Mexico’s Booming Industrial Real Estate: How Nearshoring and USMCA Are Driving Record Growth in 2024

Mexico’s industrial real estate sector is experiencing unprecedented growth, driven by nearshoring trends, increased demand for manufacturing space, and strategic trade agreements.

As global companies reassess their supply chain strategies, Mexico’s proximity to the U.S. and its extensive network of trade agreements make it an ideal location for companies looking to mitigate risks and optimize costs.

Moreover, the United States-Mexico-Canada Agreement (USMCA) has also played a crucial role in boosting Mexico’s industrial real estate market. The agreement provides a stable trade environment, encouraging companies to invest in long-term industrial projects in Mexico. The USMCA’s rules of origin requirements, particularly in the automotive sector, have increased local content production, further driving demand for manufacturing space.

As a result, several regions in Mexico have become hotspots for industrial real estate development. The Northern states of Nuevo León, Chihuahua, and Coahuila, due to their strategic locations along the U.S. border, have experienced a significant increase in demand for manufacturing and logistics space.

The Bajío region, which includes states like Querétaro, Guanajuato, and San Luis Potosí, is also experiencing rapid industrial growth. Known for its strong automotive and aerospace sectors, the Bajío region has attracted significant foreign investment, further driving demand for industrial real estate.

SiiLA, a real estate specialist, reports that Mexico is on pace to exceed its current industrial inventory in 2024 with the addition of 6.7 million square meters due to the country’s strong demand for logistics and manufacturing facilities. The new industrial spaces will be concentrated in the Northeast, Central, and Northwest regions of Mexico. Companies stabilizing operations in Mexico have a wide variety of needs, occupying facilities ranging from 2,000 to over 185,000 square meters of gross leasable area (GLA).

Moreover, new records for industrial space deliveries in Mexico are expected to be set this year. In the first half of 2024 alone, nearly 3.2 million square meters were delivered, representing 54% of the total deliveries in 2023, the year that previously held the record for the highest volume of new inventory. An additional 3.5 million square meters are anticipated to be delivered in the second half of 2024.

Strong Growth in Mexico’s Industrial Real Estate Amid Challenges

Data indicates that 210 industrial buildings will be delivered in 2024, with 175 classified as Class A and 35 as Class B, meaning that nearly 95% of the new properties’ GLA will meet high-quality standards. These buildings will be distributed across the major real estate markets, particularly in the Northeast -including Monterrey, Reynosa, and Saltillo-, the Central region -Mexico City and surrounding areas-, and the Northwest -including Ciudad Juárez, Mexicali, and Tijuana-, accounting for 31%, 28%, and 24% of the GLA under development, respectively.

Despite temporary slowdowns in absorption and limited availability of industrial-zoned land, the significant delivery of new industrial spaces in 2024 shows the resilience and adaptability of the Mexican market. The diversification in the size and location of these new facilities is a strategic response to evolving logistical and manufacturing needs, ensuring that Mexico remains a crucial player in the global supply chain and is well-positioned to seize future growth opportunities, even in a challenging environment of limited infrastructure and high competition for suitable land.

While the outlook for Mexican industrial real estate is mainly positive, there are challenges to be addressed. Infrastructure improvements, particularly in transportation and logistics, are necessary to fully capitalize on the country’s industrial potential. 

Despite these challenges, the Mexican industrial real estate market offers vast opportunities. As global supply chains continue to evolve, Mexico is well-positioned to become a leading hub for industrial activity in the Americas.

Contact us today to discover how your business can leverage these advantages and secure a competitive edge in this dynamic environment.