Mexico's retail real estate market continues to display its stamina and resilience in the face of economic changes, with an ongoing recovery process. In the first half of 2023, over 500 brands of various sizes, domestic and international, have absorbed approximately 130,000 square meters of space in shopping centers across Mexico City, Guadalajara, Monterrey, and Queretaro.

These absorptions occur when the vacancy rate in the retail sector continues to decrease, reaching levels close to 8% nationwide, according to SiiLA. This marks the lowest level since the third quarter of 2020, when the vacancy rate was 7.6%. However, there is still some ground to cover to reach pre-pandemic levels, as at the end of 2019, the vacancy rate was below 5%.

 The increase in occupancy has been driven by the absorption of spaces by new businesses and tenant retention, along with a slowdown in the delivery of new inventory. These are positive signs for the retail real estate market, although the recovery has been gradual throughout 2023.

 Brands Making Their Mark

Many companies are finding fertile ground in Mexico to establish and expand their presence. In the first half of 2023, more than 500 brands have chosen to open their doors and tap into the Mexican market. From major exhibitions like "BODIES, Real Human Bodies," which opened in mid-year with 6,800 square meters at the Antea Lifestyle Center in Queretaro, to the opening of Work Cafe Santander branches at the Fashion Drive in San Pedro Garza Garcia, Monterrey, the diversified influx of businesses has rejuvenated the retail real estate market in various parts of the country.

According to SiiLA, companies in the food, entertainment, consumer products, and personal services sectors accounted for 92% of the space absorbed by brands absent in Mexico's major retail markets before 2023. The remaining space was occupied by brands associated with FIRE and TAMI tenant groups, as well as the education, government, hospitality, transportation, and logistics sectors.

Regarding property types, the preference leans towards small spaces, mini-stores, and kiosks, representing 76% of the premises occupied by these companies. Medium-sized stores and those located in food courts were the next in demand, comprising 18%. The rest of the occupied spaces are large, such as anchor stores and megastores.

Notably, among the analyzed markets, Queretaro concentrated the majority of absorbed space with over 96,300 square meters, equivalent to 73% of the space demand from those 500+ companies. Additionally, 15% was concentrated in Mexico City. This reflects that in the first nine months of 2023, the attraction of new brands was more pronounced in the Bajio and Central Mexico regions compared to the North, where there was demand but less pronounced.

 The analyzed data indicates that Mexico's retail real estate market is undergoing a significant recovery and is demonstrating its adaptability to economic changes. For more information on this and other real estate sectors, explore SiiLA REsource or contact us at contacto@siila.com.mx.