The steady stream of new investments by foreign companies in Mexico is a testament to the resilience and attractiveness of the country's economy. Over the past 25 years, this influx of capital has grown nearly sevenfold and, except for a few exceptional years, has averaged 40% of the foreign direct investment (FDI) coming into Mexico. This consistent trend demonstrates that Mexico remains a robust and appealing destination for foreign investors, who are eager to contribute to the growth and development of the Mexican economy.

However, a slowdown in new foreign investments has been observed since last year. Although this is part of a cyclical trend, a decrease of this magnitude has not been seen since 2014. Currently, new investments account for around 14% of FDI. Even investment levels in the first quarter of 2024 were the lowest for a first quarter in the past 25 years, according to the Mexican Economy Secretariat.

Due to this recent slowdown, new investments could continue to decline in the short term. This may be due to global economic factors, political and social uncertainties, or changes in market conditions.

Despite the decline, new investments and the reinvestment of foreign capital have been sufficient to drive growth in Mexico's industrial real estate market. Over the past year, this sector grew by 12%, primarily due to these investments. According to SiiLA, more than 70% of Mexico's industrial gross leasable area (GLA) relies on foreign investments, highlighting their importance for infrastructure development.

Investments, Nearshoring, and the Real Estate Market

When analyzing new foreign investments by region, it is interesting to note that they increase proportionally due to their proximity to the U.S. border. The areas receiving the most new investments are the north (31%), Bajio (27%), the center (26%), and the south (15%), in that order.

This pattern can be attributed to nearshoring and the growing interest in investing in Mexico as a strategic access point to the U.S. market, which allows companies to reduce operating costs.

International sales data, including exports and commercial transactions in foreign markets, support this observation. Government figures indicate that 85% of the international sales of northern states are destined for the United States. In Bajio, this proportion is 70%, in the center 62%, and in the south 54%.

Additionally, according to SiiLA Market Analytics, industrial GLA grew significantly in the north over the past year (18%), followed by Bajio (7%) and the center (4%). This trend reflects how proximity to the largest consumer market influences regional economic development and attracts greater foreign investments, especially in key industries such as manufacturing, technology, and logistics.

For example, the sub-industries that saw the most growth in the north over the past year were water and sanitation, agribusiness, and technology, with significant absorptions by multinational companies. The Toro Company, for instance, absorbed over 60,000 square meters in Pesqueria, Nuevo Leon, in mid-2023.

In Bajio, notable sectors included construction, electrical energy, and household products, while in the center, the prominent industries were aerospace, mining, and agribusiness. Renowned firms such as ThyssenKrupp and Arcor expanded their operations in these regions.

Overall, significant development has been observed in 27 sub-industries, indicating diversified and robust growth in Mexico's industrial sector. This broad development underscores the country's ability to attract foreign investments across multiple sectors, reinforcing its position as a strategic node in global supply chains and solidifying its appeal as an investment destination.

For more information on the performance and development of the commercial real estate market, explore SiiLA REsource or contact us at contacto@siila.com.mx.