Mexico’s industrial real estate market has enjoyed years of booming demand fueled by the nearshoring rush, but U.S. trade policy is playing no small part in bringing the lucrative sector down from its high.
Developers are facing mounting delays and financing hurdles as the once-white-hot industrial sector enters a recalibration phase, the Mexico Business News reported.
National vacancy rates have climbed from historic lows of around 1 percent to an average of 6 percent, and new leasing has slowed considerably.
The culprit isn’t oversupply but rather, according to Francisco Tijerina of SIRSA Construcción, a convergence of pressures including rising interest rates, permitting backlogs, inflation and, more recently, chilled demand due to restrictive U.S. trade policies and elevated tariffs.
“There is less investment, less employment, and therefore less consumption,” Tijerina said, saying he estimated 90 percent of large-scale industrial projects are currently paused. “At the moment, investment is essentially at a standstill.”
It’s a sharp contrast to the bullish environment of the past few years, when Mexico became a relatively more attractive destination for companies seeking proximity to the U.S. without the geopolitical risk or cost of overseas manufacturing.
Key metros like Monterrey, Mexico City and Guadalajara saw speculative builds race ahead of leasing, and even now, many new deliveries in those cities are pre-leased. But net absorption has slowed or even turned negative in some markets. Monterrey saw a nearly 11 percent increase in industrial inventory year-over-year.
Still, optimism persists. Analysts point out that the structural logic of nearshoring hasn’t changed, and supply chains are still shifting. Mexico’s labor cost, geographic advantage and existing manufacturing base remain appealing.
Demand for last-mile logistics and Class A space remains especially strong around Mexico City’s northern submarkets and Saltillo. And AMPIP, the country’s industrial park association, is pushing ahead with a $5 billion plan to develop 100 new parks nationwide, with 13 now underway. But until legal certainty returns and cross-border demand firms up, the market will continue adjusting.
— Judah Duke
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