Aiming to reactivate the real estate and construction sectors, Mexico City’s government will promote office repurposing into housing, offering tax benefits to project developers. The initiative seeks to take advantage of abandoned corporate spaces to increase the housing supply in the city, while contributing to economic reactivation at the same time.
The Mexico City government published new guidelines for the conversion of offices. The spaces considered for the program are unused or abandoned buildings that, before March 31, 2022, were under corporate use and currently do not fulfill that function. To contribute to the city’s economic reactivation plan, the developers converting these offices will gain tax benefits and fast-tracked registration permits granted by the local Ministry for Urban Development and Housing (SEDUVI).
The conversion plan includes 10 zones and corridors within the city, including the city’s downtown, Santa Fe, Polanco, Granadas, Paseo de la Reforma, Revolución Avenue, Insurgentes Sur, Insurgentes Centro, Insurgentes Norte and the portion of the Periferico area within the Benito Juarez, Coyoacan and Miguel Hidalgo districts.
The new guidelines will allow for up to 40 percent of the buildings to be kept as office space, though this percentage does not include parking lots. Once converted into apartments, developers may also adopt a rental model for permanent occupancy or housing for vacation rentals, such as Airbnb services. Total demolition will be prohibited and the construction of additional parking spaces will not be allowed.
The new guidelines entered into effect on March 22, 2022, and will remain until Dec. 31, 2024. Currently, there are nine office-to-housing conversion projects in development, covering a total area of 50,000m² and considering the adaptation toward 750 rental units. These projects are located in Polanco, Revolucion Avenue and Santa Fe.
Converting offices to housing has been one of the main strategies the real estate sector implemented to recover from the pandemic’s economic hit. Vacant office space in Mexico City currently exceeds 2.6 million m². Demand has remained well below offer: in 2021, demand for corporate space barely reached 333,000m².
Rafael Gómez Cruz, Head, SEDUVI, commented that as a result of the pandemic and the new hybrid home office work model, companies do not often require physical offices. Therefore, around 1.5 million m² of office space was vacated, which represents 20 percent of the total office space in the city.