The Future of Nearshoring in Mexico: The Decline of New Investments and the Challenge of Sustaining Growth

Talking about nearshoring to Mexico is not about an endless source of new companies. What was once a flood of investments three or four years ago is now a more controlled, less frenetic flow. But far from being a crisis, it's a natural market adjustment: companies that once arrived in droves now come with more strategy, while those already established are expanding their presence with firmer steps. This means that industrial demand remains dynamic and space absorption continues, though the momentum no longer comes from the same place. Something has changed, and understanding why is key to anticipating what's ahead.

Nearshoring is not an abstract phenomenon—it is measured in companies, square meters, and capital.

According to SiiLA, more than 1,200 national and foreign companies entered the industrial real estate market between 2020 and 2024. While foreign firms—representing 52% of these companies—have sought to establish themselves in Mexico to reduce operating costs, some driven by their connection to the United States and others by the appeal of the local market, Mexican companies have grown primarily as suppliers of goods and services for industries strengthened by the reconfiguration of supply chains. Factors such as the U.S.-China trade war since 2018, the global economic crisis due to the pandemic, and, more recently, the conflicts in Ukraine, the Red Sea, and the Suez Canal have accelerated this process.

These hundreds of new companies absorbed nearly four out of every ten industrial square meters in Mexico over the past four years, equivalent to about 13 million square meters.

However, the influx of companies has started to dwindle. Compared to the peak of nearshoring in 2021, today, 31% fewer foreign companies are arriving, and the entry of new Mexican companies into the sector has decreased by 43%.

The lower flow of new companies is also reflected in investment. Data from SiiLA aligns with reports from the Mexican Economy Secretary: between 2021 and 2023, new foreign investments fell nearly 67%, and preliminary figures for 2024 suggest that the downward trend continues. However, this is not a cause for alarm. More than a sign of crisis, it reflects an adjustment in investment cycles, as, although new capital arrivals have slowed, total foreign direct investment (FDI) has increased by 7-8% over the past four years.

This is explained by the fact that while new investments adjust downward, capital reinvestment has nearly doubled during the same period. The same has occurred with the occupation of industrial spaces. According to SiiLA, the number of foreign companies already operating in Mexico and absorbing space to expand has increased by 115% over the last four years.

Behind this behavior is a structural dynamic that defines business growth in Mexico: not all companies expand at the same pace, and newcomers rarely do so in the early years of operation. In fact, less than 5% manage to grow within their first three to four years in the country, according to SiiLA Market Analytics. In contrast, one out of every five established companies has expanded its presence in the last five years, with notable examples such as Ternium, Bosch, Kenworth, Liverpool, Amazon, and Mercado Libre.