Tariff Uncertainty Slows Monterrey’s Industrial Market

Monterrey’s industrial real estate market is facing a new phase shaped not only by increased availability and developer competition but also by growing uncertainty surrounding US tariff proposals. According to Colliers Monterrey, net absorption of Class A and B industrial spaces in Nuevo Leon totaled 149,491m² in the first quarter of 2025 — a 70.18% decline compared to the 502,000m² recorded in the same period last year.

The submarkets of Apodaca (86,528m²) and Salinas Victoria (75,325m²) saw absorption, largely due to the integration of pre-leased or build-to-suit (BTS) facilities. However, new construction combined with reduced demand drove vacancy to 4.03%, the highest level seen in recent years.

“The Monterrey market is moving now toward the tenant. Competition among industrial developers has started. Low prices and flexibility are the key drivers,” says Sergio Resendez, Managing Director, Colliers Monterrey.

Despite a volatile global economic outlook, Monterrey’s industrial sector continues to expand. The OECD forecasts global growth of 3.1% in 2025 and 3% in 2026, but warns that trade restrictions and geopolitical tensions are dampening investment and consumption — particularly in countries like Mexico, the United States, and Canada. For Mexico, this could mean a GDP contraction of 1.3% in 2025 and 0.6% in 2026, if the proposed 25% US tariff materializes.

Still, market activity continues. During 1Q25, inventory grew by 399,655m², mostly from new developments in Apodaca, Guadalupe, Santa Catarina, Escobedo, Cienega de Flores, and Salinas Victoria, although this was 24% less than the space added during the same period last year.

Rental rates remained mostly flat due to softer demand. The average asking rent stood at US$7.08/m² per month, slightly down from US$7.09/m² in 4Q24. For Class A properties, rents averaged US$7.17/m², while Class B rates came in at US$6.70/m². 

As of March 2025, 56 Class A and B properties totaling 1.14 million m² were under construction, with completions expected in late 2025 or early 2026. An additional 60 planned projects could bring 1.39 million m² to market within the same time frame.

By quarter’s end, Monterrey’s total industrial inventory reached 22.56 million m², with 909,329 m² unoccupied — equivalent to a 4.03% vacancy rate. Ongoing construction represents 5.07% of total inventory, signaling investor confidence despite uncertainty caused by US tariff policies.

Uncertainty has also impacted project pipelines. Rafael McCadden, Director of Industrial and Logistics, Colliers, says to El Economista that at least 15 projects in northern Mexico were either canceled or paused in early 2025.

“Nearshoring has not ended, but it has entered a hibernation phase. Some advanced projects are waiting to see what happens. But we expect clarity around tariffs by 3Q25,” says McCadden.

Despite these headwinds, experts remain optimistic about Mexico’s long-term position. “This will be resolved. Mexico is a strategic partner that is hard to replace. We share a 3,152km border with the United States, we have an average population age of 29, and we were not included in Trump’s reciprocal tariffs. That gives us a competitive edge,” says McCadden.