O’Donnell and Mercado Libre Land Major Vallejo Deal Amid Tight Market Conditions

While vacancy rates rose across most of the country's industrial markets over the past year—with some exceptions in the Bajío corridor—Mexico City moved in the opposite direction, showing a continued decline, according to SiiLA data. What sets it apart? A logistics-oriented profile driven by domestic consumption.

In the Bajío region, roughly 70% of industrial space is occupied by manufacturers; in the north, that share is closer to 60%. In Mexico City, by contrast, nearly half of the inventory is held by logistics and finished goods companies, while only one-fifth is dedicated to manufacturing. This structural difference stems from urban density, limited industrial-zoned land, and the pressure to operate near the end consumer. As a result, corridors like Vallejo, Tlalpan, CTT, and Arco Norte have repositioned themselves as strategic distribution hubs rather than manufacturing centers.

One of the clearest examples of this shift is Mercado Libre’s recent expansion in Vallejo. The company leased 8,225 square meters within O’Donnell’s OD Vallejo industrial park under a triple-net agreement. The warehouse—already built—is currently undergoing renovation and is expected to be operational by September this year.

Vallejo, one of the city's oldest industrial submarkets, isn't the largest—it accounts for just 5% of the metro area's inventory—but it is the most central. Its location, combined with an ongoing modernization of inventory, helps explain the rebound in demand.

Despite limited room for new development, Vallejo has posted one of the highest gross absorption figures in the capital so far in 2025, with net absorption exceeding 40,000 square meters. Much of this momentum is tied to the transformation of Class B and C warehouses now being upgraded to meet modern logistics standards.

In O’Donnell’s case, the retrofit involved adapting an existing warehouse to the technical requirements of one of the country’s leading e-commerce players, with key features for last-mile operations: expanded parking and maneuvering areas, internal roads broad enough for double- or triple-lane circulation, and multiple access points.

This modernization underscores the importance of updating facilities without sacrificing location—especially in a market where logistical efficiency increasingly depends on specific, technical variables. A warehouse recently vacated by Mercado Libre in Tlalnepantla—with a less strategic location and more limitations for adaptation—illustrates the contrast: in rotating, high-intensity, block-organized operations, such differences impact the entire supply chain.

In that context, the transaction at OD Vallejo not only expands one company’s operating network—it also marks a turning point for the submarket. According to SiiLA data, it ranks as one of the most profitable base rent deals recorded this year in Mexico City, reaffirming that demand for well-located, adaptable, urban-logistics-ready spaces remains strong.

As a matter of fact, rents in Vallejo have risen at a 10% compound annual rate over the past five years, well above inflation. That, paired with intense recent absorption and ongoing scarcity of well-positioned logistics space, suggests the submarket is entering a phase of consolidation—where urban efficiency trumps scale, and where Mexico City operates on a logic of value through centrality, not volume.

But Vallejo doesn't just reflect that logic—it embodies it. In each repurposed warehouse pulses the story of a city that, instead of sprawling outward, is learning to fold back into itself, to reclaim what already exists and make it useful again. And in that gesture—more urban than industrial—the future of the market takes shape: one where logistics doesn't follow consumption, but orchestrates it.

Discover more industrial market transactions and access key metrics on tenants and inventory at SiiLA Market Analytics, or request personalized assistance at contacto@siila.com.mx.