Industrial GDP Cools, But Real Estate Market Hasn’t Hit the Brakes

Mexico’s industrial sector eased off the gas, but hasn’t stopped. Between the first and second quarters of 2025, industrial activity grew 0.8%, though it remained 0.2% below last year’s level. Using original (non-seasonally adjusted) figures, the annual drop stands at –1.1%. Far from a collapse, the data points to a controlled slowdown: less momentum, not a setback.

That nuance matters for the industrial real estate market. While demand linked to production may moderate—especially in manufacturing-heavy sectors—an abrupt contraction in space is not expected.

In fact, according to SiiLA, in the first half of the year, gross absorption of industrial space fell 2% year-over-year, while net absorption—though still positive—declined 22%, and new inventory deliveries dropped 27%. This suggests that interest in occupying space remains, but at a slower pace and with higher turnover than a year ago, and that projects are taking longer to consolidate amid slowing demand and tenant adjustments.

Meanwhile, the industrial vacancy rate rose 44% year-over-year by the end of the second quarter, driven by specific—non-structural—departures of large tenants. Even so, the market remains stable: vacancy is hovering around 4%, and rents rose 13.2%, a sign of strategic repositioning rather than capital flight.

On top of that is a macroeconomic environment that, despite the industrial slowdown, continues to show signs of strength.

In Q2, total GDP rose 0.7% quarter-over-quarter and 1.2% year-over-year, boosted by a 1.8% quarterly rebound in exports, which returned the trade balance to positive territory. In other words, external engines—crucial for industrial space demand—are still running. In addition, foreign direct investment remains on an upward cycle, especially via reinvestments, while public debt remains under control at below 50% of GDP. This allows infrastructure policy to continue without increasing country risk, which in turn reduces financing costs for new parks or expansions.

Even business cycles suggest a soft landing. According to the System of Cyclical Indicators, the Coincident Indicator stood at 99.6 points in May—slightly below its long-term trend—while the Leading Indicator rose to 100.0 in June, hinting that the slowdown may have bottomed out. There are no technical signs of a recession—only of a rebalancing. In this context, the industrial real estate market isn’t stalling: it’s adjusting its pace to stay on course.

So, what lies ahead in the medium term?

On the one hand, the local manufacturing base tied to durable goods sensitive to global cycles may slow down. But incoming projects linked to logistics reconfiguration will continue to drive a positive, albeit slower, flow of operations. On the other hand, rents aren’t expected to fall—they may even rise—due to the structural scarcity of well-located land and the market’s technical demands. The environment favors build-to-suit developments or modular expansions that reduce oversupply risks, and financial investors will stay engaged, though more selectively, seeking talent, energy, and proximity to border crossings.

Are there risks? A few worth watching. First, a weaker external environment, the peso’s relative appreciation, and persistently high real interest rates could slow new construction orders. Second, delays in key public infrastructure (energy, customs) could increase costs and lengthen commercialization cycles.

In short, Mexico’s industrial sector is entering a phase of controlled deceleration, with signs of stabilization in production and favorable external fundamentals. For the industrial real estate market, this translates into a slower—but still positive—growth outlook, where supply discipline and geographic focus will be key to sustaining profitability.

To learn more about the performance and outlook of Mexico’s industrial real estate market, visit SiiLA REsource or contact us at contacto@siila.com.mx.