Mexico: 186 Companies Absorb 2.5 Million sqm of Industrial Space. U.S. Companies Lead in H1 2024

In the first half of 2024, 186 companies from diverse regions occupied nearly 2.5 million square meters across Mexico’s major industrial markets, with U.S. investment leading and strong growth from Asian, Mexican, and European firms.

Companies like Kohler, Foxconn, and Michelin are leading the absorption of industrial space in Mexico, taking up over 30,000 square meters, underscoring the country’s key role in global expansion strategies.

Nancy Sánchez Moya is the Senior Vice President of Manufacturing for The Americas at The Lego Group. Photo: SiiLA.

By: SiiLA News

10/15/2024

Mexico’s industrial market is a global melting pot, attracting companies from various regions of the world. These companies, from the U.S., Asia, Mexico, Europe, and the rest of the Americas, are solidifying Mexico as a strategic point for foreign investment. Their presence, occupying millions of square meters across the country’s major industrial hubs, is a testament to the global significance of Mexico's industrial market. In the first half of 2024, 186 companies absorbed nearly 2.5 million square meters in the most dynamic markets, according to data from SiiLA. U.S. companies led with 35% of the gross leasable area (GLA) absorbed, followed by Asian (23%), Mexican (21%), European firms (16%), and companies from the rest of the Americas (5%).

Mexican companies occupied nearly half a million square meters, primarily in the transportation, logistics, and food and beverage sectors. A notable example is the bottling company GEPP, which absorbed over 32,000 square meters in Guadalajara. The average size of the spaces occupied by Mexican companies was approximately 8,000 square meters, with a preference for regions like the Bajío and the northeast, where 43% and 28% of the firms were established, respectively.

On the other hand, U.S. companies saw significant growth in the Bajío and northern regions of the country, with major expansions from companies like the manufacturer Kohler, which absorbed 140,000 square meters in Guanajuato. Investments from these firms were concentrated in strategic sectors such as capital goods, construction, and electronics, representing 55% of the GLA absorbed by U.S. companies during the first half of 2024.

However, foreign investment in Mexico isn’t limited to North America. Asian companies like Daikin and Foxconn absorbed nearly 570,000 square meters, primarily in San Luis Potosí, Guadalajara, and Monterrey, focusing on capital goods and the automotive sector. Similarly, European companies, such as Michelin and The Lego Group, established operations in the Bajío and northern regions.

Global Expansion on Mexican Soil

Chart created with SiiLA Market Analytics data.

Mexico’s judicial reform has emerged as a significant factor influencing investment decisions. According to business representatives, the uncertainty caused by the reform has led foreign companies to withhold billions of dollars in industrial projects, particularly in key sectors such as automotive and infrastructure. This, coupled with political uncertainty in both Mexico and the U.S., the renegotiation of the USMCA in 2026, and the potential global recession, has heightened investor caution and slowed the investment flow. However, it is expected that many companies will resume their plans once regulatory and political frameworks are clarified.

Despite the cautious environment, the future of foreign investment in Mexico looks promising. Companies continue to seek medium and large industrial spaces, the construction of which requires significant investments. These investments, often tens of millions of dollars, reflect the growth and long-term commitment of global companies to Mexico.

In terms of size, U.S. companies dominated the absorption of medium and large spaces during the first half of the year, occupying spaces of over 16,000 square meters in the Bajío and northwestern regions. Asian companies and firms from the rest of the Americas, on the other hand, preferred spaces of over 14,000 square meters, mainly in the northern part of the country. Meanwhile, European firms opted for smaller spaces, around 11,000 square meters, focusing on the automotive and electronics sectors.

Despite the political and regulatory tensions, Mexico's industrial market remains resilient and attractive for investment. Its competitive costs, strategic geographic location, and trade agreements like the USMCA continue to make it a prominent destination for global business expansion strategies. While judicial and energy reforms, along with political and economic uncertainty on a global scale, add complexity, international companies continue to view Mexico as a key logistical and production hub for the future.

For more insights into industrial real estate market trends and performance in Mexico, explore SiiLA REsource or contact us at contacto@siila.com.mx.

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