business

PRODUCTS

public

COVERAGE

attach_money

PRICES

pie_chart

SEGMENTS

post_add

BLOG

more_horiz

MORE

Mexico’s corporate availability is decreasing 

16 May, 2023 | #DatozByDatoz

The four largest corporate real estate markets in the country started the year with positive signs, as for the first time since 2020, when  COVID-19 pandemic began, the first quarter of 2023 recorded decreases in the availability of spaces, contrary to the upward trend of previous periods. 

Mexico City, Monterrey, Guadalajara, and Queretaro had decreases in the square meters of available spaces ranging from 17.2% to 2.9% compared to 1Q 2022. This was achieved due to the containment in  construction starts of new projects and the recovery in the gross absorption of spaces, especially in Guadalajara and Monterrey. 

Mexico City, the market that concentrates 80% of the country’s corporate spaces, had a downward adjustment of 2.9%, decreasing 80,000 m2 of available space between 1Q 2022 and 1Q 2023, with 2.7 million m2 available, of which 2.4 million m2 are spaces in already delivered buildings and the rest are under construction. 

Sergio Mireles, founder-partner at Datoz, commented in a media meeting that there is currently an excess of 1.5 million m2 when compared to the quarter of 2020, so to reach these levels, it is necessary to absorb close to half of the m2 being marketed. 

With this, the availability rate has recorded its fourth consecutive quarter decrease after the upward trend, now standing at 22%, after reaching its peak in 1Q 2022 with almost 23%. However, it is still a high rate, as the decreases are minimal. 

“We will continue to see a trend among property owners towards greater contractual flexibility, in order to attract tenants due to strong competition,” said Sergio Mireles. 

The availability of offices in Monterrey decreased year-over-year by 12.4%, offering 50,000 m2 less, which were leased in the last 12 months by logistics and manufacturing companies, so availability closed the quarter with 338,000 m2

The availability rate was 16.3%, after reaching its historical peak of 19% during 1Q 2022. Monterrey has also not been able to recover pre-pandemic levels of availability. 

Guadalajara had a reduction of 7.9% in the availability of offices, with an offering of 160,000 m2 during 1Q 2023. Higher absorptions and no new project starts contributed to the reduction of 13,000 m2 in availability. 

The availability rate was 16%, after reaching its peak during 3Q 2022, with 19.2%. Guadalajara still needs to reduce its availability rate by 1 percentage point to reach pre-pandemic levels. 

The office real estate market in Querétaro had the greatest contraction in its availability, with a decrease of 17.1% compared to 1Q 2022. This emerging office market has just over 100,000 m2 available. 

Sergio Mireles explained that Querétaro has had six consecutive quarters of decreasing availability, which could suggest a clear path to recovery, but the demand has not yet fully recovered and has not been consistent. What has happened in Querétaro is that the delivery of new projects is completely halted, and since it is a small market, demand directly affects availability. 

The availability rate closed the quarter at 13.3%, the lowest level even before COVID-19 pandemic. 

It is important to note that these decreases in office space availability in Mexico’s most dynamic markets are encouraging, as demand is likely to recover to pre-pandemic levels in the second half of 2024. 

The latest