Historic Growth in México City's Industrial Sector, powered by Logistics and E-commerce Boom

The logistics and e-commerce sectors have driven record-breaking growth in industrial demand in Mexico City and the Metropolitan Area. By the end of Q3, leased spaces surged to 1.2 million square meters, marking a 55% increase compared to the same period last year, according to CBRE Mexico’s Industrial MarketView report.

The report highlights that logistics remains the main driver of market activity, accounting for 59% of transactions, followed by e-commerce at 29%. The e-commerce sector is gaining ground and is expected to continue rising, driven by new retail strategies embracing digital platforms for online sales.

“Build to Suit” (BTS) projects are particularly popular with tenants even before hitting the market, boosting construction activity to historic highs. In Q3 alone, over 181,000 square meters of new projects broke ground in the Cuautitlán, Tultitlán, Vallejo, and Iztacalco corridors. As a result, construction pipelines surpassed 1 million square meters for the third consecutive quarter, with 83% of these spaces pre-leased.

Across various corridors monitored by CBRE Mexico, more than 2.2 million square meters of projects are planned, with approximately 63% slated as Built to Suit developments, while the remaining 37% are speculative or Spec to Suit projects expected to begin construction in 2025.

According to Mexico’s Ministry of Economy, the Mexico City Metropolitan Area (ZMCDMX) continues to be the top recipient of foreign direct investment, representing 46% of the national total so far in 2024. The United States leads as the primary investor (44%), followed by Germany (11%) and Japan (9%).

This dynamic has kept gross demand high in the region. Over the past two years, gross demand exceeded 1.2 million square meters annually, and in 2024 this figure has already been surpassed, with forecasts projecting it to top 1.4 million square meters by year-end.

New Supply

CBRE Mexico noted that in Q3 2024, 175,000 square meters were added to the ZMCDMX Class A inventory, with 70% concentrated in Cuautitlán, maintaining it as the largest corridor and comprising 39% of total inventory. The remaining 30% was added in Tultitlán and a last-mile project in Coyoacán.

With new projects coming online, availability edged up 2.3% over the previous quarter, resulting in 258,000 square meters of vacant space. Despite the robust construction activity, the vacancy rate is expected to remain low due to strong pre-leasing trends.

At the corridor level, vacancy rates remain near historic lows, especially in Big Box corridors driven by pre-leasing activity. For instance, the Huehuetoca-Tepeji corridor reported a 33% vacancy rate, while the Cuautitlán, Tultitlán, and Tepotzotlán (CTT) corridor remains at record lows with a combined 0.8%.

The Zumpango-AIFA corridor, recently added to the market, is expected to help bolster supply with new large-format projects. “In the current Mexico City market cycle, the coming months will be important to observe the growth in its Metropolitan Area, the new Zumpango-AIFA corridor, and the northern zone along the Querétaro exit,” the report anticipates.

Inventory

By the end of Q3 2024, the ZMCDMX Class A inventory grew 3.7% year-over-year, reaching 10.98 million square meters. The CTT corridor remains the largest market participant with 77% of the inventory, followed by Tlalnepantla with 11% and Vallejo-Azcapotzalco with 4%.

It’s projected that over 900,000 square meters will be added by year-end, pushing inventory to 11.9 million square meters, marking the largest increase since 2018.