Commercial Developments Still Going Strong?By Pedro Alcalá | Wed, 11/25/2020 - 14:01
Commercial retail spaces have suffered a decrease in visits and traffic throughout the year as a consequence of the pandemic, even without a federally mandated lockdown. As a result, COVID-19 has severely impacted the real estate market.
An Oct. 1 BBVA report on Mexico’s real estate situation for the second half of 2020 claims that the sector is currently going through its worst depression in 20 years, which would mean that the pandemic has affected Mexican real estate in ways that the 2008 international housing crisis did not. In June, Centro Urbano was already reporting on COVID-19’s negative impact and how it had hit the commercial and retail sector the hardest, only behind the hospitality segment. According to some of our interviewees, a potentially unfavorable political and economic context has to be added to COVID-19 on the list of negative conditions for the sector. “In the past few months, we witnessed a strong drop in demand for all types of properties: residential, commercial and in particular offices. Not only because of COVID-19 but also due to the political and economic climate,” Juan Rodríguez, Partner and Director of Planning at MAC Arquitectos Consultores, said to MBN. As a consequence, the current scenario is expected to result in a decrease in commercial space developments affecting the Mexican retail industry. Only yesterday, El Financiero reported that Best Buy will be closing its 41 stores in Mexico at the end of 2020 as a direct result of COVID-19.
However, a recent briefing put together by real estate consultancy CBRE Mexico revealed that despite the considerable impact of 2020 on the commercial real estate sector, a general positive trend in the market for commercial space development in Mexico has been seen for the last five years. Real Estate Market & Lifestyle reported that commercial spaces in Mexico have grown 4.2 million m2 over the past five years. A total of 113 new projects were developed: 20.1 million m2 of commercial space distributed across 692 developments were reported at the end of 2015 and currently there are 24.3 million m2 across 805 developments. This represents a 20 percent growth. “In Mexico, there is still plenty of space available for future potential construction and developers are analyzing in an increasingly strategic fashion what are the best locations and types of malls and commercial spaces to develop,” CBRE Mexico’s Vice President of Retail for Latina America Luis Llaca said in Real Estate Market & Lifestyle’s piece.