Industrial Supply and Demand in Mexico: What Does It Mean That New Warehouses Are Larger Than Absorbed Spaces?

In northern Mexico and the Bajío region, the size difference between absorbed properties and new inventory is greater than in central Mexico. According to data from the first half of 2024 by SiiLA Market Analytics, in the metropolitan area of the Valley of Mexico, the properties demanded are 26% smaller than those offered. In contrast, excluding exceptional cases like Monterrey, Saltillo, and San Luis Potosí, the difference in the north and Bajío is approximately 33%.

Notably, this difference is minimal in Monterrey, at just -5%, well below the trend in the north and the rest of the country. This is related to the regional companies' profile, where the demand for custom-built warehouses exceeds the national average size.

In contrast, Saltillo and San Luis Potosí show a dynamic opposite to the national trend. In these regions, absorbed warehouses tend to be larger than those added to the market during the year's first half. In Saltillo, which resembles Monterrey as the third market with the largest warehouses in the country, the difference is minimal (1%). In San Luis Potosí, the properties demanded were up to 15% larger than the new inventory, placing it among Mexico's top five regions with the largest average warehouse sizes.

Despite the growing trend toward larger industrial spaces, driven by expanding demand in manufacturing and logistics sectors, the market shows signs of maturing by adjusting supply to the specific needs of each region and property class. This adjustment is crucial in an environment where operational efficiency and space optimization are as valued as size, especially in last-mile areas.

However, the real revelation is not just that the gap between supply and demand is closing, but that it is doing so in a market that is diversifying and becoming increasingly specialized. Nevertheless, this path to optimization is challenging. Developers face growing land scarcity and an increasingly complex regulatory environment, which may limit their ability to respond quickly to changing market demands. Moreover, the risk of oversupply in certain areas, particularly in markets that have not yet reached a clear equilibrium, could pressure asset profitability in the medium term.

In this context, the challenge will be to build more or larger spaces strategically and adaptively. As the key players, developers will need to focus on creating flexible spaces that can adjust to changing market needs and identify areas where actual demand justifies new investments. The ability to anticipate trends and carefully balance supply with demand will be crucial to maintaining profitability and ensuring long-term success. Ultimately, the key will be to build with vision, not just volume.

To learn more about Mexican industrial real estate market trends, explore SiiLA REsource or contact us at contacto@siila.com.mx.