Mexico’s industrial real estate sector experienced a historic year in 2022 thanks to the nearshoring effect, which has led to an unprecedented relocation of production and supply chains along the country’s northern border. As a result, more than 68 million square feet were consolidated in almost five hundred transactions, representing the highest level of space absorption on record in Mexico.
In this article, we will analyze the outlook for the industrial real estate market in 2023, considering the arrival of Tesla in Nuevo León and the increase in investments by Asian companies in the country. We will also explore the most dynamic markets and current trends in the sector, with the objective of offering relevant information for investors, developers and companies looking to establish themselves in Mexico.
Nearshoring in Mexico: what to expect in 2023?
According to Market Analysis, it is expected that the demand for space in the industrial real estate market will continue to show significant increases during 2023 thanks to the nearshoring effect. Before Tesla’s arrival in Nuevo Leon was made official, it was estimated that space absorption would not exceed the 2022 record. However, now that the arrival of the automaker owned by Elon Musk has been confirmed, it is expected that the market dynamism will be strongly increased during the next three years.
According to Marcos Álvarez, CEO of Market Analysis, it is estimated that space absorption in 2023 will reach approximately 23 million square feet, and that markets such as Saltillo, Torreón and Reynosa will benefit from the arrival of the automotive giant’s suppliers. In addition, considerable growth in space absorption compared to 2022 is expected in all major markets (Monterrey, Juarez, Tijuana and Mexico City), surpassing the gross absorption records of recent years. Markets such as Guadalajara, San Luis Potosí, Querétaro and Saltillo are also expected to have a record year in absorption.
Tesla’s impact in Mexico
Market Analysis forecasts that Tesla’s arrival in Nuevo Leon will have a significant impact on the demand for space in the national real estate market. The presence of the automotive company owned by Elon Musk will generate a dynamism in the industrial markets during the next three years, which will translate into an increase in the absorption of space compared to 2022.
By 2023, it is estimated that industrial space absorption will reach 23 million square feet, and markets such as Saltillo, Torreon and Reynosa are expected to benefit from the arrival of Tesla’s suppliers.
The nearshoring effect will continue to drive the growth of the real estate market in Mexico. Companies of Asian origin will increase their presence by at least 30% nationwide with the arrival of Tesla and the continuity of the nearshoring boom.
As for the demand for space in the main markets, it is expected that during 2023 it will continue with a positive trend, surpassing the gross absorption records of recent years. In addition, markets such as Guadalajara, San Luis Potosi, Queretaro and Saltillo will also have a record year in absorption.
The Market Analysis team points out that in the period from 2015 to 2022 the average variation in gross absorption of industrial space in Mexico was 11.76%. Now, based on the absorption figures, forecasts made for the years 2023, 2024, 2025, show that the absorption of industrial spaces at the national level will have a growth of 5.07%, 8.49% and 10.54% respectively, which yields a growth of 8.04% for the following three years.
In summary, Tesla’s arrival in Nuevo Leon will have a significant impact on the national real estate market, generating an increase in the absorption of space compared to 2022. In addition, the nearshoring effect will continue to drive the growth of the real estate market in Mexico in the coming years. Forecasts indicate that the absorption of industrial space will continue to grow, which represents an opportunity for institutional developers and companies looking to relocate their operations.
Challenges to be faced
Mexico has seen an increase in its industrial sector in recent years, and the opportunity to attract even more investment is on the horizon thanks to the nearshoring phenomenon and the arrival of renowned companies such as Tesla to Nuevo Leon. However, for the country to continue to take advantage of these benefits, it is critical to address the infrastructure challenges that currently exist.
One of the main challenges is the lack of infrastructure for electricity supply. With energy demand steadily increasing, the current infrastructure is not sufficient to meet the needs of industry. In order to take full advantage of Mexico’s potential as an investment destination, investments must be made to strengthen the electrical infrastructure and ensure that the power supply is sufficient and reliable for industry operations.
In addition to electrical infrastructure, it is crucial to improve the port, rail and road connections that are linked to the neighboring country. These are of vital importance for the movement of goods and for international trade in general. Both public and private investments are required to improve these connections, which will be fundamental for the development of an infrastructure plan that has as its axis the improvement of logistics within Mexican industrial production.
If these infrastructure challenges can be overcome, nearshoring and the arrival of companies such as Tesla in Mexico could generate significant growth in the coming years. This would bring widespread benefits for industrial parks, companies, workers, government, among others. However, to achieve this, it is essential that investments are made in the country’s infrastructure.
VYNMSA is a leading company in the industrial real estate market in Mexico that has stood out for its commitment to sustainable development and technological innovation. In addition, its nearshoring business model has become an attractive alternative for companies seeking to reduce costs and improve efficiency in their supply chains.
In short, nearshoring in Mexico, supported by companies such as VYNMSA, presents a promising opportunity for companies seeking a cost-effective and efficient option for the production and distribution of their products. With its experience and leadership in the industrial real estate market, VYNMSA is well positioned to continue to be a valuable and reliable partner for companies looking to establish or expand their operations in Mexico.
We actively work with industrial real estate brokers as business partners, we have around 20 buildings of inventory ready for immediate occupancy, which adds up to around 2 million square feet of built space in the northeast and Bajio region of Mexico.
Contact us and find out why VYNMSA is your best industrial real estate business partner in Mexico.