Market Transparency Adds ValueThu, 11/01/2018 - 09:38
Q: How would you respond to suggestions the real estate market has stagnated over the last few months?
A: I would disagree. Firstly, market activity is actually slightly higher than it was at the same time last year in office, industrial and retail. There has been consistency in the market. 2016 was a record year for absorption and when comparing 2017 year-on-year it has been a very strong year so far. The elections certainly caused a certain amount of hesitation but this happens in all countries. But the antagonist is the uncertainty rather than the outcome of the elections.
We measure market activity by demand, and the demand this year has been very consistent with that of last year for 1Q18. However, I believe 2Q18 will show completely different results. Having said that, I think after the elections when we know what direction the country will take, a lot of that uncertainty will be dissipated. Investors and users of the space will be ready to make decisions again.
CBRE remains very bullish on Mexican commercial real estate because of all the factors that have created growth over the last few years, from the population dynamic to the work ethic to the location. We think this market will continue to grow.
Q: Which city do you believe will have the strongest activity in the next few years?
A: I think all the major and secondary cities will have strong activity for their own reasons and each one is very dependent on different industries and different factors. Obviously, Tijuana is strong because of its connection with the US. The issues with Tijuana at the moment are access to labor and access to land. There is a lot of demand in Tijuana for industrial, and right now it is difficult to find solid industrial facilities that are vacant in the city. Guadalajara continues to be a strong market for different reasons. It continues to be an area where there is a lot more development of high tech and R&D facilities. It has highly trained, highly skilled labor and engineers that can satisfy those workforce demands. Monterrey is the major industrial city of the north. It will continue to grow but it is very dependent on industrial activity and output. I think that will have a lot to do with geopolitical and economic situations because ultimately it is an industrial hub.
The whole Bajio region will continue to be important. The growth of this region has historically been very strong, slowing in the last year or two mainly due to the uncertainty in the automotive sector. But I think in general it will continue to grow strongly, but exactly how strongly will be dictated by political and economic forces.
Q: What makes a project really successful in Mexico?
A: Firstly, the current and future demand must be well understood. This comes from having good forecasting abilities and understanding where the economy is moving. After this, a developer should incorporate itself into a region where it adds value.
One important factor is location. But there are also other considerations such as the quality of design, the quality of tenancy, the care and maintenance of the asset and the overall efficiency of that building. It is also important to consider who the neighbors in the building are.
Q: What is the main added value you offer to clients?
A: Real estate is a local business and a personal business. We are the largest, and we have better access to those local markets and relationships. When our clients come and ask for information, we are able to give them first-hand access to those markets, sub-markets, contacts and people, which allows them to gain a foothold in the country. Another factor is that, because of our size as a vertically-integrated company, we can not only help clients find a space, we can also help them go through the design, construction, post-construction, move-in and the management of that space. With all those tools, the client can access the whole range of services in one place. It is the difference between going to a restaurant that serves only a main course, and going to a restaurant that serves starters, entrees, main course, dessert and an aperitif.