Mexico City: A Strategic Hub for E-commerce with Mercado Libre Leading the Way

Mexico City is one of the cities that contributes the most to Mexico's economy. According to government and World Bank data, this city generates approximately 17% of the national GDP, making it a hub for business and last-mile logistics. Due to its economic, social, and geographical significance in the country's central region, Mexico City has become a strategic location for e-commerce companies seeking to capitalize on one of Mexico's most important consumer and logistics markets. In this favorable context for the development of e-commerce, Mercado Libre is the company with the most significant footprint in industrial warehouses among the e-commerce companies based in Mexico City, according to data from SiiLA Market Analytics.

As of the first quarter of 2023, Mercado Libre occupied over 307,000 square meters in the Mexican capital, with prominent properties. According to SiiLA, the average size of warehouses occupied by this company is at least three times larger than the average size of industrial warehouses in Mexico City. Generally, these large warehouses are in strategic areas with low urban saturation and access to communication and transportation routes. These properties often serve as production and/or storage centers for large volumes of goods, supplying smaller distribution centers or last-mile operations. Their function is to serve as distribution nodes within a logistics chain.

It is worth mentioning that this year Mercado Libre vacated two industrial warehouses in Mexico City's logistics corridor of Cuautitlan, Tultitlan, and Tepotzotlan. The Argentinean company relinquished nearly 78,000 square meters in a context of an announcement in which Mercado Libre revealed plans to invest $1.6 billion in Mexico throughout 2023, surpassing its investment in the country during 2022. This investment aims to expand its logistics, marketing, and technological development divisions. In fact, on June 19th, Mercado Libre celebrated the opening of a Distribution Center in Uman, Yucatan. This center covers an area of 35,000 square meters and has a storage capacity of two million products.

Despite the vacancy of spaces, the total square meters occupied by Mercado Libre in the first quarter of this year were 37% higher than the square meters occupied at the beginning of 2022. Additionally, Mercado Libre remains the e-commerce company with the largest occupied space in the region, surpassing significant conglomerates such as Amazon, Shopee, and Privalia, which occupy over 317,000 square meters.

It is worth noting that, in terms of occupied square meters, e-commerce companies are the fifth most significant tenants in Mexico City's industrial market. Over the past three years, the area occupied by companies in this productive sector has increased by 86%, according to Market Analytics. The expansion of e-commerce in cities like Mexico City is linked to increased online purchases following the coronavirus pandemic. However, there are also factors related to nearshoring, which have created conditions to expand logistics chains, with large industrial warehouses in more distant areas from major urban centers and smaller last-mile warehouses in regions with higher urban saturation.

The increased demand for industrial space by e-commerce companies is driving the need for new technologies and logistic systems for handling goods, consequently promoting investment in infrastructure and information technologies. To learn more about the performance of this and other industrial sectors in Mexico, visit SiiLA or contact us at contacto@siila.com.mx.