Mexico Struggles to Meet Nearshoring Demands for Industrial Space

Mexico’s nearshoring trend is creating a pressing need for industrial facilities, with up to 15 million square meters required to accommodate companies shifting their operations from China to access the US market. However, ongoing construction projects in Mexico fall short of meeting the demand, leading to a shortage of available space. Real Estate Investment Trusts (REITs) acknowledge the unprecedented scale of this relocation wave, highlighting the clear deficit in industrial real estate supply compared to the soaring demand. The situation calls for substantial investment in various areas beyond industrial facilities alone, potentially fostering significant job creation and long-term economic growth in Mexico.

REITs are witnessing the positive effects of nearshoring on the industrial real estate segment, as the demand continues to outpace the supply. Over 75% of industrial tenants in their portfolios are companies drawn by the nearshoring phenomenon. Regions like Tijuana, Ciudad Juárez, Monterrey, Guadalajara, Querétaro, and the Mexico City logistics corridor are experiencing remarkable growth. This transformation presents a long-term opportunity for Mexico, but it necessitates increased investment in diverse sectors. REITs remain committed to expanding in the industrial segment, foreseeing occupancy rates exceeding 97%.

During the first quarter of 2023, publicly traded REITs reported an average weighted industrial occupancy rate of 98%, with around 400,000 square meters available for new installations out of a total inventory of 18.8 million square meters. This high occupancy rate sets records, surpassing previous quarters. The strong demand for industrial spaces indicates the need for prompt action to address the shortage and capitalize on the potential economic growth opportunities presented by the nearshoring trend in Mexico.