In the current year, the Mexican retail market has witnessed significant growth in four types of tenants that have expanded more than any others. Transport & logistics companies, education-related businesses, entertainment ventures, as well as government agencies/non-profit institutions have collectively occupied approximately 140,000 square meters in nine months. These tenants account for 16% of the occupied space in major cities' shopping centers across Mexico. But which ones experienced the most substantial growth?

According to SiiLA, between January and September of 2023, the transport & logistics sector surged by 44%. Meanwhile, the education sector saw a notable upswing of 19%, while the entertainment and government/non-profit sectors grew by 17% and 16%, respectively.

These statistics align with trends from the past two years in the retail market. On one hand, the rise of e-commerce and luxury shopping in Mexico has propelled supply chains and last-mile warehouses, particularly in areas with high urban density. This explains the concentration of logistics companies in distribution and manufacturing hubs in Mexico City and Monterrey, for instance.

On the other hand, educational services and government agencies in shopping centers have increased due to the implementation of omnichannel strategies. While the pandemic accelerated the need for online services such as virtual classes and digital procedures, the return to normalcy and social mobility have boosted their physical presence in high-traffic, high-consumption locations to promote and provide services. This explains why it is increasingly common to find Quick Learning or Kumon centers, as well as Treasury and Federal Electricity Commission (CFE) offices in shopping malls.

Regarding the entertainment sector, its development has been driven by the opening of anchor stores from major cinema chains, entertainment centers, and supermarkets, such as Cinepolis, Soriana, and Play City. However, despite the 15% increase in the presence of entertainment companies in anchor stores in 2023, these types of tenants have been occupying spaces of various sizes.

Size Matters: The Most Sought-After Types of Spaces

Throughout 2023, we have observed a preference for three real estate markets. Educational tenants have shown a preference for occupying retail spaces in Guadalajara. In contrast, transport & logistics companies like DHL, Estafeta, and FedEx have prioritized the Monterrey market. Meanwhile, entertainment firms have expanded their presence in Guadalajara and Mexico City, while government entities and non-profit institutions have opted for Mexico's capital city and Monterrey.

However, in these markets, what types of spaces are in higher demand in 2023?

There's a saying that goes, "To each their own." This expression indicates that each person has their preferences, tastes, or needs, and it's valid for everyone to choose what best suits or benefits them in a given situation.

For instance, until the third quarter of 2023, educational tenants preferred to settle in mega-stores (averaging 2,500 square meters) and small spaces (up to 150 square meters) in shopping centers. During this period, the presence of the education sector increased by 53% in the former and 23% in the latter.

Entertainment-focused businesses also preferred mega-stores and large (up to 150 square meters) and mini (less than 70 square meters) locations. Until the third quarter of the year, the presence of these tenants increased by 23% and 24% in these types of spaces.

Meanwhile, government agencies/non-profit institutions, and transport & logistics tenants have favored medium-sized spaces (less than 500 square meters) and mini-spaces. While the presence of the former increased by 57% and 17% in medium and mini-sized locations, respectively, the presence of the latter multiplied tenfold in medium-sized spaces and increased by 61% in mini-locations.

SiiLA continuously monitors retail market trends in Mexico. For more information, explore SiiLA REsource or contact us at contacto@siila.com.mx.