The retail sector in Mexico is poised for a strong rebound in 2023, according to the latest SiiLA Market Overview for the first quarter of this year. After a challenging year due to the pandemic, the retail sector in Mexico is showing signs of partial recovery, with a decrease in availability, an increase in new deliveries, and a surge in absorptions across major national markets.

Data from SiiLA Market Analytics reveals that demand for retail spaces at the national level increased in the first three months of 2023 compared to the same period in each year since 2020, with nearly 90,000 square meters being absorbed by March. Additionally, net absorption has remained positive for four consecutive quarters, indicating that more tenants are moving in than out. Also, the retail sector's occupancy rate exceeded 90%, which is the highest level seen since the pandemic's onset in 2020.

New retail inventory is also making a comeback in Mexico, with over 452,000 square meters projected for delivery starting in 2023. This increase could put supply levels above pre-pandemic levels, indicating a growing interest in investing in the sector and greater competition in the market.

During the Market Overview, Alejandro Delgado, SiiLA's Country Manager in Mexico, noted that Mexico City, Monterrey, and Guadalajara are the most important retail markets in the country, with gradual expansion processes, high-end projects and mixed-use developments that will have positive impact on market prices.

In Mexico City, net absorption returned to positive territory thanks to the delivery of build-to-suit spaces, such as the 5,000 square meters added by The Home Depot in the mixed-use Miyana building in Polanco. The city's occupancy rate, currently at 91%, is expected to continue rising throughout the year.

In the Monterrey retail market, Delgado pointed out that net absorption has been positive since last year, and occupancy rates are near 90%. Although the year's first quarter was slow, new deliveries are expected to reactivate the market, such as the Alaia Cumbres City Center and Paseo Cumbres buildings, two Class A+ properties that will add approximately 60,000 square meters starting in 2023.

In the Guadalajara retail market, availability is expected to decrease during 2023. Currently, the occupancy rate in the region is above 88%, a level not seen since the third quarter of 2020. Gross and net absorptions are also expected to rise, and there will be greater dynamism in the supply of new inventory, such as the Elite Acueducto shopping center, which will add over 2,200 square meters to the Zapopan retail submarket, one of the region's most important commercial corridors.

Overall, the retail sector in Mexico is showing signs of recovery, with increased demand for commercial spaces and a resurgence in new inventory. To access this and more insights on Mexico's real estate market, visit SiiLA or email us at contacto@siila.com.mx.