Nearshoring will keep fueling logistics space demand in Mexico22/12/2023
The upsurge in nearshoring initiatives has significantly propelled Mexico's industrial real estate sector. The growing demand for manufacturing plants, technologically advanced warehouses, and strategic distribution centers is reshaping the country's real estate landscape.This trend signifies the agility of real estate developers in creating spaces that cater to the evolving needs of industries seeking to leverage the advantages of producing consumers in a global scenario of nearshoring vs. offshoring.
Various regions drive the industrial sector
Different states in Mexico are evolving as key zones for various industrial sectors. For example, Guanajuato, Nuevo Leon, and the State of Mexico are becoming significant regions for automotive manufacturing, attracting substantial investments from industry leaders like Toyota, Tesla, and BMW.
Similarly, Jalisco and Nuevo Leon are emerging as technology hubs, drawing foreign capital from companies related to the electronics manufacturing industry.
Logistics and distribution hubs in Baja California, and Chihuahua are experiencing heightened activity, supported by investment from diverse areas. Regarding logistics, Guanajuato is also growing due to the presence of international railway operators like Kansas City Southern.
Attraction of foreign investments and technological advancements
The rise in nearshoring initiatives has become a significant catalyst for foreign direct investment (FDI), mainly from economic powerhouses like the United States, Germany, and Japan.
These investments are raising the number of industries and driving technological advancements and sustainable growth in Mexico, driven by the need to meet international standards.
E-commerce as a critical driver for industrial activity
The increasing significance of e-commerce is revolutionizing the industrial landscape in Mexico. It has significantly driven the demand for properties and industrial spaces due to a significant surge in e-commerce-related activities.
The development of warehouses and distribution centers is crucial to meet these growing requirements, with forecasts indicating a continued upward trend. The demand is focused on more than just major urban centers; secondary markets have attracted interest due to their potential for efficiently managing logistics operations.
The expansion of e-commerce and the demand for industrial spaces in Mexico, where the vacancy rate is close to 1% in several regions, signals changes in the real estate sector's dynamics.
Socioeconomic impact and forward expansion
The increase in demand for industrial spaces caused by nearshoring-linked activities foretells substantial socioeconomic benefits spanning from job creation to technological innovations. Thus, Mexico's status as a global manufacturing hub continues to consolidate.
Such expansion entails economic growth and positions Mexico as a key player in global trade dynamics.
Proximity to the US market, free trade agreements, and low labor costs are the primary drivers sustaining nearshoring, and recent shifts in global supply chains have accentuated these advantages. These aspects foster the attraction of companies investing in Mexico.
The country is working to meet the growing demand. Beyond governmental initiatives to incentivize industrial activities, the Mexican Association of Private Industrial Parks recently announced plans to construct 8 million square meters in different industrial parks, projecting a demand for 6 million square meters by 2027.
The logistics sector has seen substantial advancements driven by activities, especially in key regions like Mexico City, Monterrey, Ciudad Juarez, Guadalajara, Reynosa, and Tijuana.
The dynamics of the automotive industry and its consolidation in recent years, coupled with the growth of logistics activities, support establishing the country as a significant industrial center thanks to nearshoring. This shift not only reaffirms Mexico's prominent position in global supply chains but also positions it as an investment hub.
Frontier Industrial specializes in developing industrial buildings for rent and selling industrial lands in Mexico's most important areas. If your company seeks to establish operations in the country within nearshoring vs. offshoring, please contact us and develop your project.