The relocation of production lines in Mexico ( nearshoring ) has triggered the use of industrial spaces, but also that of luxury real estate, whose market has grown due to the arrival of digital nomads and other professionals to the country, mainly in Jalisco, Baja California and Mexico City.

Andrés Martínez , Marketing Director of the real estate developer Grupo GFA , said that this type of development seeks to resolve a greater demand in terms of sophistication, amenities and remote work.

“It has to do with the fact that more and more people are being hired by foreign companies, as well as local people who are also being hired by these types of companies; in addition, the fact of doing business with the United States and other countries is that the need for spaces to do remote work is arising,” said the executive in an interview with T21 .

Regarding the acquisition of these properties, he added that between 60% and 65% are local investors, who buy in areas such as Zapopan, Jalisco.

He pointed out that this real estate market has great potential for growth, especially with the arrival of digital nomads , who are people who work remotely and use technology to carry out their work from anywhere. This way of working was triggered during the COVID-19 pandemic.

According to figures from NomadList , more than 15% of digital nomads traveling to Latin America choose Mexico as their main destination. In addition, the consulting firm ATDAC estimated that, by the end of 2024, nearly 100,000 digital nomads were working in the country.

Due to the effects of nearshoring , Tijuana, Baja California, is another city where this phenomenon has been observed, which has led to the demand for residential spaces.

“The effect is greater there, because there is a lot of movement of people from the United States and Mexico,” said Martinez, who added that many Mexican-Americans work in San Diego but live in Tijuana.

“Tijuana allows these people, these types of users, to have a first-class life at a cost that is perhaps more affordable than if they were looking for it in San Diego, and in the end, the crossing with San Diego is 15 minutes away,” he explained.

He added that in Tijuana, doctors are a type of user who use luxury residences. “They go and treat some patients and continue traveling, because they are apartments of 40, 50 or 60 square meters (m2), which is what they need to be able to satisfy this need,” he stressed.

Other areas that have benefited from the relocation of production lines in Mexico are the Bajío region and the north of the country , where in states such as Querétaro and Nuevo León, specifically in Monterrey, a positive outlook is expected in terms of the growth of this type of property.

Sector Outlook

Andrés Martínez believes that the luxury real estate market in Mexico has had a good reception, and therefore expects further growth.

“I think the luxury real estate market is growing significantly, at least here in Guadalajara the increase in capital gains has been 15% annually since 2020. In Tijuana the growth has been very similar,” he said.

In this regard, he said that demand is very high, and although there are ups and downs in the sector, “we see a very positive outlook for the luxury real estate market in Mexico,” so more projects are expected in Guadalajara and Mexico City.

According to the consulting firm Softec , the luxury housing market in Mexico closed 2024 with a value of 310 billion pesos (mdp) in sales, having placed more than 60 thousand units last year.

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The commercial real estate investment and services company, CBRE , reported that from January to September 2024, the net absorption of the Mexican Bajío region reached 540 thousand square meters (m2) , a figure that almost doubles that of the same period in 2023, while the commercialization of spaces or gross demand was 722 thousand m2 , which was mainly driven by land sale transactions, and the expansion of companies already established in the region.

In its MarketView report on the Bajío industrial real estate sector in the third quarter of 2024 (3Q24) , the firm noted that construction activity closed the third quarter with 612 thousand m2 ^under development, of which 30% is pre-leased.

He also indicated that demand for industrial space by tenants in the automotive and light manufacturing industries , which account for more than half of the demand, continues, and that figure is expected to remain high due to current negotiations.

According to information from the Ministry of Economy , during the first half of 2024 (1H24), the entities that make up the Bajío, that is, Aguascalientes, Guanajuato, Querétaro and San Luis Potosí, totaled three thousand 688 million dollars of Foreign Direct Investment (FDI) , with Guanajuato and San Luis Potosí being the largest recipients in the region.

“The Bajío region has been characterized by having an important automotive cluster. Automotive plants have been established in all four states, which have boosted the commercialization of industrial spaces,” said Rodrigo Folgueras, vice president of CBRE Mexico in the Bajío region.

At the close of 3Q24, Querétaro led gross demand with 41% , driven by diverse manufacturing tenant transactions. Meanwhile, Guanajuato was the second market with the highest gross absorption with 28% of the commercialization activity ; San Luis Potosí was in third position with 19% of the gross absorption driven by land sale transactions, CBRE reported.

In turn, the vacancy rate or availability remained with downward variations, since it closed said period at 3.4%, slightly lower compared to the same period in 2023, when it was 4.2 percent.

CBRE stated that construction activity has been characterized by the development of Build to Suit projects, closing 3Q24 with just over 612 thousand m2 under development , of which 30% are projects with these characteristics and are already pre-leased.

Developers have begun speculative building as demand is expected from industrial tenants in both light manufacturing and automotive. Light manufacturing and the automotive industry are expected to demand industrial space in the region, attracted by the logistical advantages, skilled workforce, as well as the infrastructure of industrial parks in the Bajío.

At the end of the period, the Bajío closed with an inventory of 14.1 million m2 , which represented an annual increase of 5%, with Querétaro and Guanajuato as the markets with the greatest inventory growth, being the first in which more than half of the new supply was concentrated from January to September 2024. 3Q24 closed with 612 thousand m2 of construction activity for delivery in the following six months.

Meanwhile, the vacancy rate closed at 3.4% in 3Q24, which was 0.9% less than at the end of 3Q23.

Due to the shortage of supply in markets in the north of the country, the Bajío continues to represent an opportunity for investors and companies looking for industrial space as a result of the relocation of companies in Mexico ( nearshoring ).

In addition, the dynamism of the automotive and light manufacturing sectors continues to drive the growing demand for industrial real estate in this region of Mexico.

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