Mexico’s Industrial Spaces are Getting Bigger: Record Absorptions in Q3 2024

In Q3 2024, the average size of industrial space absorptions in Mexico reached a record high of 12,200 square meters per transaction. This growing demand reflects the increasing complexity of supply chains, driven by nearshoring, e-commerce, and advanced logistics.

Since 2020, the average size of industrial absorptions has grown nearly three times faster than vacancies, signaling strong demand for industrial properties, controlled tenant turnover, and a preference for larger, flexible spaces for long-term operations.

Jorge Díaz de la Vega y Flores leads Kawasaki Mexico, which absorbed nearly 84,000 square meters in Q3 2024. Photo: SiiLA.

By: SiiLA News

10/23/2024

In Q3 2024, industrial space absorptions in Mexico reached a new milestone. With an average size of 12,200 square meters of gross leasable area (GLA) per transaction, this marks the highest level recorded since SiiLA began tracking data. This average includes speculative and built-to-suit facilities, generally larger, which drives up the overall average absorption size.

In just the last four years, comparing the first three quarters of each year, the average size of absorptions has grown 69%, reflecting a rising demand for increasingly larger and more efficient industrial spaces. The growing complexity of supply chains drives this trend due to nearshoring, the boom in e-commerce, and the development of advanced logistics hubs.

This represents a strong demand for space and growing investor confidence in the Mexican industrial market, with commitments to occupy large properties for the long term. It also indicates a profound market transformation, where companies seek facilities that meet current needs and allow for future expansion.

According to SiiLA Market Analytics data from the first three quarters of each year between 2020 and 2024, the average size of absorptions has grown nearly three times faster than vacancies in the industrial market. This is due to factors beyond high demand, limited delivery of newly available inventory, and strong tenant retention.

First, the flexibility and the average area occupied by tenants, around 10,300 square meters and smaller than the average absorption in the last quarter, allow only part of these spaces to be vacated instead of the entire facility. This reduces the scale of vacancies and permits companies to absorb space according to their needs. Even in the logistics sector, gradual vacancies are common due to relocations or operational factors.

Second, long-term lease agreements encourage the subleasing of warehouse modules, especially when companies seek to free up space, and the original agreement does not account for property segmentation. This limits the amount of released space and reduces the expansion opportunity for some companies. However, since more than 70% of industrial warehouses are delivered with some degree of occupancy, the average size of absorptions tends to exceed vacancies, as larger spaces drive absorptions, while the lack of available full warehouses limits vacancies.

Absorptions of the Moment

The average size of absorptions tends to be larger than that of vacancies.

In Q3 2024, the five largest absorptions far exceeded the average. On the one hand, Mercado Libre took two industrial facilities: one exceeding 103,000 square meters and another just over 99,000 square meters, both in Mexico City’s CTT submarket (Cuautitlán, Tultitlán, and Tepotzotlán), within the Danhos Industrial Cuautitlán I and Panorama Industrial Nodín parks. Meanwhile, Mabe acquired 100,000 square meters in the Industrial San Luis park in San Luis Potosí, while Kawasaki and Kohler absorbed approximately 83,700 and 70,000 square meters, respectively, in Interpuerto Monterrey and the Kohler Plant, both in Monterrey.

These cases reflect some of the main occupancy trends in Mexico during the first three quarters of the year.

According to SiiLA, six out of ten absorptions occurred in Monterrey, Mexico City, Guadalajara, Guanajuato, and Querétaro during this period. However, the only five industrial markets where average absorptions exceeded the national average were Monterrey, Saltillo, San Luis Potosí, Ciudad Juárez, and Reynosa, averaging 19,200 and 12,800 square meters.

It’s important to note that so far in 2024, the subindustries occupying the largest spaces have been consumer goods, construction, manufacturing, electronics, and automotive. In contrast, the real estate, agribusiness, entertainment, government, and oil subindustries have taken up the smallest volumes.

What we’ve learned from the last four years is that Mexico’s industrial market has not only grown but also demonstrated extraordinary resilience.

Between 2020 and 2024, gross absorption and the delivery of new inventory have followed upward trajectories, underscoring Mexico’s growing importance as a strategic point for global trade. However, the most revealing aspect is that despite the constant increase in inventory, the size of absorptions has consistently surpassed that of vacancies, reflecting sustained demand for large industrial spaces. This trend indicates that although many new developments are being added to the market, tenants quickly absorb them, keeping occupancy high and limiting vacancies.

Beyond the numbers, this data suggests a future in which industrial infrastructure will be crucial to Mexico’s economic expansion, integration into global production and trade dynamics, and influence in North America. The real question is no longer whether the market will continue growing but how to harness this momentum in the medium and long term to solidify and sustain Mexico’s essential role in global supply chains.

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