10% of Companies Drive Industrial Growth. But They Aren’t the Largest

This is relevant because it shows that market structure and growth dynamics do not necessarily evolve in the same way. In fact, growth dynamics (Gini = 0.95) tend to be considerably more concentrated than occupancy (Gini = 0.70). This implies that demand cycles do not replicate the market’s composition, but instead temporarily compress around a subset of companies.

This, however, does not mean company size ceases to matter. On the contrary, approximately 67.5% of the observed differences in absorption can be attributed to occupiers’ prior size (R² = 0.675). Put differently, companies with larger occupied footprints tended to record more significant expansions than smaller occupiers. The pattern was observed both in absolute terms (Pearson = 0.79) and relative terms (Spearman = 0.80), as the largest occupiers frequently appeared among the companies that absorbed the most space.

Nevertheless, that relationship was not proportional. The data show that a 1% increase in occupied space was associated, on average, with an approximately 0.62% increase in cumulative absorption. In other words, larger companies tended to expand more, but each additional increase in size tended to translate into relatively lower growth.

Taken together, the findings suggest that, at least during the past year, changes in industrial demand depended on the expansion decisions of a relatively small number of companies. The direct implication is that the growth, investment, or relocation plans of a handful of occupiers can significantly influence the market’s trajectory.

To learn more about these trends and access detailed information on Mexico’s industrial sector, visit SiiLA Market Analytics or contact us at contacto@siila.com.mx.