In Mexico, Industrial Net Absorption Hits Bottom. Competitiveness Does Not

Mexico’s industrial market is showing signs of deceleration, not from a structural loss of competitiveness—although some key costs, such as wages and energy, have increased—but mainly due to cyclical factors: trade tensions between the United States and China, global economic uncertainty, and new tariffs. Adding to this is a slower pace in the reconfiguration of supply chains, also disrupted by conflicts in the Middle East and Europe.

This explains why absorption, while still solid, is no longer reaching the extraordinary levels of 2022 and 2023—key years for the nearshoring boom—but now sits closer to 2021, when the phenomenon was just consolidating.

The difference is now visible in hard numbers. According to SiiLA, the first half of 2025 recorded the lowest net absorption in four years, with a positive balance of 1.9 million square meters. That figure is 1% lower than in the same period of 2021 and between 22% and 27% below the levels seen from 2022 to 2024.

Behind this trend lie atypical exits by major tenants—such as AGP Glass and Bosch in Monterrey—and a weaker arrival of new occupants, the result of slowing foreign investment. New investments declined 39% year-over-year between 2023 and 2024, while reinvestments and intercompany accounts increased by 8% each. Over the previous five years, these three categories had averaged annual growth rates of 9%, 19%, and 18%, respectively, according to Mexico’s Economy Secretary.

That slowdown in capital also played out in sector absorption. In the first half of 2025, demand for space decreased by 57% to 63% in capital goods, manufacturing, chemicals, and mining, and virtually collapsed in construction, electronics, and agribusiness, with declines of up to 99% compared to the same period in 2024. In contrast, sectors such as automotive and logistics still posted growth of between 15% and 27%, though not at a pace strong enough to offset the fall in traditional sectors.

With demand down and turnover rising, the vacancy rate—currently at a moderate level of around 4%—increased by 44% year-over-year. In volume terms, this translates to more than four million square meters of industrial space available in the second quarter of 2025, the highest figure for a comparable period in five years and 55% more than a year earlier. Much of this jump is explained by speculative inventory: nearly two million square meters delivered in 2024 (a quarter of that year’s total new supply) and more than 400,000 in 2025 (17% of the total).

As a result, nearly seven out of ten vacant square meters have never been occupied. The rest are spaces vacated by tenants. Adding to this is the spike in northern Mexico, where the volume of available space is now nearly six times higher than it was a year ago, with major hubs—from Juárez to Tijuana—among the most severely affected.

Despite the decline in absorption and the rise in vacancies, rents continue to trend upward—13.2% in the past year, surpassing $7 per square meter per month—underscoring that competition for quality space remains strong even in a cooling market.

In such a market, where the signals appear contradictory, the difference is made by the data. Find more at SiiLA Market Analytics or contact us at contacto@siila.com.mx.