Credit moderation has directly influenced construction dynamics, delaying or downsizing new projects and channeling investment toward locations with higher occupancy potential. At the same time, reduced financial leverage has weakened the sector’s ability to offset the forces that keep the construction cycle volatile—post-pandemic reactions, speculation, market saturation, and capital reallocation. As a result, after the 2021 rebound—when construction activity doubled following a temporary pause—new inventory dropped sharply as the speculative cycle faded and demand became more selective, in a context where even limited turnover was enough to heighten occupancy uncertainty.

This trend continued into 2025, when just over 20,000 sqm were added in the first three quarters—the lowest volume recorded by SiiLA since comparable data exist—marking the bottom of the construction cycle. Since 2022, however, the market has begun to rebalance: if in years like 2019 or 2021 new deliveries far outpaced absorption, the opposite has been true since then, with demand exceeding supply and defining a turning point in the cycle.

In this new equilibrium, data from SiiLA Market Analytics show that gross absorption follows a cyclical yet less erratic path than construction, with peaks in 2022 and 2025 coinciding with phases of lower delivery—suggesting that occupancy improves when supply cools. This means the market’s balance now depends less on construction momentum than on the ability to align timing and space with real demand. Hence, construction no longer precedes demand; it responds to it—marking a structural shift in how the sector allocates capital and assumes risk.

That shift is also reshaping return expectations. The Overall Appraisal Rate (Cap Rate) has risen for three consecutive quarters, reflecting investor prudence amid slow rent recovery and muted income growth, while investment—still scarce—favors stabilized assets and longer-term horizons. More than a new expansion cycle, Mexico’s office market appears to be entering a phase of natural selection—where only what’s necessary is built, and what’s profitable is tested.

For more insights on Mexico and Latin America’s real estate markets, visit SiiLA REsource or write to contacto@siila.com.mx.

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ᵃ Methodological Note. The author’s estimate is based on data from Banxico (SIE series CF762), INEGI (ENEC), and SiiLA Market Analytics. Since none of these sources break down construction loans by property type, a proportional estimation was made using three parameters: on average, 5% of total credit to the nonfinancial private sector goes to construction; of that activity, 49% corresponds to industrial, commercial, and service buildings; and within that segment, offices account for roughly 12% of commercial inventory. The resulting calculation—product of these proportions (0.05 × 0.49 × 0.12 = 0.0029)—suggests that about 0.3% of total private-sector credit, equivalent to less than three pesos per thousand, may be tied to office construction in Mexico. This estimation assumes that the sectoral distribution of building activity serves as a reasonable proxy for the distribution of credit in the absence of disaggregated banking microdata; its purpose is not accounting precision but structural and comparative context for the scale of office-related financing within total private-sector credit.