From Government to Startups: The Surprising Diversity of Mexico City’s Office Market

Mexico City’s office market doesn’t just weather crises—it thrives by balancing dominant sectors and business diversity to drive economic evolution.

What do a global corporation and a small startup in the Mexican capital have in common? Both operate in a market where government entities occupy over 16,500 square meters each, while other tenants don’t exceed 900 square meters.

Álvaro Jaramillo Escallón heads Citi México, one of Mexico City’s major tenants. Photo: SiiLA.

By: SiiLA News

12/09/2024

In Mexico City, five key sectors—finance, government, real estate, business services, and technology—account for 52% of all occupied office space. An additional 33% is distributed across 12 sub-industries, while the remaining 15% is shared among 22 smaller sectors. At first glance, the city’s office market appears dominated by large players. Still, a closer look reveals a mosaic of global corporations and small enterprises coexisting in a non-monopolized ecosystem.

How do we know Mexico City boasts such diversity? By measuring the proportional control of occupied office space using the Herfindahl-Hirschman Index (HHI). This metric helps determine whether a market is concentrated among a few sectors or well-distributed across many players.

In Mexico City, an HHI value of 749 indicates an unusually balanced market for a major city, especially in the office sector, where activity and concentration often favor large players. While the HHI reflects sectoral distribution, it doesn’t account for broader factors such as economic performance. According to the Mexican Economy Secretariat, most of Mexico City’s businesses are micro, small, and medium-sized enterprises (MSMEs), representing approximately 9% of all MSMEs nationwide. This composition reinforces the city’s high degree of business diversity and its adaptability in products and services.

Who’s Who in Office Space

The average office space in Mexico measures 900 square meters. Photo: Canva.

Office space distribution in Mexico City depends on the number of companies in each sector (business concentration) and the average space required by each. While some sectors occupy expansive areas—indicative of centralized or corporate operations—others favor smaller, flexible spaces tailored to specific needs. This dynamic highlights a diverse market where how space is used is as crucial as who uses it.

Though smaller in company count, the government sector dominates in scale by occupying the largest office spaces—typically entire buildings—with an average of over 16,500 square meters per public entity. In contrast, business services, finance, real estate, and technology sectors, representing 37% of the more than 3,100 companies monitored by SiiLA in Mexico City, occupy smaller spaces averaging 1,500 and 3,000 square meters, aligning closely with local sectorized averages.

Sectors such as telecommunications, finance, insurance, automotive, and consumer goods are the largest occupiers after the government, with averages exceeding 3,000 square meters. Conversely, industries like business services, construction, legal, agribusiness, water and sanitation, and import/export tend to occupy the smallest spaces, often below 900 square meters on average.

The data paints a picture of an office market defined by dominant sectors setting the pace yet bolstered by specialized sub-industries and smaller firms. This diversity is key to its resilience and adaptability. Since 2022, following the most challenging years of the pandemic, Mexico City’s office market has experienced positive net absorption, marking a turning point in its recovery and reinforcing its role as a critical hub for business evolution.

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