7/11/2023
Mexican workforce’s technical capacities stand out among the main reasons five states show as the most benefited regions for the industrial activities’ relocation due to nearshoring to Mexico trend.
At the end of the 2023 third quarter (from July to September), Mexico City, Monterrey, Saltillo, Tijuana, and Guadalajara, all cities with industrial activity tradition, concentrate 75% of the country’s industrial buildings demand.
Since the growth of nearshoring activities started in the country, Mexico City and Monterrey have been leading the use and demand of industrial spaces in Mexico. Still, for this last 3-month period, Mexico City took advantage of this indicator. It showed the gross need for industrial areas, with 274,000 square meters, compared with 263,000 square meters of Monterrey, according to Solili data.
For leading these figures, Mexico City registered the most significant operations in terms of space, with 4 transactions of 30,000 square meters or more, reported El Economista with data from the real estate website.
In global terms, Mexican industrial space absorption is over 1 million and 30 thousand square meters in 2023, according to the firm.
Technical capacities and logistics infrastructure, key factors for industrial regions
Nearshoring to Mexico has boosted the attraction of foreign investment to various areas of the country, especially those where the infrastructure allows regular logistics activity, such as Monterrey, Nuevo Leon, and the metropolitan areas of Mexico City and Guadalajara.
The highly skilled workforce is also a key reason for enterprises looking to relocate their activities, considering that for 2023 the expected foreign investment is around US$ 35,300 million, and in 2022 manufacturing, automotive, and information technology industries were the sectors with the most nearshoring activities in the country.
Last year, Mexico received over US $31,60 million in foreign investments, according to Mexico Business News, reporting data from the World Bank.
Mexican government boost laws to maintain growth in nearshoring trend
Following the nearshoring to Mexico trend, the Mexican government enacted a decree for granting tax incentives to key export sectors, consisting of immediate deduction of investment in new fixed assets and additional deduction of training expenses.
The mentioned decree establishes benefits for enterprises relocating industrial activities that boost the Mexican economy to promote the growth of different production operations. The activities include:
- Products intended for human and animal consumption.
- Fertilizers and agrochemicals.
- Raw materials for the pharmaceutical industry and pharmaceutical preparations.
- Electronic components, such as single or loaded cards, circuits, capacitors, condensers, resistors, connectors, semiconductors, coils, transformers, harnesses, and computer and phone modems.
- Machinery for watches, measurement, control, navigation instruments, and electronic medical equipment for medical use.
- Batteries, accumulators, batteries, electrical conductors, plugs, contacts, fuses, and accessories for electrical installations.
- Gasoline, hybrid, and alternative fuel engines for cars, vans, and trucks.
- Electrical and electronic equipment, steering systems, suspension, brakes, transmission systems, seats, interior accessories, and stamped metal parts for cars, vans, trucks, trains, ships, and aircraft.
- Internal combustion engines, turbines, and transmissions for aircraft.
- Non-electronic equipment and devices for medical, dental, and laboratory use, disposable medical equipment, and optical articles for ophthalmic use.
For these mentioned production activities, the decree includes the immediate deduction of investment in new fixed assets used for the development of activities in the critical sectors of the export instead of applying the authorized maximum deduction percentages established in the Income Tax Law.
According to the decree, redirecting tax incentives to export industries will enhance competitiveness, innovation, and investment in technology, which contributes to job creation and attracts foreign direct investment.
“Furthermore, export activity increases the inflow of foreign currency into the country and improves the trade balance, thereby enhancing the confidence of investors and trading partners. Thus, the measure aims to boost economic growth by harnessing Mexico's potential in key sectors.”, is also said in the document.
Frontier Industrial offers industrial land for sale and buildings for rent in the main industrial areas of Mexico. If your enterprise is looking to relocate operations in the country in the context of nearshoring to Mexico, we can help you develop your project with our Build-to-Suit services. Do not hesitate to contact us and receive more information or see availability.
