Mexico City and Monterrey have more industrial projects in development than any other market nationwide. According to data from SiiLA Market Analytics, these two Mexican regions are projected to account for 60% of the total industrial gross leasable area (GLA) to be delivered in Mexico from 2023 onwards. The new industrial warehouses will add over 7.7 million square meters to the national inventory. This reflects the unprecedented development that the sector is experiencing with the boost of nearshoring and the growth of the manufacturing industry in the country.

Notably, 78% of the projected industrial area will be developed in six submarkets. On the one hand, the Zumpango-Nextlalpan, and the Arco Norte submarkets, as well as the Cuautitlan, Tultitlan, and Tepotzotlan (CTT) corridor, will concentrate nearly eight out of every 10 square meters under development in Mexico City. On the other hand, Apodaca, Salinas Victoria, and Santa Catarina will concentrate a similar proportion in Monterrey.

These six submarkets have something in common. Each one is located approximately 15 to 40 kilometers from the market to which they belong, either Mexico City or Monterrey, and mostly –except for Santa Catarina– they are located north of their respective markets. These submarkets are particularly attractive to investors and developers because they are close to metropolitan areas and have more available land for developing larger industrial warehouses. They also have strategic locations near transportation routes, existing industrial infrastructure, skilled labor, and business opportunities in growing markets.

SiiLA data indicates that availability in these six submarkets is very low or nonexistent, with an average below 1%. This indicator reflects the high competitiveness in these regions. Additionally, available information suggests that the new industrial warehouses will be larger than the average. In Mexico City, the average size of the new developments is nearly three times larger than the average size of industrial warehouses in the market. In the case of Monterrey, the ratio or difference is 2.4 times.

The Prologis Apodaca East Park in Monterrey stands out among the ongoing projects, where over 400,000 square meters of industrial GLA will be built between 2024 and 2025. Prologis has already delivered approximately 61,000 square meters to the American manufacturer Toro Company in this complex. Similarly, major companies such as Carrier and Daye are awaiting the delivery of around 150,000 square meters in the industrial parks of FINSA Santa Catarina, located in the namesake town, and the Hofusan Industrial Park in Salinas Victoria, Nuevo Leon.

The low availability and high competitiveness in the six submarkets of Monterrey and Mexico City encourage the construction of large industrial warehouses, as they allow companies to meet their long-term space needs and optimize their operations by expanding their logistics capacity, which enables them to take advantage of economies of scale in their processes. However, this growth challenges the real estate sector and developers regarding land acquisition, construction, and investment costs, especially considering that most of the new inventory, over 95%, is of high quality or class A.

With over 7.7 million square meters in development, Mexico City and Monterrey are poised to break the record for new inventory in the last nine quarters. The area of new industrial warehouses is 18% higher than the accumulated GLA of new industrial inventory between Q1 2019 and Q1 2023, according to SiiLA. These are excellent news for Mexico's commercial real estate market in the context of nationwide industrial over-demand!

If you want to learn more about market trends in the industrial sector, visit SiiLA Market Analytics or contact us at contacto@siila.com.mx.