After eight consecutive quarters of contraction, the office market in Mexico City (CDMX) once again has positive net demand, which is encouraging. However, it is far from the levels it presented before 2019.

According to the consulting firm Cushman & Wakefield, this moment of stabilization shows that given the great variety and quantity of spaces available in high-quality buildings, a considerable number of tenants have continued to renew their leases under favorable conditions, or have migrated to more central areas or higher profile buildings.

Check here: CDMX corporate gross demand continues to rise as of 3T2022

With regard to demand, free space for occupancy fell in Mexico City, reflecting the drop in vacancy rates in most submarkets. After more than two years with an imbalance favorable to tenants, demand for office space outpaced supply growth and available space began to shrink.

The consultant points out that the net demand in the Polanco and Insurgentes submarkets maintains its positive numbers, to which the Interlomas, Reforma y Lomas Altas submarkets have also joined. In the latter case, a specific transaction fully absorbed the set of Constituents to reconvert it for educational use.

A slowdown in construction activity was observed since the start of the pandemic. Owners and developers have promptly monitored changes in the behavior of demand and have taken measures to adjust the supply of corporate spaces.

Of interest: The recovery in the demand for offices in the country is imminent

Another effect on the corporate market is the significant decrease in the volume of inventories that could be even more pronounced with the conversion of a dozen office buildings to residential use, corresponding to class B buildings.

On the upside, the level that starting prices are taking continues to reflect a moment of stabilization. The drop observed in previous quarters has practically stopped and only a small downward adjustment is observed with respect to 2021 prices.

Finally, the need to have places where collaboration and corporate identity are encouraged will continue to play a significant role in the different cities of the country, for which the specialists highlighted that the evolution of the market is underway.

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Original note