New Spaces for a New NormalityFri, 01/01/2021 - 12:00
Q: How has your activity expanded in the industrial and residential sectors and how are you differentiating yourself?
A: The industrial segment has been consolidating in recent months along with our own portfolio, which is also healthier. Industrial has undoubtedly been the most resilient during the pandemic. More than differentiating ourselves from our competition, it is necessary to have the right timing and target the right markets. The reality is that for a long time, the manufacturing market in the country’s border regions had led the country’s industrial expansion. Now, the logistics and automotive markets have taken a leading role. We have followed this trend to stay in the market. The residential segment is still developing and one of our objectives in the short term is to grow our client portfolio in this area.
Q: How has the behavior of the commercial sector evolved during this crisis?
A: Although there was a short pause in activities as USMCA was enforced, the industry maintained a positive trend. Unlike the hotel and commercial sector, real estate has been one of the winners of the pandemic, with the logistics sector among the fastest-growing areas due to the growing demand for online purchases. Similarly, light manufacturers continue to require built-to-suit facilities, spurring greater growth.
Q: Some experts say malls will continue to be an essential part of Mexican social life in the new normal. How do you think their role will evolve?
A: I believe the role of malls in a post-pandemic scenario will be no less important than it was seven months ago. These places will always be an important meeting place for people and a key local and regional service provider. The question is how many malls will survive in the coming months. There are overcrowded areas where there are too many restaurants or entertainment centers. This has become more evident during the pandemic and the enormous growth of e-commerce will only contribute to more stores disappearing. For example, if before this crisis there were five shopping centers in the Santa Fe neighborhood, in a few months there will probably be only two.
Many places, instead of disappearing, will adapt to offer other types of services. Some will become residential centers while others will become offices in the medium term. There has to be a redistribution between the meters built and the current offering for retail, hotels and the industrial sector. We will even see mini-warehouses inside shopping centers that will serve as distribution points for many companies. Some restaurants also no longer have an interest in serving customers inside their facilities and are focusing all their efforts on delivery.
There is no doubt that the multifamily asset will see a new boom due to the pandemic and that will take us to the same level as the US in this segment, where this concept has been a spearhead in the industry for many years. The pandemic will leave us with per capita income that will push us further into this trend. Renting, as opposed to buying, is going to become a necessity because land prices will not allow many people to buy a property. Multifamily developments allow for more accessible rentals in areas with high demand.
At Altea Desarrollos, we have already adapted some spaces for remote work and at the same time, we have offered more offices where there were none before. We also believe that offices will be relocated because the new normality considers working from home as part of the day to day. However, not everyone has the possibility to work from home. Business centers and offices located in very specific areas may not be as useful as they once were.
Q: What is the main challenge in transforming existing spaces into dark kitchens?
A: The law of supply and demand will never cease to exist. It is not a question of having an oversupply of dark kitchens. The market always reaches a turning point when the number of people living around these services generate minimum consumption. Capitalism is defined by these rules and while sometimes developers are persistent in overbuilding because something was successful in the past, this is not a good strategy.
Q: What impact will the pandemic have on communities that were underserved when it came to malls?
A: The pandemic will slightly slow down this segment but will not limit it as a viable product. I believe that the problem is timing. Retailers have a major cash flow problem and their commitments will not be met in the short term. This will be a long crisis with a very slow recovery curve, especially in the retail segment because companies must first recover their sales levels before they can start growing. We have planned the construction of two shopping centers but we are still defining the dates. During the pandemic, we opened a shopping center in Gomez Palacio, Durango, which we are now promoting.
Altea Desarrollos is a Mexican real estate developer located in the state of Nuevo Leon. It has significant experience in the commercial and retail sectors.