Mexico. An evident recovery has been showing the corporate market in Mexico City to reach its highest level in the last two years, with 171 thousand 894 m², which means good news after more than 24 months of instability and negative figures.
The above is clear from the report of activities of the office market of Mexico City corresponding to the third quarter of the current year, prepared by Mauricio Mondragón, analyst of the market research division of Newmark, whose president in Mexico and regional director for Latin America is Giovanni D'Agostino and highlights that there are signs of stability since the corporate market has remained practically static, compared to last quarter and where inventory, availability rate and starting price remained practically unchanged.
"The inventory has increased marginally with the entry of two new buildings to the market in the Insurgentes-Roma-Condesa corridors and in Avenida de las Palmas. This, and the balance between occupations and vacancies, pushed the availability rate just 0.1 percentage point above the previous period, which means that there are more than 1.8 million unoccupied square meters in the office market in Mexico City today, a figure that has remained relatively stable during the last year. Giovanni D'Agostino pointed out.
The analyst also stressed that "in addition, net absorption had a slight decrease, but remained stable with 21,954 m², so we expect it to improve at the end of the year. It is a good sign that net absorption has remained positive despite the fact that unemployment increased significantly, compared to the last period."
D'Agostino added that quarterly net absorption and market activity remained very close to the levels of the past period, registering 21,954 m² and 171,894 m², respectively. It is noteworthy that the level of activity has been the highest since the beginning of the pandemic,
Market activity increased again from last quarter and, as mentioned, reached its highest level since the first quarter of 2020. These movements were mainly concentrated in the Polanco, Insurgentes and Santa Fe corridors, which together contributed 57% of total market activity.
On the other hand, unemployment also increased significantly in this third quarter and reached its highest point during the last year. The Santa Fe, Insurgentes and Bosques corridors witnessed the most tenant losses, and together accounted for 52% of the city's vacancies.
The importance of Santa Fe
Santa Fe is the largest submarket in the entire city and, until before 2020, was one of the corridors with the highest growth rate. It has 1.4 million square meters of profitable area, which means that 18% of the ZMVM's Class A office inventory is concentrated in a single corridor. Therefore, it is important to be attentive to the behavior of this corridor, as its movements have an important impact on the market of the whole city.
This area of the west of the CDMX encapsulates 22% of the total availability of the corporate market and is the third submarket with the lowest starting prices, only after Interlomas and Norte, which represents that, due to the volume of availability, Santa Fe prices tend to cause the decrease in the average rental price of the office market of the capital of the country.
In addition, it has consistently presented negative net absorption, which means a reduction in the spaces occupied by companies and their migration to other parts of the city, given the favorable market conditions for tenants.
"Despite the fact that uncertainty continues in the face of an economic recession, the inflationary problems that continue to rise and the fact that investors continue cautiously, as they seek financial and economic stability, there is confidence that the office market in Mexico City will continue on the path of recovery," said Giovanni D'Agostino. president in Mexico and regional director for Latin America of Newmark.