The industrial real estate market in Mexico saw a decline in new construction starts and gross absorption of industrial buildings during Q3 2024 compared to the previous quarter. However, the country’s 21 most active markets continue to perform well when comparing the year-to-date totals with the same period last year.
The caution observed in industrial space investments during July, August, and September is due to the economic and political context in Mexico and the United States. In Mexico, the judicial reform, the transition of the Federal Government, and in the United States, the upcoming presidential elections have influenced investors’ decision-making, leading them to wait for a context with greater certainty.
Nonetheless, long-term investments continue to strengthen activity in the industrial real estate market, as both absorption and construction starts have shown positive numbers compared to the previous year, indicating that confidence remains strong.
The Drop in Industrial Building Construction and Absorption
In Q3 2024, there was an almost widespread decline in industrial building construction starts and gross absorption compared to the previous quarter.
Regarding construction starts, the central region (Mexico City, Puebla, and Hidalgo) saw the lowest construction activity with just 1.5 million square feet (ft²), representing a 33% decrease. The northwestern region (Tijuana, Juarez, Mexicali, Chihuahua, Hermosillo, and Nogales) recorded 1.8 million ft² in construction, a 58% contraction. Meanwhile, the northeastern region (Monterrey, Saltillo, Reynosa, Matamoros, La Laguna, and Nuevo Laredo) started 2.5 million ft² in construction, a 52% drop from the previous quarter, according to Datoz’s Analytics 2.0.
Gross absorption, referring to lease and sales transactions of industrial spaces, was also negative for the same three regions. The northeast recorded only 2.2 million ft² in transactions, a 45% decrease; the central region had 2.7 million ft² in absorption, 29% less than the previous quarter; and the northwest registered 3 million ft² in lease and sales operations, a reduction of 27%.
Only the Bajío region, driven by Querétaro and Guanajuato, posted positive numbers for these indicators, with 4.3 million ft² in construction—a 3% increase—and 5.4 million ft² in absorption, a 33% rise, due to storage, automotive, and electronics operations.
Industrial Market Remains Strong
Despite declines in new construction starts and gross absorption of industrial spaces in Q3 2024, the country’s industrial real estate market remains robust. From January to September 2024, construction starts accumulated 44.5 million ft², marking a 4% increase over the same period in 2023, while gross absorption reached 46 million ft², a 1% year-over-year rise.
Overall, 2024 is expected to close with levels similar to the previous year, as activity continues, and recent announcements indicate substantial investments in the manufacturing sector.
