SiiLA Market Overview. 2023 Will Set a New Record for Industrial Warehouse Deliveries in Mexico

Mexico's industrial real estate market is undergoing unprecedented growth, marked by record-breaking deliveries of industrial facilities. In a time when nearshoring and e-commerce are driving the market, Mexico stands in a unique position to further solidify its leadership in the industrial sector in Latin America. However, this success comes with challenges, as demand continues to outpace supply, presenting an opportunity to develop new projects and enhance strategic infrastructure and essential services.

According to Alejandro Delgado, Country Manager Mexico at SiiLA, the country's industrial real estate market is expanding at a remarkable pace. Delgado noted that during the first nine months of 2023, more than 270 industrial facilities were delivered, equivalent to over 3.9 million square meters. This means that, on average, 1.3 million square meters were delivered each quarter, and it is anticipated that the record levels of 2022 will be surpassed in the final quarter of this year. In 2022, approximately 300 industrial facilities were delivered, totaling almost 4.6 million square meters.

Despite the delivery of new industrial inventory increasing by approximately 50% between 2019 and 2022, demand still surpasses supply. This occurs within a context of rising absorption rates, historic lows in availability, and historic highs in price per square meter nationwide. This phenomenon not only underscores the market's strength but also highlights the challenges faced by developers and companies seeking to expand within the Mexican industrial sector, as there is an urgent need to develop new projects that can meet the needs of companies, especially in the country's northeastern region.

During the most recent SiiLA Market Overview, a quarterly client event that provides insights and analysis of the commercial real estate market, Alejandro Delgado explained that the sub-industries that absorbed the most square meters in the third quarter of 2023 were automotive and parts, capital goods, transportation and logistics, electronics, and consumer products.

Furthermore, SiiLA's executive mentioned that the majority (56%) of the new inventory delivered in 2023 was concentrated in three markets: Monterrey, Ciudad Juarez, and Tijuana, with the arrival and expansion of major companies like AGP Glass, Essilor Luxottica and Technimark.

Delgado also emphasized that beyond the figures, the real story lies in the details. He highlighted that over 90% of the new inventory is pre-leased to the market nationally, underscoring investor confidence and high demand for industrial spaces in the country. Additionally, he noted that demand is concentrated in spaces ranging from 7,000 to 15,000 square meters, making it advisable to construct properties that can be subdivided into modules of these sizes.

Moreover, Delgado predicted that the industrial sector in Mexico will experience exponential growth ahead, driven by the manufacturing sector, while e-commerce and consumer products, whose demand surged due to pandemic-related mobility restrictions, will stabilize and exhibit more organic growth compared to the trends observed in 2021 and 2022. This development occurs in a macroeconomic context where Mexico is already the leading exporter of products to the United States, surpassing even China, and the second-largest recipient of U.S. imports, trailing only behind Canada.

For more information on commercial real estate market trends and outlook, visit SiiLA Market Analytics or contact us at contacto@siila.com.mx.