Why Industrial Absorption Is Falling in Mexico Despite Stable Vacancies
- The decline in industrial absorption in Mexico reflects a demand shift that goes beyond vacancies and affects multiple industries.
In Q3 2026, net industrial absorption in Mexico fell nearly 60% year over year. However, the decline was not driven by more space becoming vacant, but by fewer companies beginning to occupy space.
The distinction matters because net absorption measures the increase in occupied space in a market after accounting for space that becomes vacant. According to SiiLA data, companies occupied 976,000 square meters of industrial space during the quarter and vacated another 275,000 square meters, resulting in a net increase of approximately 702,000 square meters of occupied space.
A year earlier, companies had occupied just over 2 million square meters and vacated approximately 280,000 square meters. Thus, while vacated space remained virtually unchanged, space occupied fell by more than half.
Fewer Leasing Transactions Amid Weak Investment
This difference highlights two aspects of market activity. First, the decline in net absorption does not reflect an extraordinary increase in vacated space. Although the number of move-outs decreased, they involved larger spaces, and the total area vacated fell just 1.8% year over year. Second, lower occupancy was accompanied by a substantial decline in move-in transactions, pointing to weaker industrial leasing activity. In fact, the third quarter of 2025 saw approximately three move-in transactions for every move-out, compared with just over two in the same period in 2026.
The slowdown in industrial occupancy is also occurring amid sluggish private investment growth. According to INEGI and Banxico, private gross fixed capital formation rose just 0.2% year over year in the first seven months of 2026, while investment in machinery and equipment fell 1.0%. Meanwhile, foreign direct investment fell 7.9% during the first half of the year, with declines across all three components, including new investment, which dropped 23.1%.
The Decline Extends Across the Industrial Supply Chain
The decline in industrial space occupancy did not begin in 2026. Since the second quarter of 2025, nationwide gross absorption, which measures space newly occupied during a given period, has recorded six consecutive year-over-year declines, with the third quarter of 2026 drop the steepest since then.
During part of that period, fewer move-outs moderated the impact of weaker demand on net absorption. In the third quarter of 2025, for example, fewer move-outs offset 65.3% of the year-over-year decline in new occupancy, a share that rose to 71.7% in the first quarter of 2026. However, that offset virtually disappeared in the third quarter, when vacated space declined only slightly, and the drop in new occupancy was reflected almost entirely in net absorption.
The contraction in demand is also evident when examining the economic activities of companies occupying industrial space. Among the most notable declines were companies involved in vehicles and auto parts, electronics, and digital fulfillment, whose move-in transactions fell 67.5%, while the space they leased declined 80.5% compared with the third quarter of 2025¹. The simultaneous contraction in activities related to both manufacturing and the storage and distribution of goods suggests that weakening industrial real estate demand is not confined to one stage of economic activity but extends across different links in production and distribution chains.
Heading into the end of 2026, the industrial real estate market outlook will depend largely on demand recovery. However, to match the gross absorption recorded in the fourth quarter of 2025, companies would need to occupy approximately 1.7 million square meters during the final three months of the year, an increase of roughly 77.5% from the previous quarter. For comparison, between 2022 and 2025, the largest increase in gross absorption from the third to the fourth quarter was 15.4%². Nevertheless, the market could begin regaining momentum without reaching that volume, provided new occupancy increases and move-outs remain relatively stable.
Looking for more real estate market data? Visit SiiLA Market Analytics or email us at contacto@siila.com.mx.
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¹ The analysis includes transactions for which the companies’ economic activities were identified, representing 95.9% of gross absorption in the third quarter of 2025 and 63.1% in the same period of 2026.
² The historical comparison covers 11 industrial markets with available data for both quarters of each year between 2022 and 2025. Reynosa is excluded to keep the geographic sample consistent. The 77.5% increase is calculated using nationwide gross absorption reported by SiiLA.
