REITs in Mexico 2024: Industrial Investments and Strategic Divestments in Offices

The moderate growth of FIBRAs (or REITs) in Mexico is primarily fueled by the industrial and office sectors, with a significant 2% increase in both. Meanwhile, other segments, such as retail, are holding steady with minor downward adjustments.

Notably, FIBRA Monterrey and FIBRA Nova are at the forefront of industrial growth, leading with expansions ranging from 7% to 12%. Additionally, projects like FIBRA Plus’ Espacio Condesa are further enhancing the focus on premium offices in Mexico City.

Guillermo Medrano is the CEO of FIBRA Nova. Photo: SiiLA.

By: SiiLA News

10/04/2024

Over the past year, the real estate portfolios of Mexico's FIBRAs saw moderate expansion, mainly driven by the industrial and office sectors. Meanwhile, other investment sectors, such as retail and commercial assets, remained stable with slight downward adjustments.

According to data from SiiLA, FIBRAs' industrial portfolios grew by approximately 2% last year, mainly due to the demand for logistics and manufacturing spaces in northern Mexico. It's worth noting that this growth does not include transactions between trusts, such as FIBRA Prologis' majority stake in FIBRA Terrafina's industrial portfolio, which, although increasing Prologis' portfolio, does not add to the total rentable area managed by Mexico's FIBRAs.

Office portfolios also grew by 2%, although this growth stems from mixed strategies. For instance, FIBRA Monterrey has divested low-performing properties, while FIBRA HD and FIBRA Plus have focused on expansion, with increases of around 5%.

While the industrial and office sectors have seen moderate growth, they have been much more dynamic than other segments like retail and commercial properties, including hotels, educational institutions, and medical facilities. These segments have remained stable, with slight reductions between 1% and 2%, mainly due to portfolio adjustments to improve performance. However, a rebound is expected in the coming quarters, driven by projects like FIBRA Plus's ongoing development of over 23,500 square meters of rentable commercial space. This could significantly improve occupancy and profitability in the short term, indicating a potential for growth in the retail and commercial properties sector.

Industrial and Corporate Sectors: Investment Engines

Espacio Condesa is a mixed-use project by FIBRA Plus. Render: FIBRA Plus.

Over the past year, the industrial portfolios of FIBRA Monterrey and FIBRA Nova led the way, with increases ranging from 7% to 12%.

In 2024, FIBRA Monterrey acquired eight Class A industrial buildings in Nuevo León, adding 186,105 square meters of rentable space. Simultaneously, it is building another 66,200 square meters and plans expansions exceeding 101,600 square meters in Coahuila and Nuevo León, driven by nearshoring-fueled industrial demand. The trust is also evaluating acquisitions totaling $555.5 million to further strengthen its industrial portfolio over the coming years.

Meanwhile, FIBRA Nova signed a binding agreement to acquire 50 hectares of land in Chihuahua for future industrial projects. As of the end of the second quarter of 2024, the company held 960,817 square meters of undeveloped land in northern Mexico, though these projects are still in the planning phase.

In the office sector, FIBRA Plus, which owns 96% of FIBRA HD's shares, and FIBRA Monterrey stand out.

During the second quarter of this year, FIBRA Plus sold two office units in the Bosques de Duraznos corporate complex as part of its divestment strategy, which includes a portfolio of 35 properties: 14 offices, 12 commercial, three land parcels, and six educational properties. At the same time, the company continues developing more than 38,400 square meters of corporate space in the Espacio Condesa project in Mexico City, with delivery expected by the end of 2024.

In contrast, FIBRA Monterrey's office portfolio shrank by around 1%, closing the first half of the year with just under 206,000 square meters, with an occupancy rate of 75.3%.

The moderate growth of FIBRAs' portfolios, led by the industrial and office sectors, reflects a balance between strategic expansion and divestments in underperforming assets. Despite adjustments in other segments like retail and commercial properties, ongoing development projects indicate renewed dynamism in the coming months. With increasing demand for industrial space driven by nearshoring and the development of premium office spaces, FIBRAs continue positioning themselves to capitalize on emerging opportunities and consolidate their significant role in Mexico's commercial real estate market.

For more information on the performance and development of FIBRAs' portfolios, explore SiiLA FIBRA Analytics, or contact us at contacto@siila.com.mx.

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