Record Growth: Mexico's Industrial Boom Drives Absorptions and Delivery of New Properties in 2023

The industrial market in Mexico is undergoing an unprecedented expansion. Nationally, it is observed that 90% of the new inventory is delivered occupied, indicating that space absorption could break records in 2023. Although it is expected that absorptions and delivery of new properties will gradually balance from this year onward, the demand for industrial warehouses currently exceeds the supply, according to data from SiiLA for the second quarter of 2023, revealed during the Market Overview on Thursday, July 20.

Alejandro Delgado, Country Manager Mexico at SiiLA, commented that during the first half of 2023, there has been a significant increase in gross and net absorption, as well as in the volume of new inventory, surpassing the records of any other first half since 2020. This positive trend is generating an increase in market prices nationwide, partly due to high demand and the arrival and expansion of companies in Mexico, within a context of favorable global economic conditions for the national industry.

According to Delgado, three macroeconomic factors are essential to understanding the high degree of demand for industrial properties in the country. Firstly, this year Mexico became the leading trading partner of the United States in terms of exports, surpassing countries such as China, Canada, Japan, and Germany. Secondly, the United States recorded a record level of investments in Mexico, while Asian foreign investment experienced a boom nationwide. And thirdly, despite the adverse economic environment caused by the global pandemic, Mexico has continued to produce manufacturing goods and strengthen its supply chains and logistics infrastructure.

During the Market Overview, Delgado also indicated that in terms of gross leasable area (GLA), Monterrey and Mexico City remain the most important industrial markets nationwide, with approximately 15 and 12 million square meters, respectively. However, the regions with the highest levels of new inventory delivery were Monterrey and Ciudad Juarez in the northern part of the country, which delivered 99 industrial warehouses in the second quarter of the year, representing one of the highest levels of delivery in the past three years.

Regarding the profile of absorptions at the national level, Delgado emphasized that most warehouses absorbed in Mexico have an area ranging from 3,000 to 7,000 square meters. Second are warehouses with up to 3,000 square meters, followed by those with up to 15,000 square meters. For example, Monterrey has two prime industrial properties available for consultation on SiiLA SPOT: FINSA Santa Catarina – 11 and Prologis Apodaca East Park – 10. These Class A buildings offer extensive space, with over 100,000 and 61,000 square meters of GLA, respectively.

Furthermore, the Country Manager Mexico at SiiLA mentioned that availability has particularly reduced in the Northeast and Northwest of Mexico. However, the Bajio and the country's Central region have also experienced significant reductions, with price increases reaching historic levels. In this regard, Delgado stated that at the national level, the industries that absorbed the most space in the second quarter of 2023 were transportation and logistics, vehicles and parts, services, capital goods, and electronics.

SiiLA's Market Overview is a quarterly exclusive event for clients, where the latest data, analysis, and trends in the office, industrial, and retail segments at the national level are presented. To learn more about the commercial real estate market landscape, visit SiiLA or contact us at contacto@siila.com.mx.