In Mexico, 70% of Office Floors are Occupied by a Single Company: An Overview of the Real Estate Market

In Mexico's office market, two realities coexist and intertwine: tradition and innovation. According to data from SiiLA, 70% of office floors in the country's major cities are occupied by a single tenant, while multiple companies occupy the remaining 30%. This situation is due to the widespread presence of institutions that—due to their size and business niche—opt for traditional spaces that meet their needs for privacy, corporate identity, and operational centralization—in contrast, emerging productive sectors that have reshaped the labor landscape in the last decade lean towards flexible spaces characterized by operational efficiency and contracts and costs tailored to the demand for specific services and amenities.

The contrast between traditional and flexible offices reveals significant national trends.

On the one hand, full-floor offices with a single tenant have an average Gross Leasable Area (GLA) of 1,300 square meters. This size is 4.3 times larger than the average size (300 square meters) of offices on corporate floors occupied by two or more tenants, highlighting a clear distinction in occupancy preferences that respond to different business strategies and needs. This contrast in space usage is also reflected in the sectoral composition of the office market, where each industry shows distinctive patterns in its choice of workspace.

In this sense, data from SiiLA Market Analytics indicates that 50% of the GLA of office floors is occupied by a single government institution or FIRE (finance, insurance, and real estate) company. These traditional sectors stand out for signing long-term contracts that allow them to establish a solid and constant presence in crucial markets, reflecting a space selection strategy oriented toward operational stability. In contrast, segmented office floors shared by multiple tenants are usually chosen by emerging companies, SMEs, and startups that value flexibility, collaboration, and cost optimization. Among the exponents of productive sectors that prioritize collaborative and flexible spaces are business services and TAMI (Technology, Advertising, Media, and Information) companies, which occupy about 30% of the GLA of office floors in Mexico. These sectors are characterized by seeking environments that foster innovation, agility, and team interaction.

Adaptability and Regional Characteristics

The diversity in office occupancy reflects the adaptability of the Mexican real estate market to different business models and work styles, showing an evolution towards a more dynamic and diverse balance in the use of office spaces.

Although single-tenant offices dominate the market, a shift in business preferences and needs is challenging their hegemony. Interestingly, data from SiiLA reveals that while the number of single-tenant office floors has remained stable, in the last three years, there has been a significant increase (30%) in companies offering coworking services.

The popularity of coworking spaces and shared offices underscores a growing interest in more collaborative work environments and more compact and flexible spaces for companies seeking synergies and networking opportunities. At the same time, the volatility of the business world is leading companies to prefer spaces that allow easy scalability and adaptation to market fluctuations, prioritizing space optimization over its magnitude. Additionally, incorporating technology and adopting remote work are redefining the traditional office concept towards hybrid models that combine physical and virtual presence.

It is essential to mention that each office market and submarket in Mexico has its nuances and trends. Examples are Mexico City and Monterrey, where a higher proportion (71% and 75%) of office floors are occupied by a single tenant compared to other regions like Queretaro and Guadalajara (48% and 66%). This trend can be attributed to various structural and market factors that differentiate these cities.

On the one hand, Mexico City and Monterrey stand out as the country's main economic centers, attracting corporate headquarters of public institutions and multinationals, such as the Mexican Public Education Secretariat that has rented five floors in the Mitikah - Centro Bancomer building in the capital, or British American Tobacco that rented a floor in the Corporativo Punto Valle in Monterrey. While Mexico City is the political and economic hub at the national level, making it ideal for government companies and companies seeking long-term influence and stability, Monterrey is being driven by its robust industry and proximity to the United States, attracting companies with extensive capital backing.

On the other hand, Queretaro and Guadalajara stand out for their rapid growth and development in key sectors such as technology, advanced manufacturing, and creative industries. These regions have fostered a more diversified and dynamic business environment, where technology parks and industrial clusters facilitate a business model that generates demand for more efficient office spaces. Additionally, the real estate infrastructure in Queretaro and Guadalajara has evolved to offer options aligned with the needs of emerging markets, especially in terms of contractual flexibility. Important companies like Siemens Energy and Luxoft rented full floors in Empresalia Torre Ceiba (Queretaro) and Distrito La Perla - Edificio Biosfera II (Guadalajara).

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