In a period marked by geopolitical volatility and supply chain recalibration, the U.S.-Mexico border is emerging as a crossroads of industrial and logistics opportunity—a narrative shaped less by abstract trends and more by the hard realities driving capital, labor and infrastructure across 2,000 miles of interconnected urban markets. The momentum propelling this opportunity is the deepening of U.S.-Mexico business ties and the rebalancing of supply chains amid ongoing trade tensions and manufacturing shifts, according to the latest podcast from CBRE industrial experts. As the cycle transitions from uncertainty to cautious optimism, the region stands poised for another wave of activity, underpinned by strategic advantages and tested by both infrastructure lag and policy ambiguity.
CBRE’s Head of Industrial and Retail, James Breeze, sets the stage, noting that the relentless push to protect supply chains has only intensified over the past five years. “One way to protect supply sourcing is, like we’re going to talk about a lot, onshoring manufacturing in the U.S., but significantly in Mexico,” he points out, highlighting the surge in U.S. imports through Mexican border crossings.
In 2024, over half of all imports from Mexico entered through the Laredo port—a milestone that, for the first time, saw Laredo surpass the Port of Los Angeles in total imports by value. This volume is not merely a logistics footnote but a signal of durable demand, with leasing activity last year up 10% along the so-called NAFTA Superhighway, particularly benefiting corridor hubs such as Dallas, Chicago and most notably, Kansas City, which finished 2024 as the top growth market in percentage terms.
Yet, the landscape is not without its challenges. Trade policy volatility, notably the looming expiration and potential renegotiation of USMCA in 2026, has caused a pullback in demand in border markets. Markets such as Laredo and El Paso saw 16% and 25% declines in absorption this year, as companies—especially those tied to Asian and European manufacturers—adopt a wait-and-see approach. Still, Chicago and Kansas City are bucking the trend, buoyed by nascent manufacturing growth and their emerging roles in newly conceived supply chain models.
John Kirkman, CBRE’s senior managing director for supply chain advisory, underscores the evolution of the network itself.
“We’re moving from the classic Asia-to-port-to-DC model to one where new archetypes run goods through Mexican ports and up through key U.S. nodes,” Kirkman observes.
Over 14 million square feet is under construction in El Paso and Laredo alone, much of it tailored for automation and cold storage. The merger of Canadian Pacific and Kansas City Southern railroads, meanwhile, gives rise to a unified rail corridor stretching from Monterrey to Toronto, establishing Kansas City as a pivotal distribution “super node.”
Kirkman is careful to note that border infrastructure is struggling to keep pace, with increasing dwell times threatening to disrupt the flow of time-sensitive goods. While investment is beginning to address these shortfalls, mismatches between construction, demand and logistics efficiency persist, shaping the operational calculus for tenants and investors alike.
Labor remains a central concern. As Kristen Sexton, CBRE's executive vice president and labor analytics specialist, frames it, the border boasts a “very well established, stable and productive workforce” on both sides—a key reason companies cluster along the boundary. Wages in Mexican border markets run at a roughly 70% discount to U.S. equivalents, although saturation and competition raise the labor cost premium to about 12% compared to central Mexico.
Ongoing advances in robotics and AI are not only elevating skill levels but also intensifying competition for technical talent. Sexton notes that major openings in automotive, aerospace and electronics have surfaced over the past five years, contributing to dynamic workforce expansion, but that market entrants must compete aggressively to become employers of choice in a landscape where saturation can quickly tip into a bottleneck.
A consistent theme is the revival of the “twin plant” model, wherein manufacturers operate paired facilities straddling the border to optimize production, tariffs and logistics. Christian Perez, CBRE’s El Paso and Ciudad Juárez director, believes this “revitalized twin plant model” is now more relevant than ever for industrial operators on both sides. Juarez and El Paso, for instance, function as a contiguous 180-million-square-foot binational market—a scale reflective of this integration.
Central to unlocking the next phase of expansion are the anchor markets of Monterrey, Juarez and Tijuana. Monterrey, according to Ramon Flores, executive vice president for CBRE Mexico’s northeast division, serves as Mexico’s preeminent industrial hub and draws global corporations with its mix of scale, talent and access. Rents and deliveries in Monterrey doubled in peak years, although recent tariff uncertainty has prompted a pause. Flores anticipates a “second wave of nearshoring” as soon as trade conditions clarify, with rising activity from European and Chinese firms driving demand for highly sophisticated logistics and manufacturing space.
Juarez, as described by Executive Vice President Andre Sandoval, has registered 40% industrial market growth over four and a half years, transitioning from vanilla manufacturing to specialized, high-value plants. The region is primed for further expansion, with no shortage of space or skilled labor. Tijuana, meanwhile, is described by CBRE’s Rafael Garcia Rovirosa as a market with the “highest lease rates and lowest cap rates of any border market,” driven by broad-based demand ranging from automotive to medical devices to electronics. Its proximity to California and strategic access to both U.S. and Asian markets have made it a favored destination, albeit one currently wrestling with oversupply and infrastructure limits as pipeline product comes online faster than tariffs and demand can absorb.
Despite periodic slowdowns tied to policy ambiguities and infrastructure mismatches, the CBRE team remains fundamentally bullish. Structural drivers—trade realignment, labor cost arbitrage and supply chain diversification—are not cyclical anomalies but factors likely to define the next decade of industrial investment along the U.S.-Mexico border. As the region braces for a likely second wave of nearshoring and manufacturing expansion, CBRE’s experts agree that those positioned to navigate labor competition and infrastructure constraints will find themselves at the front lines of North America’s supply chain transformation.
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