Insufficient Industrial Space to Meet Nearshoring Demand

The growing influx of companies entering Mexico due to the allure of nearshoring is expected to bring substantial resources to the country. Nevertheless, experts are concerned about the adequacy of available industrial space to meet the surging demand. The Mexican Association of Private Industrial Parks (AMPIP) highlighted the importance of the industrial real estate sector within Mexico's export-driven economy, which is currently grappling with nearly zero availability rates.

In 2022, occupancy in the Mexican industrial market accounted for over 73 million m², which places it as the largest industrial market in Latin America. According to Simón Galante, President, Mexican Association of Real Estate Investment Trusts (AMEFIBRA), over the years, Mexico’s industrial market experienced accelerated growth surpassing countries like Brazil, Argentina, Peru and Chile. 

However, despite this positive trend, Galante warned that it might not be sufficient to meet the increasing demand caused by nearshoring. He estimated that Mexico needs more than 15 million m² in the next five years. 

According to the Ministry of Economy (SE), FDI reached US$18.6 billion during 1Q23, which is 48% more than the figure registered in the same period in 2022. Most of the investment was concentrated in Mexico City and Nuevo Leon, two states that require the most industrial spaces.  

In 2022, industrial parks reported occupation rates of 97.9% and 30% growth in developed inventory. In this sense, the Northern, Bajio and Western markets reported a 35% increase in inventory, while Mexico City’s metropolitan area reported only a 17% growth rate, as reported by El Economista. 

Mexican Real Estate Investment Trusts (FIBRAs), which are the largest industrial space developers in the country, with over 17 million m², are working to tackle this issue. FIBRA UNO (FUNO), the oldest FIBRA and one of the largest in Mexico, announced it has land reserves to develop industrial space accounting for over 1 million m². “Today, everyone is talking about industrial space, which is the segment we consider to develop the most inside the trust. We have over 1 million m² of land that can be transformed into 500,000m² of industrial space,” the company stated, adding that it owns reserve land in over eight regions in Mexico, highlighting the case of Coahuila and Hidalgo, close to Torreon and Mexico City, respectively. 

FUNO, member of AMPIP, said that, through the association, it is looking to participate in the industrial poles the federal government is developing as part of the Interoceanic Corridor of the Isthmus of Tehuantepec once the Southeast starts attracting investors.