Industrial Submarkets Without Available Space: High Demand and Development Challenges in Mexico

In this context, which submarkets have maintained full occupancy of Class A and B properties the longest?

According to SiiLA Market Analytics, the vacancy rate in Arco Norte (Mexico City) and Mesa de Otay (Tijuana) has remained about zero since the beginning of their monitoring. These regions stand out for their strategic positioning: Arco Norte as a key hub for consumer goods and food distribution in central Mexico, supported by its highway connection to Piedras Negras, Coahuila; and Mesa de Otay for its importance to the electronics, packaging, and pharmaceutical industries in the northwest, with direct access to San Diego via the Otay Mesa bridge.

An essential feature of markets like Arco Norte or Huehuetoca—home to a Costco distribution center—is their role as hubs for extensive build-to-suit industrial facilities designed to meet tenants’ specific needs. In these areas, speculative transactions tend to focus on strategically located lots, reflecting a market dynamic aimed at securing key land parcels ahead of construction to address the growing demand for advanced logistics infrastructure. However, this approach limits the immediate availability of ready-to-use spaces.

Beyond these, the most consistent submarkets are concentrated in Tijuana. La Mesa, San Antonio de los Buenos, and Playas de Tijuana—along with Mesa de Otay—are the closest to the U.S. border in the northwest area of this industrial region and have been fully occupied for the past three years. An exception in Tijuana is another top ten submarket: Cerro Colorado, adjacent to La Mesa, which only recently reached full occupancy in the second quarter of this year.

Overall, these ten submarkets have had an average vacancy rate of just 3.8% over the past five years. However, exceptions exist, such as Zumpango–Nextlalpan, where vacancies peaked at nearly 13% between 2021 and 2022 before reversing in 2023. This shift was driven by companies like Bimbo, which, in the first quarter of 2023, occupied a nearly 18,000-square-meter facility at CPA Logistics Center Estado de México. Today, this submarket has had zero availability for 1.5 years.

Chihuahua and Coahuila also feature fully occupied industrial zones. For instance, the North Ciudad Juárez submarket has reported a zero vacancy rate since mid-2022, following a 20-month period when rates fluctuated between 2.2% and 0.3%. In Saltillo and Derramadero, Coahuila, the occupancy of Class A and B properties reached 100% in the third and fourth quarters of 2023, respectively. This shift is especially notable for Saltillo, where vacancies peaked at 6.6% in 2021.

Industrial submarkets with zero availability represent a critical challenge for the sector's development in Mexico. These areas reflect strong demand and limited inventory but also show how local factors, such as strategic tenant arrivals or targeted developments, can transform market dynamics. In this context, exceptions like Zumpango–Nextlalpan and Cerro Colorado emphasize the importance of flexibility and adaptability in overcoming current limitations.

However, success will depend on directing efforts toward developing critical infrastructure in strategic corridors, simplifying land-use permits through clear regulatory frameworks, and fostering public-private partnerships to invest in sustainable industrial parks with access to renewable energy and advanced logistics systems. These actions will expand inventory in high-pressure zones and strengthen Mexico's competitiveness against global markets vying for industrial investment.

Learn more about the performance and development of Mexico's commercial real estate market at SiiLA REsource or contact us at contacto@siila.com.mx.