Market-Centered Developments Boost Real Estate IndustryBy Gabriela Mastache | Wed, 03/25/2020 - 15:57
Q: What is Altea Desarrollos’ biggest business area and why?
A: We are very focused on retail and commercial real estate. However, this is one of the sectors that is being most affected not only by the COVID-19 outbreak but also by the digital transformation. As a result, we are migrating our operations to industrial and residential development. The good thing about our operations is that we do not work only with a single product. We look to develop tailor-made solutions according to the market’s needs.
Q: What other factors are driving Altea Desarrollos’ migration to industrial and residential?
A: More than experiencing lower occupancy at our commercial real estate developments, we are seeing an evolution where tenants do not stay in a retail space as long as they did in the past. A few years ago, almost any client was willing to sign long-term contracts but today, retail leases are more short-term. There is more dynamism at shopping malls than 10 years ago. We are seeing new franchises and brands arriving to these malls but we are also seeing the disappearance of several brands that were not able to adapt.
Q: How is Altea Desarrollos helping in the development of spaces that provide experiences for consumers rather than just a sales floor?
A: We always try to include the experience concept in the design of a shopping mall. We make sure there are spaces where people can gather and spaces for events. The experience concept is more robust than before. Most shopping malls in the past had lots of halls and very few spaces for gathering and today the latter take preference.
For a shopping mall, entertainment and dining is crucial, including playrooms, virtual simulators and differentiated children’s areas. Fashion stores will not disappear but they are not as important as they were. Now there needs to be a balance between the fashion and the entertainment offering.
Q: What are the most important characteristics that tenants look for in Altea Desarrollos’ developments?
A: Location remains the most important factor. After that, tenants look for consistency in the operation. As developers and operators, we have an impact on the way tenants interact with the space. For instance, if we want to double their lease every time they renew their contract or if they do not have access to 24 hours services, those things impact their operations and their growth options. Tenants also do not want to be in a development that they know is for sale because they have no assurance of permanence if someone else buys the development. The fewer factors that impact a tenant’s operation, the more willing that tenant is to stay in the development.
Q: What opportunity niches has Altea Desarrollos identified in different parts of the country?
A: We do not have a geographic surface defined as a strategy. Our current portfolio has a significant representation in the northeastern part of the country. However, our future projects are based mainly on the business opportunities we see regarding existing demand. There are many locations where demand is not fully satisfied, which presents a better option for participation than locations that might seem more attractive. For instance, it makes more sense to develop projects in areas such as Chalco, creating developments that these areas do not have and that can provide them with the services they need, rather than to develop a project in Polanco.
Q: What is Altea Desarrollos assessment of the recent performance of the real estate market?
A: We have seen a slowdown in movement but mainly because every time there is a change in government there is a great deal of uncertainty. The industry experienced this during the first year of the current administration. Also, every time there is a change in government, we have to go back for new permits and so on.
Q: How is Altea Desarrollos innovating in its market proposition for the real estate sector?
A: We are becoming 100 percent digital so we can work and provide services from anywhere. Also, we try to build according to the market’s needs rather than to our own desires. Sometimes, the authorities authorize the construction of a 100-room hotel but only authorize the construction of 10 houses. As developers, we tend to build what is authorized rather than what is needed. At Altea Desarrollos, we are more focused on building what is needed, which allows us to offer a variety of products. We need to understand that there are locations that need housing rather than hotels and we are not afraid to push for products that are different to what the permit originally allowed. We are patient and know how to negotiate with the authorities so we can actually offer what the market needs.
Q: What are Altea Desarrollos’ priorities for the next two years?
A: We want to enter public markets by issuing a CKD. This will be a challenge. However, it will open the possibility for the development of 10 new projects. We hope to sustain our double-digit growth, which is another reason to launch our CKD.
Altea Desarrollos is a Mexican real estate development company located in the state of Nuevo Leon. It has significant experience in the commercial and retail sectors