Monterrey, the industrial capital of Mexico, is showing early signs of strain amid a wave of uncertainty surrounding global trade and the future of nearshoring in Mexico. Once hailed as the epicenter of industrial growth, the city now faces its highest industrial vacancy rate in years, prompting serious questions about whether the nearshoring boom is slowing down.

A Tripling of Vacant Industrial Space in Monterrey

According to new data from Solili, a leading real estate consultancy, 5.4% of Monterrey’s industrial space is now unoccupied—equivalent to over 1 million square meters of vacant space. This is three times higher than the vacancy rate reported during the same quarter in 2024.

Several factors are driving this shift:

• Completion of speculative industrial parks that remain unleased
• A slowdown in industrial demand
• High-profile tenant exits, including one that freed up 110,000 m² in the Santa Catarina corridor

The Santa Catarina corridor had previously been touted as the site for Tesla’s gigafactory in Mexico, highlighting the depth of change in the local market.

A Nationwide Slowdown in Industrial Real Estate

This trend isn't limited to Monterrey. Nationwide, 4.3 million square meters of industrial space are currently available, showing a clear rise in industrial vacancy. In Q2 2025, developers added 87 new industrial buildings while only 937,000 m² were absorbed, one of the lowest figures since 2021 and 37% below the Q2 2024 level.

Despite strong expectations at the start of the year, it’s now clear that nearshoring demand has not materialized as rapidly as anticipated.

What’s Behind the Decline? Key Factors Slowing Nearshoring

The recent increase in industrial vacancies reflects a combination of global and domestic challenges:

• Geopolitical uncertainty and trade friction, including new U.S. tariffs
• Fluctuating global inflation and high interest rates
• Slower-than-expected investment decisions from multinational firms
• Continued construction of speculative inventory without pre-lease agreements

While the fundamentals of nearshoring in Monterrey remain strong—proximity to the U.S., robust infrastructure, and competitive labor—the current environment signals the need for market adjustment.

Outlook: Market Adjustment or Lasting Slowdown?

Real estate developers such as Prologis, Vynmsa, and Vesta remain active, delivering over 260,000 m² of speculative space in Q2 alone. However, the rising industrial vacancy in Monterrey suggests that the supply is currently outpacing demand.

Solili notes that while macroeconomic pressures will continue to influence the sector, Mexico’s internal response—in terms of regulation, security, and fiscal incentives—will determine how well it weathers the current slowdown.

As global companies recalibrate investment strategies, Mexico must maintain a focus on:

• Streamlining investment procedures
• Upgrading logistics and energy infrastructure
• Enhancing legal and fiscal certainty for foreign investors

Conclusion: A Pause, Not a Collapse—Time for Strategic Action

The industrial vacancy rate in Monterrey is a cautionary signal—not a death knell for nearshoring. While nearshoring in Mexico continues to offer long-term potential, the mismatch between supply and demand needs urgent attention.

As Mexico enters the second half of 2025, stakeholders must recognize that industrial real estate absorption is slowing. The country must now shift from riding the wave of nearshoring hype to executing a sustainable, investment-friendly strategy that attracts and retains global manufacturers.