Tenant Turnover in Mexican Retail: Rate Drops to 4% in 2024

In 2024, four out of every 100 retail brands vacated spaces in shopping centers in Mexico, either to relocate or close operations entirely. Far from alarming, this figure reflects the sector’s recovery, with tenant turnover now four times lower than in 2020.

Data from SiiLA highlights a relative resilience in Mexico’s business environment, despite INEGI figures showing that half of MIPyMES (micro, small, and medium enterprises) fail within two years of their founding.

Ángel Alverde leads Gigante Grupo Inmobiliario, the owner of Gran Terraza Belenes in Jalisco, which in 2024 regained tenants that had vacated spaces mid-year. Photo: SiiLA.

By: SiiLA News

11/29/2024

In the first nine months of 2024, approximately 155 retail brands, primarily micro and small enterprises, vacated their spaces in Mexico’s major shopping centers. Whether to relocate or close operations, this number represents roughly 4% of the companies currently occupying retail spaces in the Bajío, central, and northern regions of Mexico, including key markets such as Mexico City, Monterrey, Guadalajara, and Querétaro.

While this figure might initially seem concerning, its impact was relatively minor, accounting for just 0.3% of the gross leasable area (GLA) across these markets. This marks a much more optimistic outlook compared to previous years.

Mexico’s retail sector has remarkably recovered since the darkest days of the pandemic. Shopping center occupancy rates now stand at 93%, approaching pre-2020 levels but still two to four percentage points below that benchmark. Despite tenant departures, absorption rates far outpace vacancies, and the number of companies vacating these spaces is now five times lower than at the height of the pandemic. (See Graph I).

Graph I

Did you know that, over the past three years, up to 5% of brands that vacated shopping center spaces returned to occupy new spaces within the same year? This suggests that some businesses can quickly reorganize, either in the same plaza or another within the same region.

Steady Recovery

The current landscape is promising. While four out of every 100 brands still vacate shopping center spaces, this figure is four times lower than in 2020. (See Graph II).

Graph II

In addition to reducing the number of brands vacating spaces, the annual proportion of vacated GLA has dropped significantly over the past four years. So far in 2024, the GLA vacated is up to 12 times smaller than in 2020 and represents just half or a third of what was seen in recent years. Although the 2024 figures are preliminary, the data indicates a consistent improvement. (See Graph III).

Graph III

Beyond the number of brands vacating spaces, the size and location of vacated spaces provide valuable insights into Mexico’s retail market dynamics.

The Footprint of Vacancies

Between 2020 and 2024, vacated spaces ranged from 120 to 220 square meters, reflecting a trend toward smaller spaces being abandoned in shopping centers. In 2024 alone, 46% of vacated spaces corresponded to the smallest units, such as kiosks, micro-units, and small stores, while 18% were mid-sized spaces ranging from 300 to 600 square meters.

Which sectors lead the vacancy rates? Currently, nine out of ten tenants vacating spaces belong to sub-industries such as food, consumer goods, and personal services.

However, the impact of these vacancies varies significantly by region. Vacancy rates remain higher in the Bajío and northern regions than in the Mexico City metro area. In the Bajío, for every square meter vacated, approximately 200 square meters are occupied; in the north, this figure rises to over 330 square meters, while in central Mexico, it reaches 500 square meters for every square meter vacated.

SiiLA’s data reflects the retail sector’s recovery and highlights the fragility of micro, small, and medium enterprises (MIPyMES) in Mexico. According to INEGI, these account for more than 99% of the country’s businesses, yet over half fail within two years of their founding. In this context, access to reliable and up-to-date information, such as that provided by SiiLA Market Analytics, is crucial for making strategic business decisions in an increasingly competitive environment. For more information, contact us at contacto@siila.com.mx.

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