Office rental prices in Mexico have shown a start to 2022 with prices that have remained on the rise in most corporate markets nationwide.

In the case of the main markets such as Ciudad de México y Monterrey, the increases in rents since the beginning of the year have been 1.6% and 3.3%, respectively. Medium markets such as Guadalajara y Tijuana also registered quarterly rental price increases of 1.5% and 1.3%, respectively.

If we evaluate the evolution of rents in annual terms, Mexico City registers a downward adjustment of half a percentage point in a market that registered an annual inventory increase of 439 thousand square meters.

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In general terms, the start of new construction has been slowed down throughout 2021 both in Mexico City and in medium-sized markets, which has benefited from the fact that there is no more increase in oversupply.

Another circumstance that has helped to prevent prices from falling drastically in the case of Mexico City has been the provisions of the capital government by allowing changes of buildings from the corporate sector to the residential sector or the approvals of change of use of Class B and C buildings for hospital use.

Until March 2022, the office vacancy rates are located in Puebla, which almost reaches 26%, followed by Mexico City with 23% and Monterrey and Guadalajara with 20.4% and 20.3%, respectively.

In almost all these markets, gross demand had been recovering very slowly, although in the last quarter of 2022, vacancies led net demand to negative terms in the country's capital.

The beginning of the year represented a new challenge for the return to the offices in the midst of a price increase that takes Mexican inflation to 7.45% as of March 2021, which makes it even more difficult for rents to remain low

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Another constant in demand that was recorded in the first quarter of 2022 is the negotiation of prices on Class A real estate, since there is a large supply and a selective demand, the balance of the negotiation is tilted towards the tenant.

Now, the owners or developers of Class A office spaces, well located and with facilities and services above the average, can negotiate up to a certain point, but they will not do so below their break-even point, since that would undermine their ability to guarantee a proper maintenance of the property in the future.

The tenants know that balance point and are willing to pay the price that the property would really be worth in the market.