Much has been said about the future of the different Real Estate markets from the effects of the Covid-19 pandemic during 2020; but what could really happen? This was the central question of the last roundtable in which Eduardo Guemez, CIO at Walton Street Capital Mexico participated; Gonzalo Montaño Estrada, President of MAC Arquitectos Consultores; Guillermo Yasutake, Director of Development and New Businesses at Grupo Presidente; Javier Llaca García, Director of Operations and Acquisitions of Fibra Monterrey; and Pedro Azcué, CEO of JLL México.

Offices

During his first intervention, Javier Llaca stressed that although the home office has taken on great importance, its adoption cannot yet be considered generalized, since it has been forced by the confinement. However, he assured that the Office sector has been one of the most affected by the situation.

“We have seen many companies reducing, vacating or subletting their spaces as an immediate response to the situation. But to the extent that people are vaccinated and infections decrease, companies will realize that returning to the office is a necessity ”. Llaca added that it is difficult for companies to transmit their spirit or identity from a distance. Therefore, although the home office is here to stay, it will not displace office spaces.

Regarding the main regions of the sector, the specialist conjectured that Guadalajara could recover faster due to the size and dynamics of its market. In contrast, Mexico City will take a longer period due to its size and the slow compartment it showed prior to the pandemic. “We are not going to see a significant placement in absorption in the remainder of this year; but without a doubt a less uncertain panorama is already seen ”, he pointed out.

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Industrial

The industrial market has been one of the most resilient during the health emergency. Javier Llaca indicated that they have been able to observe a lot of demand from Asian companies seeking to enter the Mexican market. Similarly, multinational companies already established in the country are advancing with their expansion plans. However, the specialist explained that there is a fundamental need to capitalize on the sector, since there are many companies that do not have access to institutional capital and that require financial vehicles to continue developing and coping with the high demand for industrial spaces.

Llaca highlighted that from the investors' point of view, there are very attractive opportunities for local developer portfolios in cities such as Juárez, Querétaro, San Luis Potosí, Monterrey, Tijuana and Guadalajara.

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Hospitality

Two great learnings that 2020 left for the hotel sector were adaptability and resilience, said Guillermo Yasutake. Most of the players in the sector are focused on surviving the impact of the pandemic. 2020 entailed a 30-year lag and a debacle of at least 70% in international tourist arrivals, which left the industry at levels like those recorded in 1990, he said. He also estimated that returning to the figures of 2019, one of the most prolific years for tourism in Mexico, could take between five and six years.

One of the markets that have suffered the greatest impact is that of urban hotels. "Practically the corporate account disappeared and will remain dry throughout 2021 until the herd effect of vaccination is generated in Mexico," he said. The big problem with hotels in urban areas is that they are usually linked to international brands, so different land uses cannot be mixed.

Retail

Gonzalo Montaño explained that currently retailers are identifying where the greatest impact is. He highlighted that retail is one of the most complex genres of real estate development since three fundamental entities intervene: the user, the retailer and the developer.

From the users' perspective, there is great interest in returning to the malls, he said. While from the point of view of retailers, there is uncertainty and some cases of dramatic drops. And for real estate developers, the drop in rents and renegotiations have affected their capital structure.

Don't forget to read our reports for the month of May 2021 on the office and industrial markets nationwide, to learn more about the behavior of both sectors.

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