Office Demand Is Changing: What Trends Are Shaping Market Performance?

1. Furnished spaces. During the pandemic, many companies vacated furnished offices, creating a unique opportunity in the market. Alejandro Delgado noted that these spaces allow businesses to avoid large upfront investments in customizations, which is particularly attractive during economic uncertainty. On average, furnished spaces rent for one dollar more per square meter than core and shell spaces, reflecting their growing demand. However, prices are not adjusting as much as they should, as many landlords are more focused on filling these spaces than optimizing their income.

2. Coworking boom. The labor market has experienced significant shifts in recent years, and companies seek flexibility in lease terms and office space size. Coworking has emerged as a key solution in this context. Companies of various sizes have chosen these spaces due to shorter contracts and the ability to avoid long-term commitments. Delgado says, "Coworking is now the third most important industry in renting square meters in the country." WeWork, for example, is the largest office tenant in Mexico, occupying significant amounts of space in the country's major cities.

3. Increase in new available inventory. In 2019, only 30% of the square meters delivered to the market were vacant, according to data from SiiLA Market Analytics. However, by 2024, this figure had increased to 75%, reflecting a significant rise in new inventory availability. This situation stems from an oversupply fueled by developments planned before the pandemic and a slower adjustment in demand. As a result, landlords face heightened competition to attract tenants, leading to greater pressure on prices and the need to offer more appealing conditions to fill spaces.

4. Structural vacancy. Alejandro Delgado emphasized that understanding investment opportunities in the office market requires distinguishing between temporary crises, like the pandemic, and structural issues that affect long-term supply and demand. The concept of structural vacancy—spaces that have remained empty for three or more years—plays a critical role in this market transformation, as these spaces distort accurate vacancy figures. For example, Delgado noted that in Mexico City, Santa Fe had a 30% vacancy rate before the pandemic, while Bosques increased from 16% to 24%. "These figures indicate that certain submarkets were already facing challenges before the crisis, underscoring the need for deeper trend analysis to identify strategic investments," he added.

5. Key sectors driving office absorption. The finance and technology sectors are Mexico's primary drivers of office absorption. Companies like TikTok and major financial institutions occupy the most attractive and fitted-out spaces in key markets such as Mexico City and Monterrey, consolidating their presence in class-A buildings. These industries demand more space, especially in the country's main cities.

However, the sectors currently occupying the most space include finance, government, real estate, and technology. Moreover, in the past three years, the four sectors that have grown the most in Mexico's office real estate market were technology (8.3%), finance (7.4%), real estate (1.3%), and government (0.3%). These sectors have driven occupancy and remain critical in the ongoing transformation of the market.

Staying informed about the trends shaping Mexico's office market is crucial for making strategic decisions. Explore SiiLA REsource or contact us at contacto@siila.com.mx to stay ahead of the curve.