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Although the Covid-19 pandemic continued to advance throughout the past year, the office real estate market of Mexico City presented a slight recovery in terms of net and gross absorptions in the last quarter of 2021, the platform reported Newmark.
According to the latest report from the company, during the fourth quarter of last year the growth of the office inventory amounted to 62,526 square meters. At the same time, it was accompanied by a series of unemployment and an increase in the vacancy rate – the eighth in a row – and closed 2021 with the highest figure in its history at 23.7 percent.
Although net absorption continued to show negative numbers, the firm deepened, it also showed its best figure in seven periods and since the beginning of the pandemic (-38, 141 square meters).
Regarding gross absorption, despite not having been the best in several quarters, it closed the year 2021 (396,006 square meters) with a significant improvement over the previous year (322,658 square meters).
Of course, we are still very far from the pre-pandemic absorption levels and we have realized that the recovery of the office market will be slower than initially expected, as the general conditions not only of the market, but of the day to day, they are considerably different ”, deepened the report.
By the end of 2021, the annualized net absorption of the Mexico City office market reached a historic low, closing the year with -398,000 square meters, a figure that has decreased year after year since 2017, when it reached its lowest point. tall with more than 231,000 square meters.
“The real estate market for offices in Mexico City shows that, after a couple of hard years of adaptation to the new living conditions, there are signs of stabilization such as a lower rate of unemployment and improvements in both activity and absorptions in the corporate market ”, said Giovanni D´Agostino, president in Mexico and regional director for Latin America at Newmark.
Availability
Newmark pointed out that the trend has not been favorable in the evolution of availabilities during the last couple of years.
In this regard, Diana Merino, analyst of the firm’s Market Research division, explained that the square meters available in the Mexico City corporate market They went from 1 million in the fourth quarter of 2019 to 1.8 million in the same period of time but in 2021; which represents an increase of 69.3% of the unoccupied surface in two years.
“This figure is contrasted with the evolution of inventory in the same period (only 7.3% from the fourth quarter of 2019 to the fourth quarter of 2021), it is concluded that there is a clear trend of vacant office buildings in the capital”, He said.
The corridors with the greatest percentage increase in availability reported during the last eight periods have been Peripheral, Lomas-Palmas e Insurgents, which saw increases of 73.7%, 49.9% and 43.9%, respectively.
“But this does not mean that they are the brokers with the highest availability today,” he added.
On the submarkets that contribute the greatest amount of available square meters to the 1.82 million total square meters of the country’s capital are Santa Fe, Norte and Insurgentes; together they contribute 57% of the total availability of the corporate market.
Lower prices
The report indicates that the market exit price in general presented its lowest level in the last six years, this is due in large part to the recent rise in the exchange rate.
“Although it is undeniable that the slowdown in gross absorption and constant unemployment finally eroded rental prices in the market in general,” the report deepened.
The lowest rental prices can be found in the three submarkets with the highest availability rate in the market (Norte, Lomas Altas and Santa Fe) and the highest exit prices are located in the buildings whose submarkets present more stable numbers (Reforma, Bosques y Lomas- Palmas).
“Compared with the fourth quarter of 2019 (last quarter prior to the start of the pandemic), the general starting price of class A and A + buildings in Mexico City decreased 7.1%, going from 23.66 to 22.09 dollars,” he stressed.
The corridors with the greatest differences were Lomas Altas, Reforma and Insurgentes, with decreases of 17.3%, 8.6% and 8.5%, respectively.
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