre’s 18,000,000 1,053,000 sf lease at Prologis Park Grande. Tepotzotlán 16,000,000 $8.00 represents 59.2% of the total construction pipeline, highlighting 14,000,000 12,000,000 $6.00 its optimal proximity to the Mexico-Querétaro highway, and its 10,000,000 substantial reserve of developable land. Across the city, land is 8,000,000 $4.00 increasingly scarce and some submarkets are experiencing an 6,000,000 escalation in land prices, most notably those offering convenient 4,000,000 $2.00 2,000,000 logistics locations, such as Vallejo-Azcapotzalco. 0 $0.00 2012 2013 2014 2015 2016 2017 2018 Overall Class A asking rent, at US$5.61 per square foot per year, Lease Activity, SF Asking Rent, $ PSF experienced a 6.2% year-over-year downward adjustment. This price reduction was also present in Class B buildings. Overall Vacancy Outlook 15% Most analysts consider that a moderate 2.0% GDP expansion 13% (the government’s target) is achievable in 2019, however, 10% growing inflation and a high interest rates environment might challenge this achievement. Regardless, we expect to see 8% sustained enough business activity to support the continuous 5% and healthy growth of industrial space demand. Historical Average = 5.8% 3% 0% 2011 2012 2013 2014 2015 2016 2017 2018 cushmanwakefield.com MARKETBEAT Mexico City Industrial Q4 2018 2018 LEASING 2018 USER OVERALL VACANCY UNDER DIRECT WEIGHTED AVERAGE DIRECT WEIGHTED AVERAGE SUBMARKET INVENTORY ACTIVITY SALES ACTIVITY RATE CONSTRUCTION NET RENT CLASS A NET RENT CLASS B Cuautitlán 41,913,717 5,137,757 424,079 2.2% 39,100 $5.91 $5.35 Tultitlán 14,000,231 708,654 20,062 1.8% 503,574 $5.33 $4.10 Vallejo-Azcapotzalco 14,249,850 360,310 214,671 0.6% 215,188 $7.05 $6.68 Naucalpan 9,768,750 190,470 78,740 3.3% 0 $7.72 $7.09 Tepotzotlán 18,755,650 5,753,415 307,320 6.1% 2,230,460 $5.54 $4.30 Tlalnepantla 20,016,344 1,095,197 250,823 2.0% 233,130 $5.95 $5.27 Toluca-Lerma 38,803,790 3,391,639 1,364,234 1.4% 208,030 $4.86 $4.37 Iztapalapa 10,121,645 351,253 44,611 5.7% 0 $5.90 $5.05 Huehuetoca-Teloyucan 6,840,340 300,133 45,200 5.5% 332,600 $4.43 $3.90 MEXICO CITY TOTALS 174,470,317 17,288,828 2,749,740 2.7% 3,762,082 $5.61 $4.92 *Rental rates reflect asking US$ per square foot/year Key Lease Transactions 2018 PROPERTY SF TENANT CLASS SUBMARKET Prologis Park Grande 1,053,000 Mercado Libre A Tepotzotlán O’Donnell Puente México 324,150 DeRemate.com A Cuautitlán O’Donnell Puente México 224,750 Natura Distribuidora A Cuautitlán Prologis Park Cedros, Ed. 3 223,200 Hasbro A Cuautitlán CPA San Martín Obispo 196,490 Shaeffler Automotive A Cuautitlán Prologis Tres Ríos 187,200 Geodis Wilson A Cuautitlán Tultipark 164,500 DHL A Tultitlán Lerma Park 159,000 Kuehne + Nagel A Toluca-Lerma Parque Industrial Tepotzotlán I, Ed. 2 155,000 Edelmann Packaging A Tepotzotlán Convento City Park 144,360 Federal Mogul A Tepotzotlán About Cushman & Wakefield Cushman & Wakefield For more information, contact: Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 Paseo de los Tamarindos No. 60 José Luis Rubí, employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of Col. Bosques de las Lomas, Market Research Director property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter. 05120 Mexico, D.F. Tel: +52 (55) 8525 8258 ©2019 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources cushmanwakefield.com Joseluis,[email protected] believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy..

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