Mexico City office market report
Q1 2023
Inflation and Omicron continue to affect the office market during the first quarter.
Although it continues in the recovery trend, there are still significant challenges to having a dynamism comparable to pre-pandemic levels.
Inflationary pressure can affect the demand for spaces if companies start with cost reduction, while the supply can become more expensive due to increased material costs.
Given the uncertainty of this market with the trends that have been foreseen during two years of the pandemic, innovation will be necessary with products where technology and sustainable elements are the protagonists since corporations would be willing to occupy real estate spaces with these characteristics
Economy
- 128 million National population
- 9.2 million inhabitants in Mexico City
- The unemployment rate is 3.66%
- GDP -3.9%
- FDI $31,621M (9%)
Inventory & Availability
The Q1 2022 closed with 7.5 million square meters in inventory, while the availability rate stands at 24% (1.8 million square meters). Santa Fe, Norte, Polanco and Insurgentes reach 70% of the available space reaching 1.2 million square meters of the total.
Net absorption stands negative at -6,851 square meters; this represents an increase of 17.4% compared to Q12021 (-39,220 square meters)
Prices & Construction
The average asking price reached $22.56 US/m2/month; this represents an increase of 1.06% compared to the first quarter of 2021. On the other hand, the average closing price is $20.55 US/m2/month.
As for projects under construction, 731 thousand square meters are being monitored. Compared to the same period of the previous year represents a decrease of 27.4% due to the reconversion of spaces.
Consolidation of the hybrid work model
The corporate sector saw the need to establish the remote or hybrid work model, which has led companies to evaluate the actual size of the office they need, the locations, the design of the space and its collaboration guidelines so that the values are not lost. Even though tenants may seek fewer square meters and savings in price, the tendency is towards better quality and well-being of the collaborator.
Sustainability in the workplace
It is not only about reducing the number of resources used and discarded, but it is also necessary to use natural elements in the office that favour being more sustainable.
This trend is marked by the introduction of new alternative construction materials, energy-saving systems, water reuse and even the location in green places with access to traditional and alternative public transport such as bicycles or rollerblades.
Digitalization of the workplace
Technology enables everything, and a dynamic and interconnected ecosystem of partners and technologies is essential for the company.
Some of the elements that make up this trend are the devices provided to the collaborator, robust and efficient network infrastructure, cloud services, automation tools, investment in cybersecurity and training plans for new platforms.