Although there are signs of recovery for office rentals in Mexico City, the market is far from healed.
A report from online real estate market Solili highlighted that rentals appear to be on the road to recovery for the Mexican capital. Nevertheless, the average rental price remains 5% below pre-pandemic levels.
Office rental is still cheaper in other cities across the country, such as Monterrey, Puebla and Tijuana, according to Solili.
In January 2020, months before the pandemic hit, corporate tenants paid an average of US$22.3 monthly rent for one square meter of office space in Mexico City.
The Covid-19 pandemic has dealt a devastating blow to real estate markets across Mexico, but the capital has suffered the hardest blow. At the end of 2021, nearly 25% of office space was unoccupied in the city.
“There were 1.76 million square meters of vacant office space in the last quarter of 2021, or nearly 24% of the 7.48 million square meters (available in the city),” Mexico News Daily reported, citing data of the property developer JLL.
Some real estate agents are delaying new construction as they see an oversupply of commercial properties in the city. Solili says commercial real estate is less likely to fully recover in the near future.
Currency devaluations and the growing popularity of remote working could also be responsible for the drop in office rentals.
If the economy rebounds significantly, office rentals could recover to pre-pandemic levels within the next two years, said Sergio Mireles, director of Solili.
While Mexico City is lagging behind, office demand is on the rise in Querétaro, Quintana Roo and Hidalgo.
