The year 2023 was pivotal for the recovery of the office market in Mexico

Throughout the year 2023, the office market has witnessed a reduction in the vacancy rate of about 2.5 percentage points. This figure is the lowest recorded after it reached its peak in the second quarter of 2022 (with almost 25% available space). With these figures, can we talk about a recovery in the office sector in Mexico? 

Before checking if there is a recovery in office spaces, it is necessary to highlight that, despite being just one variable among many monitored in SiiLA for analysis, it can be considered suitable for evaluating what happens in the sector. It's important to remember that, in addition to measuring the relationship between available and total spaces, comparing it over time gives us an idea of the total occupied and available inventory, as well as the pace of delivering new inventory and even the absorption level (tenant entries) for a particular space (market or submarket). So, let's delve into the results that this statistic offers on the office sector in Mexico. 

At the end of 2023, this rate is still above 21%; however, it has been steadily decreasing for more than a year. This value is still considered high, as it is 6% above its value in the first quarter of 2020 (when it was around 15%), before it began to rise rapidly and consistently.  

Nevertheless, it is 3.5 percentage points below its highest level six quarters before. 

With the data presented, we can talk about a downward trend in this variable, and we could speak of a slight recovery. To determine if it is a widespread reduction or not, we will have to check if we can speak of a sector recovery nationwide or only in some regions and if it applies to all types of buildings or only some. 

In the office market in Mexico City, there is a movement very similar to what has happened nationally, while Querétaro has experienced a more pronounced decline than the rest of the markets and now has values below 15%. In Guadalajara, the decline has also been quite rapid, although there was an uptick in the last quarter, and it is still above average. However, it is essential to consider that it had values above 28% at its peak. Finally, in Monterrey, the decline has been slower, although its highs were among the lowest. 

Reviewing office spaces according to their characteristics, it has been observed that Class A+ buildings have seen the most significant reduction in their vacancy rate (by more than 4 points), followed by Class A buildings (by around 3 points), and lastly, the slightly more modest Class B buildings (around 2 points). 

Based on the paragraphs above, it can be concluded that the Mexican office market had a good year in 2023, one of the best in the last five. The vacancy rate started its reduction in 2022, but in 2023, it consolidated. A detailed examination of the numbers for each market and each class of buildings shows evidence of recovery throughout the sector, albeit better for some than for others, with some rebounds, especially when new spaces are delivered. Demand for spaces continues, especially from traditional tenants and some newcomers.