In Mexico, various shopping centers are available in multiple sizes, from large-scale establishments like super regional and regional malls to medium options like lifestyle and power centers, as well as smaller alternatives, including community centers and outlets.

This array of sizes reflects the distinct preferences and needs of Mexican consumers. These shopping centers provide a wide range of stores, restaurants, and entertainment, adapting to different locations and urban contexts. Whether in bustling cities, suburban areas, or rural locales, the presence of diverse-sized shopping centers contributes to local economic vitality, job creation, and community gathering spaces. Moreover, the competition among these varied types of centers drives innovation and continuous enhancement of shopping and recreational experiences for residents and visitors nationwide.

Large shopping centers account for around 50% of the gross leasable area (GLA) of retail assets in Mexico's major cities. In contrast, medium and small shopping centers cover 29% and 21% of retail space, respectively. However, over the past three years, medium and small-sized shopping centers have experienced more significant growth than their larger counterparts.

According to SiiLA, medium-sized shopping centers have expanded their inventory by about 525,000 square meters, marking a 45% growth over three years. Similarly, the occupied space by small shopping centers surged by 37%, incorporating nearly 330,000 square meters. Conversely, the GLA of large shopping centers grew by 22%, adding over 516,000 square meters.

Medium and small-sized shopping centers have emerged as cost-effective alternatives to larger ones due to their flexibility in terms of location and design. These more compact centers can more easily adapt to existing urban spaces, giving them an advantage in areas where space is limited or where demand doesn't warrant the construction of a super-regional mall. Furthermore, their focus on community proximity and providing a personalized shopping experience has generated fresh investment and business opportunities.

While the demand for space is comparable across shopping centers of different sizes, with availability rates ranging between 8% and 9%, rent prices are usually lower in smaller centers than in larger ones. For instance, the price difference per square meter is a mere 5% between large and medium shopping centers. In contrast, rent prices in small shopping centers are 24% to 29% lower than in larger malls. This contrast arises from market competitiveness and the distinct cost structures associated with operating and maintaining each type of shopping center.

The fact that medium and small-sized shopping centers offer more attractive rent prices can be a key factor in attracting local tenants and entrepreneurs. This fosters business diversity within these spaces, from anchor stores to specialty services and restaurants. Additionally, due to more manageable operating costs, businesses in these centers can maintain competitive profit margins and offer appealing prices to consumers.

Collectively, the amalgamation of differently-sized shopping centers creates a diverse commercial ecosystem catering to a wide range of needs and preferences. While large shopping centers draw recognized brands and offer a large-scale shopping experience, medium and small-sized centers emphasize accessibility, personalization, and community engagement.

Nevertheless, location is a significant element influencing pricing beyond factors like inflation, supply and demand, the economy, regional competition, and market cycles. Notably, most GLA for large and medium shopping centers is concentrated in Mexico City's metropolitan area, whereas smaller malls are more uniformly distributed across the country's major cities.

For more information about the retail market in Mexico, explore SiiLA REsource or reach out to us at contacto@siila.com.mx.