Speculative inventory, which accounted for 14% of new inventory in the first half of the year, and the increase in the average size of warehouses, estimated at 30,000 square meters, have also contributed to slowing deliveries. This has slowed gross absorptions, although not pre-leased property absorptions, which tend to rise due to anticipated deliveries of new inventory in the year's second half.

The slowdown in inventory delivery, particularly in regions like Arco Norte, Iztapalapa-Tláhuac, and Zumpango-Nextlalpan, where turnover is minimal and no properties are available, has slowed occupancy, reflecting the current market tensions. In general, gross absorption, which measures tenant entry, and net absorption, which balances tenant entry and exit, were 66% and 91% lower than in the first half of 2023.

Regarding net absorption, it's worth noting that turnover and occupancy levels tend to balance out in the metropolitan area of the Valley of Mexico. In this market with high demand, the scarce new inventory that enters tends to be pre-leased or quickly occupied. This has kept gross absorption in positive territory, even during the pandemic and in recessive cycles like 2023.

The data analyzed indicate that in 2024, the industrial real estate market in Mexico City and its metropolitan area will be in a transition phase, marked by limited supply and sustained demand.

Despite these challenges, the vacancy rate has increased slightly for two consecutive quarters, reaching close to 1.7%. This is partly due to the completion of some projects in progress, the release of large but limited spaces by tenants who have vacated their premises, and the presence of speculative inventory.

Moreover, economic uncertainty has led some companies to delay their expansion plans, temporarily freeing up more space in submarkets like Huehuetoca and Naucalpan, where vacancy rates are higher. However, high demand could quickly absorb this additional space, maintaining short-term pressure on the market.

Mexico City's industrial real estate market is entering a transitional period characterized by limited supply and sustained demand, creating tensions in occupancy and new inventory delivery. Despite these challenges, the market has shown remarkable resilience, adapting to economic uncertainty and maintaining an optimistic medium-term outlook.

With a robust pipeline of more than four million square meters projected through 2026, and high demand that could quickly absorb any new inventory available, Mexico City's industrial sector appears well-positioned to continue growing. However, competition for available spaces may intensify, increasing rental prices and raising the bar for future developments.

As the year progresses, developers' ability to deliver new inventory will be crucial in relieving current tensions and maintaining market balance.

In this context, it will be essential to meet immediate demand and anticipate and shape the trends that will define the industrial market in the coming years. Developers and critical players must focus on innovation and sustainability to stay competitive in a market facing significant structural changes. These shifts, driven by increasing demand for energy efficiency, process automation, and the need for flexibility in industrial spaces, are redefining market expectations and will dictate the success of those who can adapt and lead these trends.

For more on the development and performance of Mexico's industrial market, explore SiiLA REsource or contact us at contacto@siila.com.mx.