Executive Context: Why This Matters for Expansion Decisions

Mexico’s industrial real estate market is sending mixed signals. On one hand, developers are accelerating the construction of new industrial warehouses. On the other, vacancy rates are rising, and absorption is slowing.

For CEOs, COOs, and expansion teams, this raises a critical question:

Does rising construction alongside increasing vacancy signal risk — or opportunity — for industrial expansion in Mexico?

Construction Activity Accelerates Despite Uncertainty

Even amid trade uncertainty with the United States and the upcoming USMCA review, industrial construction in Mexico continues to grow.

According to market data from Solili:

• Nearly 970,000 m² of industrial warehouse construction started in October–November 2025
• This represents a 38% increase year-over-year

Developers are pushing forward despite a more cautious demand environment

This reflects long-term confidence in Mexico’s role in North American manufacturing — but also highlights a potential timing mismatch between supply and demand.

Absorption Slows While Supply Expands

While construction accelerates, industrial space absorption is losing momentum.

Key figures:

• 4.6 million m² absorbed between January and November 2025
• 22% lower than the same period in 2024
• Developers continue delivering new inventory as tenant decisions slow

This divergence explains why warehouse vacancies are rising, even as new industrial projects break ground.

Vacancies Increase Across Core Industrial Markets

Vacancy growth is becoming visible in multiple manufacturing and logistics hubs.

Between October and November 2025:

• 117,000 m² of industrial space was vacated

This represents an 18% annual increase in released space

Markets most affected:

• Guadalajara: 29% of total move-outs
• Tijuana: 23% of total move-outs

These are not marginal locations — they are core industrial markets, which makes the trend particularly relevant for expansion planning.

What Is Driving This Market Imbalance?

Several factors explain why industrial construction and vacancy are rising simultaneously:

• Tariff uncertainty affecting investment timing
• More cautious decision-making by multinational tenants
• Speculative construction without pre-leasing
• Normalization after the peak nearshoring surge of 2022–2024

Importantly, this is not a collapse in demand, but a market adjustment as supply catches up with a more selective tenant base.

Total Inventory Continues to Grow

By the end of November 2025:

• Mexico’s industrial real estate inventory reached approximately 111 million m²
• This represents 7% year-over-year growth

The market remains structurally strong — but pricing, incentives, and building quality now matter more than ever.

What This Means for Expansion Teams

For companies evaluating industrial expansion in Mexico, this environment creates strategic leverage:

• More options in certain markets
• Increased willingness from landlords to negotiate
• Better alignment between building quality and operational needs
• Opportunity to secure modern space with improved terms

At the same time, location selection and building specifications become critical. Not all vacancies are equal, and not all new projects fit every operation.

Conclusion: A Market Reset, Not a Red Flag

The acceleration of industrial construction alongside rising warehouse vacancies signals a rebalancing phase, not a structural downturn.

Mexico’s industrial real estate market remains solid — but expansion decisions now require:

• Better timing
• Clear operational requirements
• A sharper focus on building quality and location fundamentals

For prepared companies, this is a window to secure the right space under more favorable conditions.

FAQ

Why is industrial construction increasing if vacancies are rising?Because many projects were planned during peak nearshoring demand and are now delivering into a slower absorption phase.

Does rising vacancy mean demand is weakening permanently?No. It reflects a normalization after rapid growth and more cautious tenant decision-making.

Which markets are most affected by vacancies?Guadalajara and Tijuana are currently seeing the highest share of released industrial space.

Is this a good moment to enter the Mexican industrial market?For companies with clear requirements and flexibility, yes — conditions are becoming more negotiable.