(858) Tijuana Industrial Real Estate September 15, 2010 ©Maquila Properties, Inc. Double Dip or continued growth?

(858) Tijuana Market Overall Tijuana has about 52 million SF of Industrial Real Estate Currently: 219 Buildings (up from 190 six months ago) available with about 9.9 Million SF (Down from 10.7 Million SF) averaging 45,000 SF Vacancy Rate is at 19% down from 20% Absorption is picking up, some are expanding again like Canyon Furniture

Recent Deals Canyon Furniture – 170,000 SF $0.25/SF – Sprinklered older Class B building on Via Rapida. Prime Wheel – 529,000 SF Class C purchase at $7 Million Techmart – 13,000 $0.36/SF NNN sublease. Class A- Blindajes Goldman 36,000 SF Otay Class $0.30/SF (858)

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(858) Classsize# of buildingsAverage size A2,749, ,749 B1,799, ,427 C1,354, ,248

(858) Source: Maquila Properties, Inc.

(858) Buildings > 100,000 SF 28 Buildings (up from 25 six months ago) available Average asking rent is $0.38 ($0.43/SF in 2007) Mostly newer Class A buildings Mostly owned by institutional investors like FINSA, CPA, GE Capital, Prologis, Verde, Prudential

(858) Land Prices/Construction 1 Hectar $60/SM in El Florido (CADENA). Prices as low as $30/SM are available in the city – many are still asking $750/SM. No new spec building is happening. Rental rates and land prices are usually at least 20% below asking. Many are renting at 60% of asking and giving free rent. Construction costs are about $25/SF Shell.

(858) Conclusions IGS, Sares Realty are liquidating local assets at 12% CAP rates or $40/SF. The direction is slowly positive as we have stopped the negative absorption. Lower rents and other costs have improved Tijuana competitiveness vis a vis Asian manufacturers Land is coming down, Construction, not so much