Tijuana, Between a Steep Export Drop and a Historic Wave of Foreign Investment

The expansion cycle that fueled Tijuana between 2020 and 2023 lost momentum in 2024, and demand now shows clear signs of cooling.

In the first half of 2025, industrial absorptions fell to their second-lowest level in the past five years, with just over 190,000 square meters of gross take-up and 60,000 net, down 24% and 63% from a year earlier. This reflects not only fewer new tenants but also higher turnover, to the point that, early in the year, net absorption turned negative, something not seen since the end of the pandemic.

This is partly because, in Tijuana, supply is growing at twice the pace of net demand, meaning new inventory is hitting the market faster than it is being occupied. The result: a vacancy rate that has doubled over the past year—reaching 5.5%—and fiercer competition for tenants.

In this context, rents have held steady, averaging $8.75 per square meter per month, 3.8% higher than mid-2024. However, adjusted for annual U.S. dollar inflation (3%), real growth is only marginally positive—a reflection of selective adjustments and partial pass-through of operating costs to tenants, rather than pressure from excess demand. This confirms that while the market is no longer riding the boom of recent years, it retains the maturity for landlords to shift costs without losing competitiveness. Today, it is not a landlord’s market but one where bargaining power lies in space quality and the ability to attract strategic operations.

This dynamic means that despite higher turnover, 44% of tenants that vacated space in 2025—including Baxter, Comex Platech, and Foxconn—kept operations in the region. That permanence, however, contrasts with a drop in external activity. In the first half of 2025, Tijuana’s international sales totaled $15.39 billion, down 15.6% from a year earlier and marking its sharpest decline for a first semester since 2020-2021.

The setback does not erase the long-term trend, which has doubled exports in two decades. Still, the recent adjustment could be read more as a normalization after the post-pandemic export peak and the global logistics reconfiguration boom than as a structural break.

Still, it comes amid lower local industrial absorption, suggesting that slower external sales and softer demand for production space could reinforce each other in the short term. This means Tijuana’s export momentum can not be assumed to drive industrial absorption automatically, but will increasingly depend on the market’s ability to attract high-value investments, diversify its production base, and sustain competitiveness against other cross-border hubs.

The bright spot is that foreign direct investment in Baja California—home to Tijuana—hit a record of about $2.48 billion in 2024, driven by historically high levels of reinvestment and intercompany capital transfers that offset one of the steepest declines in new investments in 25 years, recorded between 2021 and 2024. This dynamic is keeping the market alive, without the expansive push of new projects, but with the stability provided by long-established companies.

Tijuana is a market specialized in the production and sale of electrical machinery and instruments, which account for 65% of its exports and, together with other manufacturing, more than 39% of its industrial space. That specialization has been a growth engine but also a source of risk, magnifying the impact of any adjustment in global demand for these goods, especially now, as U.S. tariffs threaten to slow orders and shift operations elsewhere.

Nonetheless, it wouldn’t be the first time. Similar patterns played out in 2009, 2012, 2016, and 2020—years marked by recessions, trade tensions, and global disruptions that cooled both production and foreign trade in the region. The challenge now is to avoid history repeating itself.

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