April 24, 2025 MexicoCRE Newsletter edition

Introduction

Mexico is experiencing an economic transformation, emerging as a pivotal player in North America's industrial landscape. From aerospace to semiconductors, and retail to real estate, the country is witnessing a surge in strategic investments that are reshaping its economic future. This renaissance is particularly noteworthy as it coincides with global supply chain restructuring and the increasing prominence of nearshoring initiatives.

As the United States' largest trading partner, surpassing China, Mexico has positioned itself at the intersection of multiple high-growth industries. The country's strategic advantage is further amplified by its skilled workforce, competitive costs, and the robust framework provided by the USMCA. This edition of Mexicocre explores the convergence of these developments and their implications for manufacturers, investors and industry stakeholders.

Industry Deep Dives

Aerospace Ascendancy: Mexico's Growing Aviation Footprint

Mexico's aerospace sector continues its impressive trajectory, maintaining its position as the fourth-largest exporter of aerospace products globally. The industry is projected to grow at an annual rate of 15% through 2025, with exports expected to reach $12 billion. This growth is supported by:

• Strategic aerospace clusters in Querétaro, Chihuahua, Baja California, Sonora, and Nuevo León

• A robust ecosystem of over 60,000 skilled workers, projected to reach 110,000 by 2025

• Significant presence of global players like Bombardier, Safran, and Airbus

• Advanced educational initiatives through institutions like UNAQ (Universidad Aeronáutica en Querétaro)

Silicon Shift: Semiconductor Industry Takes Root

Mexico is rapidly emerging as a crucial link in the global semiconductor supply chain, particularly in assembly, testing, and packaging (ATP) operations. Asian giants including Foxconn, Wistron, and Pegatron are actively exploring opportunities in Mexico, driven by:

• Strategic advantages offered by the CHIPS and Science Act

• Mexico's established manufacturing expertise and infrastructure

• Proximity to the U.S. market reducing logistics costs and time

• Growing pool of technical talent, with Mexico producing more engineering graduates per capita than the U.S. or Canada

Retail Revolution: Home Depot's Expansion and Discount Store Boom

The retail sector is witnessing significant growth, exemplified by Home Depot's ambitious expansion plans and the proliferation of discount stores. Home Depot has announced a substantial US$1.3 billion investment over the next five years, aiming to:

• Open five new stores annually, reaching 165 locations by 2030

• Create 2,000 direct and 10,000 indirect jobs

• Increase local sourcing from 85% to 100%

Meanwhile, discount retailers like Tiendas 3B are capitalizing on changing consumer preferences, with plans to open 550 new units in 2025, demonstrating the sector's dynamism and adaptability.

Industrial Real Estate: Building the Future

The industrial real estate market is experiencing robust growth, with significant developments across key regions:

• Net absorption has returned to the six-year average across 18 monitored markets

• 6% expansion in inventory, reflecting strong market confidence

• 14% increase in overall weighted lease rates

• Development of new industrial parks, including significant investments in regions like Jalisco, Guanajuato and Aguascalientes

Regional Economic Development

Emerging Industrial Hubs

Several Mexican states are emerging as powerful economic engines:

• Querétaro: Established as a premier aerospace hub with advanced educational facilities

• Chihuahua: Growing focus on semiconductor and electronics manufacturing

• Guanajuato: Attracting significant retail and industrial investments

• Aguascalientes: Expanding industrial base with new manufacturing facilities

Looking Ahead

The convergence of these developments positions Mexico for sustained economic growth in the coming years. The country's ability to attract diverse investments across multiple sectors suggests a robust and resilient economic future. Key trends to watch include:

• Further integration of Mexico into global supply chains

• Continued expansion of high-tech manufacturing capabilities

• Development of supporting infrastructure and educational programs

• Growing importance of regional economic clusters

Conclusion

Mexico's economic transformation represents a unique opportunity for investors, businesses, and professionals. The country's strategic advantages, combined with significant investments across multiple sectors, create a compelling case for increased engagement with the Mexican market.

Stay informed about Mexico's evolving economic landscape by subscribing to Mexicocre's weekly updates. For those interested in exploring investment opportunities or seeking detailed market analysis, our team of experts is available for consultation. Contact us at https://discoverycre.com/contact-us