Mexico's Retail Market Surges: Community & Lifestyle Centers Lead the Post-Pandemic Rebound | SiiLA Q2 2023

The retail market in Mexico has experienced a swift recovery since 2020. Currently, there is an exciting trend toward developing small and medium-sized shopping centers, such as Community Centers and Lifestyle Centers, which account for half of the existing retail floor space. Furthermore, in major national markets like Mexico City, Monterrey, and Guadalajara, there has been a decrease in availability, growth in new inventory deliveries, and an increase in absorptions. These indicators suggest that the retail sector is gaining ground after the pandemic, according to data from SiiLA for the second quarter of 2023, presented during the Market Overview on Thursday, July 20th.

Alejandro Delgado, Country Manager Mexico at SiiLA, commented on this matter, stating that despite the slow progress in the retail sector during 2023, there is a positive trend in absorptions, surpassing levels observed before the pandemic. Delgado also mentioned that there are expectations for a sector rebound throughout this year, following the momentum of 2022, when record absorptions and an increase in average market prices were observed.

The improvement in Mexico's retail sector is largely attributed to the growing trend of developing spaces focused on complete and personalized shopping experiences in strategic and high-quality locations, such as Community and Lifestyle Centers. This trend was reinforced during the pandemic due to users' need for places that allowed them to fulfill multiple needs in one secure location. In fact, the most significant retail developments during the first quarter of 2023 were Community Centers, among which Elite Acueducto in Guadalajara and the expansion of Miyana in Mexico City stand out, contributing a combined total of over 12,200 square meters to the market.

Moreover, the recovery is linked to the economic strengthening of anchor stores, which represent 43% of the total retail space in the main markets nationwide, according to data from SiiLA Market Analytics. In the last year alone, the gross leasable area of these stores increased by 8% in Mexico City, Guadalajara, and Monterrey, resulting in the absorption of approximately 180,000 square meters.

Data from SiiLA's Market Overview also indicates that the retail sector has experienced four quarters with market prices similar to pre-pandemic levels and a general downward trend in availability since December 2022. However, it's essential to mention that although availability has reached levels close to those at the end of 2020, it has yet to return to pre-pandemic levels. In this regard, it is expected that from 2023 onward, the recovery and normalization of the retail sector in Mexico will continue. The positive indicators and the downward trend in availability suggest an increasing demand for commercial spaces, prompting investors and developers to respond to this need with new projects.

SiiLA's Market Overview is a quarterly exclusive event for clients, presenting the latest data, analysis, and trends in the nationwide office, industrial, and retail segments. For more information about the commercial real estate market landscape, visit SiiLA or email us at contacto@siila.com.mx.