MEXICO REGIONAL SPOTLIGHT

OVERVIEW

Mexico emerges as a relative winner, despite the challenging global policy landscape, with a compelling long-term structural story. Market fundamentals remain strong, leasing momentum has increased since April 2 and growing NOI from high-quality international tenants drives forecasts for elevated returns. 

• After years of strong performance, our base case is that Mexican industrial continues to deliver elevated returns, primarily driven by ongoing rent growth together with yields of about 7%. 
• Rental growth has slowed from rapid levels recorded in 2022-23 on the back of tariff uncertainty and the potential renegotiation of the USMCA.
• While the policy backdrop is set to remain challenging in the near term, our long-term conviction in Mexico’s investment market remains firm, reflecting several factors.  
  • Tightly integrated North American supply chains. 
  • Mexico’s skilled and available labor force in advanced manufacturing.
  • Proximity and linkages to the U.S. market. 
• In our outlook, availability remains low against a backdrop of rising demand – forecasts for rental growth of 5% per year compare favorably with the United States.