Inflation “puts in check” the construction of offices in Mexico

As in all sectors, the inflation has become a warning factor for the office real estate marketsince this phenomenon impacts both absorption, rental prices, as well as the construction of new corporate spaces in the country.

During last September, the inflation general registered an increase of 8.7% in its annual comparison, while the sub-indicator referring to materials for the building presented an increase of 13.17% and thus link 20 consecutive months with double-digit annual increases, according to the National Institute of Statistics and Geography (Inegi).

“(The inflation) Affects both inventory replacement costs and rental prices. In combination with the rhythm that the demand shows, it will encourage or not the developers in the start of new constructions”, indicated Solili.

And it is that, in terms of buildingthe office sector It has been in a rut since the arrival of the Covid-19 pandemic, in part due to the cost of building materials.

According to a market report from the real estate platform, during the third quarter of 2022, only two buildings began work: One located in Guadalajara, with a profitable area of ​​just over 11,000 square meters, and the other, in Monterrey, of 9,000 square meters.

The country’s main market, Mexico City (CDMX), continues without reporting new buildings, as a result of the high numbers of vacant spaces.

However, the developments that had begun their construction prior to the health crisis and that did not have changes in their land use, have entered the inventory.

From July to September 2022, 10 buildings were integrated nationwide, seven of them in the capital.
It is worth mentioning that the gross demand at the national level, of the total of almost 270,000 square meters of registered corporate spaces, 65% is concentrated in Mexico City.

When will the oversupply end?

Although not 100%, work activities are beginning to be transferred to their face-to-face version, which has meant that, little by little, the spaces of the office sector get busy again.

In this sense, Solili highlights that the recovery trend will be consolidated in the remainder of 2022, with better expectations for next year.

“At the beginning of 2023, corridors such as Bosques and Periférico Sur in CDMX, or markets such as Mérida, that maintain the downward adjustment in vacancy could come out of oversupply, creating favorable conditions to be, once again, at the forefront of the start of new projects. corporate”.

To achieve this goal, players in the sector begin to move their chips, seeking to meet the new demands of users.

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Research conducted by JLL among 1,095 senior corporate real estate decision makers found that players are using this moment to reassess whether their portfolio is fit for purpose in light of market conditions.

Thus, 46% plan to accelerate investment in workplace design projects aimed at improving employee engagement and well-being.

Industrial activity pushes emerging markets

The demand from emerging corporate markets, such as Mérida and León, continues and corresponds to the industrial investment that has settled in these entities during 2022, which, together with related services, seek to establish themselves in spaces consistent with corporate performance. .

According to Solili, these states show annual increases in rental prices of 7% and 16%, respectively, thanks to the push that industrial activities have created in their regions, as well as because they are markets where oversupply is not an element that worries people. the developers.