The second quarter of the year closes in the midst of an inflationary scale that impacts all productive sectors nationwide.

Inflation and recent monetary policy decisions, both in Mexico and beyond our borders, directly affect investors who seek the highest return on their resources.

In June, both the United States and Mexico raised their interest rates by 75 basis points, which largely favors local financial assets that do not lose their attractiveness compared to North American financial assets.

However, if we extend the investment horizon to the medium and long term, real estate assets and in particular those corresponding to offices will have to continue to be attentive to challenges such as oversupply, increases in direct construction costs and permits to undertake the processes of change of use, as is the case of office buildings that opted for this transformation in Mexico City.

However, even with these issues to overcome, corporate demand has been gradually recovering, totaling at the end of 2Q 2022 just over 204 thousand square meters nationwide, of which 67% corresponds to Mexico City.

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The capital of the country has seen its corporate inventory grow by 3% in annual terms as a result of the buildings that have been completed and will be incorporated into the city's offer.

As we had pointed out in previous notes, the start of new construction in Mexico City has been practically nil in the last two years, although there are still 835 thousand square meters in progress that had begun construction prior to the pandemic, where Reforma y Santa Fe accumulated 61% today.

The rest of the markets nationwide have also indicated increases in demand, such as the case of Monterrey y Tijuana, which closed the second quarter of 2022 with just over 26 and 16 thousand square meters, respectively.

In the cases of Guadalajara y Puebla, gross demand exceeds three times what was registered in 2Q 2019, the same quarter before the pandemic, while Monterrey and Mérida registered a gross demand 50% higher than that registered before the pandemic.

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From the emerging corporate markets we have observed a significant take-off in León, which accumulates in the first six months of 2022 a gross demand of 4.8 thousand square meters, in a market that has raised its rental price by more than 50% during the last year being able to take advantage of the competitive prices that it maintained with respect to the rest of the national markets, and of the interest that the shoal has aroused in terms of industrial investment.

In general terms, the fact that daily production and transfer activities have been normalized in the main cities has allowed companies to plan the actual use of spaces, even in the midst of a contagion situation that is already moving towards the fifth wave. Companies have learned to react if any member of the team becomes infected and seek to minimize the incidence with the use of healthy distance elements and procedures and constant cleaning of areas, as well as preventive isolation.

The remainder of the year will continue to advance the recovery amid vacancies that still remain high, such as those shown by Puebla and Mexico City, such as 27.6% and 22.8% at the end of 2Q 2022, respectively.

Markets such as Monterrey, Guadalajara, Querétaro and Tijuana do reflect significant annual vacancy adjustments that are between 4% and 6.8%, so we can continue to anticipate downward adjustments for the rest of 2022, thus achieving a better balance to resume the path of opportunity for the start of projects to be activated again.