Marco Garza
Founding Partner
GM Capital

Designing Cities for People

Wed, 11/01/2017 - 14:24

As commercial real estate evolves and more developers turn their attention to mixed-use spaces to maximize the potential of their square meters, citizens want more infrastructure that benefits the surrounding communities and increases their quality of life. Marco Garza, Founding Partner of GM Capital, warns that developers must adapt “the pedestrian culture” as a philosophy or risk going out of business.

“Cities need to be designed for people, rather than vehicles,” he says. As priorities change, with new generations placing more value in efficiency, mobility and interconnectivity, infrastructure must be customized to follow suit, just like in any other industry. “Real estate developers must adapt quickly to the new generations and change their value propositions or risk becoming obsolete.”

For instance, there are 249 shopping centers in the metropolitan area of Monterrey, most of them concentrated in the area of Valle in San Pedro Garza Garcia, one of the most luxurious zip codes in the country. By the end of 2018, it is estimated that there will be at least 10 new shopping centers in the area. But what differentiates one from the other?

“Shopping malls can disappear,” Garza predicts. “What matters today and in the future, is the experience that space provides. We are continuing to develop different retail spaces that offer the same value proposition and the market is becoming saturated.”

Around the world, former retail kings such as Neiman Marcus, Saks Fifth Avenue and Macy’s are being forced to close after failing to anticipate the needs of new generations. “It has come to a point where we are discussing whether or not we reinvent Plaza Fiesta San Agustin, one of our biggest shopping malls in San Pedro Garza Garcia, for two reasons: we are not taking full advantage of the land and it creates no experience.”

As more people move into cities, developers will be obligated to steer away from the traditional shopping malls and Garza believes that a more holistic approach is required. “Simply constructing shopping malls only creates walls and limits the opportunity to make the most of the available land,” he says. Mixed-use projects are growing more popular among developers and add more value than traditional shopping malls.

With this in mind, GM Capital aims to help people make the most of their time by working, playing and living at a stone’s throw through the funding and development of three large mixed-use spaces in the next 20 years. Distrito Armida in San Pedro Garza Garcia is not like any other mixed-use project. The 600,000m2 development will integrate health, education, culture, housing, commercial, corporate and service all into one place. Importantly, Garza says, it will reduce traffic and increase mobility, creating a more livable neighborhood.

“We have to diversify, integrate the eight principles of urban development and stop encouraging the use of cars,” he says. “Parking lots are the ultimate enemy of mobility. In San Pedro Garza Garcia alone, there are more than 123,000 people and 1.5 cars per person and the creation of more parking spaces further encourages the use of vehicles.”

This saturation is exacerbated by the fact that more than 190,000 people commute through the municipality each day. Garza believes that the first step to solving the area’s mobility problems is to densify the area and create more housing that allows people to live closer to their places of work. For this reason, Distrito Armida will consist not only of commercial and hotel developments, but also housing units.

“Many people that work in San Pedro Garza Garcia live in other housing developments with an average price tag of MX$2-4 million,” he says. “Typically, they cannot afford the high-priced homes, education and costs of living in the neighborhood where they work.” Distrito Armida will contain three residential towers with 120 apartments in each at an average cost of MX$2.5-4.5 million, making it one of the most affordable housing units in the area.

But providing housing is not always enough to motivate people to move into an area. “In San Pedro Garza Garcia, the schools are extremely expensive because tuition fees not only cover the building costs but take into account the amenities like courts, fields and auditoriums,” says Garza. Education is an important factor for families and GM Capital decided to dedicate a portion of its development exclusively to education.

The company plans to provide education, from kindergarten to high school, in the same district with a more accessible price tag. Garza explains that these schools will not incorporate the traditional facilities such as soccer fields or tennis courts, giving people a scaled-back alternative to those that already exist, without sacrificing quality. “By providing them with cheaper living and education options, people will automatically move to San Pedro Garza Garcia and this will instantly reduce mobility issues,” says Garza.

Apart from Distrito Armida, GM Capital is laying the foundations for two similar projects, another in Valle and one in the Escobedo neighborhood. With such a vested interest in Valle, GM Capital took a leadership role in creating the Parque Rufino y Olga Tamayo Trust to undertake the urban regeneration of the Valle Oriente financial district of San Pedro Garza Garcia. Real estate developers, construction companies and educational institutions joined this trust to raise money to regenerate parks, streets and other public areas. Its first project was to restore the Rufino Tamayo Park with a total investment of MX$81 million.

“People have the misconception that the public sector should carry out projects like this but ultimately the public sector simply manages the city, while the private sector has to operate it,” says Garza. The trust will continue to work on a six-year MX$500 million project to completely restore and regenerate the urban area of Valle Oriente, which will include a free public transportation system for the area.

And ultimately, the private sector will play a larger part in transforming Mexico’s cities into sustainable urban hubs in the future and real estate developers will have a key role. “We spend more than 85 percent of our lives in three areas: our place of work, our house and in our car,” says Garza. “We need to change our strategies completely and create spaces where our families can thrive and create a happier, more productive and inclusive society.”