Challenges of the industrial market in Nuevo Leon, Mexico after investment growth

by Advance Real Estate 22 de August, 2023 481 Views

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In 2022, Nuevo Leon’s industrial market experienced an increase in demand for buildings. Newmark’s data revealed 7 million sqft¹of new industrial buildings constructed in the second quarter.

This result came directly from significant Foreign Direct Investment (FDI) inflows related to the industrial market. Such a phenomenon brings great benefits but also big challenges.

Industrial space demands in Nuevo Leon

Last year, Nuevo Leon registered a net absorption of 1.9 million sqft². Additionally, the availability of Class A industrial spaces reached 1.7 million sqft.

This surge of space demand was distributed among the primary industries of Nuevo Leon as follows: 19% for commerce, 25% for manufacturing, and 34% for other services.

More categorically, demand for Class A spaces has driven different facilities to either finish operations or begin closing in a short period. Indications show this growth will continue, and demand for industrial spaces will keep advancing in the short term.

How will this demand change in the main industries of Nuevo Leon in 2023?

For 2023, this growth is projected to persist but at a slow pace, between 5% and 15%. However, the arrival of new companies and expansion plans of existing ones will still require constructing industrial space.

Considering this, Gabriela Siller³, Director of Economic and Financial Analysis at Grupo Financiero Base, predicts that in 2023, Nuevo Leon could contribute the largest increase in Mexico’s GDP.

This anticipated growth, linked to factors such as foreign investment in nearshoring projects, entails advantages like greater production and export capacity and employment opportunities.

New challenges

Regardless of the several advantages that come with a large investment, the Nuevo Leon state will have to face many issues:

A quality public transportation system is needed to maintain the efficient performance of new industrial spaces and support the subsequent job opportunities to avoid triggering urban or social conflicts.
The supply of clean energy must be affordable and uninterrupted to meet the industry demand and sustain its long-term operation without causing environmental impact.
Young professionals, especially highly trained young people, must be incorporated into the labor market to ensure ongoing industrial demand growth.
Increasing the availability of strategically-located spaces will be pivotal to successful projects and social growth since meeting demand will be key to providing strategic spaces adaptable to the industry’s changes.

At Advance Real Estate, we strengthen the industrial market in Mexico. We specialize in leasing industrial buildings to face the challenges of new investments and the growing demand for industrial spaces.

Meet Advance Real Estate and learn how to boost your company’s growth in Nuevo Leon.

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Advance Real Estate

Advance is a leading company in the acquisition, leasing and operation of industrial and logistics assets, with presence in 12 cities within Mexico and a portfolio of 11.5 million sf of industrial space.

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