The Boom in the Office Sector in Mexico City. 15 Projects That Will Transform the Landscape by 2025

Mexico City is currently amid a booming office sector development, with at least 15 ongoing projects set to add approximately 418,000 square meters to its real estate market. These projects, averaging 17 office floors each, are expected to increase the capital's corporate gross leasable area (GLA) by 5% between 2023 and 2025. While this uptick may appear modest, it mirrors a resurgence in new inventory deliveries. It's worth noting that the projected delivery area equates to a substantial 40% of the delivered GLA over the past five years, as per SiiLA data.

This potential increase in supply comes at a time when the demand for office spaces in Mexico City is in a recovery process, following the commercial slowdown in the real estate market due to the COVID-19 pandemic. This revival, driven by sectors such as technology, finance, and the service industry, brings significant challenges and benefits. The new projects will not only expand office availability but could also foster intense competition among property owners and managers, potentially translating into more attractive conditions for companies seeking to expand or establish themselves in the city. Moreover, the resurgence in inventory delivery is an encouraging indicator of economic recovery in the region as these projects materialize in the coming years, potentially contributing to job creation and sustainable development.

 It is essential to highlight that the average delivery size is 28,000 square meters, with 99% of the projected GLA being high quality (Class A+ and A) and 9% of the spaces boasting environmental certifications due to their design and construction materials. These factors hold significant relevance as they influence investment decisions and, consequently, the ability to attract tenants. They also reflect current trends in the real estate market, such as the growing importance of sustainability, technology, and workplace efficiency.

 Submarkets with the Most Growth in the Next Two Years

In the commercial real estate market, it is widely recognized that location plays a crucial role in the success of a project. This is because the location of a commercial property can significantly impact accessibility for customers, employees, and suppliers, as well as the company's visibility. A strategic location can increase tenant and customer attraction, which, in turn, can positively affect financial performance and the property's market value. Therefore, the choice of location is a critical consideration in the commercial real estate sector.

In this regard, SiiLA market Analytics data indicates that 45% of the GLA to be delivered between 2023 and 2025 will be concentrated in the Insurgentes submarket, which will experience growth of at least 12% in the next two and a half years. Following Insurgentes, the region with the most significant growth (12%) will be Mexico City's central business district (CBD), including the Reforma, Polanco, and Lomas Palmas submarkets. These locations will account for 36% of the new inventory's GLA.

The rest of the projected office area will be distributed among the Interlomas, Periferico Sur, Norte, and Santa Fe submarkets, growing by 8%, 3%, 3%, and 2%, respectively.

Insurgentes and Mexico City's CBD stand out due to their strategic locations. They serve as corridors for business and commercial activity, offering highly attractive locations, accessibility, visibility, and amenities that appeal to companies from various sectors. Moreover, they are in more central areas than other development hubs, such as Periferico Sur or Santa Fe. However, less central areas continue to attract demand for office spaces due to their unique advantages and specific characteristics. For instance, Periferico Sur has evolved into a significant technology hub, drawing companies and startups searching for an environment conducive to innovation. Santa Fe, on the other hand, remains a focal point for financial companies and multinational corporations due to its high-quality infrastructure and proximity to key services.

For more information on commercial real estate market trends, explore SiiLA REsource or contact us at contacto@siila.com.mx.