Since the beginning of 2023, the office real estate market in major Mexican cities has witnessed 43 significant transactions in Class A+, A, and B properties. According to data from SiiLA, it's not just noteworthy numbers but also the prestige of the companies leasing spaces. These lease agreements can bolster the office market's stability and generate an economic flow exceeding $1.6 million monthly. This paints a promising future for Mexico's commercial real estate sector.

What do the most recent office market transactions in Mexico, involving over 77,000 square meters of gross leasable area (GLA), reveal?

On the one hand, data indicates that companies actively seek high-quality spaces in central, well-connected locations with technological and transportation infrastructure in strategic submarkets with a high concentration of businesses. Therefore, it's no surprise that 92% of leased office space falls under Class A+ and A categories, with the majority (85%) located in Mexico City, especially in submarkets boasting extensive corporate zones along major thoroughfares such as Insurgentes, Periferico, and Reforma, as well as in prominent commercial districts like Santa Fe.

In Mexico City, Monterrey, Guadalajara, and Queretaro, which rank among the nation's most important office markets due to their size and the types of companies they attract, the average size of leased offices hovered around 1,800 square meters, ideal for companies with expansion plans. These leases have an average duration of four years, ensuring stable medium-term rents averaging $22 per square meter.

It's worth noting the construction year of the buildings that have seen the most transactions this year. Six of every ten signed contracts involved relatively new properties constructed at most eight years ago.

Furthermore, despite the typically high demand for central areas, many submarkets in the outskirts of business centers, such as Bernardo Quintana in the northeast of Queretaro, Valle and Sur in the south of Monterrey, or Interlomas in the northwest of Mexico City, offer significant investment opportunities. Over the past three years, these areas have seen substantial growth, ranging from 12% to 29%, according to SiiLA.

Tenants and Industries Leading in Space Demand

Transactions clearly indicate the industries and companies driving office space demand in the Mexican market. The data shows that technology, financial, and professional services industries are at the forefront of this demand. Technology companies, driven by digitalization and the need for innovation, actively seek spaces that foster collaboration and creativity. Meanwhile, financial institutions seek offices in strategic locations close to clients and other banking services. Professional services firms, including legal firms, consulting agencies, and advertising companies, value accessibility and a presence in areas with a high concentration of businesses.

Moreover, there is notable interest from international companies in establishing a presence in Mexico, reinforcing the country's position as an attractive destination for foreign investment. These companies are looking for high-quality infrastructure, cutting-edge services, and the opportunity to connect with the local market and the Latin American region.

According to SiiLA, tenant groups TAMI (Technology, Advertising, Media, and Information) and FIRE (Finance, Insurance, and Real Estate) accounted for 60% of the GLA negotiated through the 43 transactions recorded in the major office markets in 2023. Government agencies and companies in the healthcare sector followed suit.

Two companies stood out: IBM from the TAMI group and CitiBank from the FIRE group. Each absorbed over 14,500 square meters, representing 38% of the GLA negotiated in transactions. They were followed by other technology and insurance companies such as Apex Systems and HDI, as well as ISSSTE, each absorbing more than 5,500 square meters.

The analyzed transactions reveal that the Mexican office market is witnessing a gradual recovery in demand and an evolution in tenant needs and preferences. They seek more flexible spaces, green and sustainable offices, and greater technology integration into their daily operations. All of this reflects the changing drive and sustained growth of the commercial real estate sector in the country.

For more information on commercial real estate market trends, explore SiiLA REsource or contact us at contacto@siila.com.mx.