Magazine article Journal of Property Management

Mexican Evolution

Magazine article Journal of Property Management

Mexican Evolution

Article excerpt

International trade and professional recognition spark a hot market

Zero to 60 in 10 years! In the past 10 years, commercial property management in Mexico has evolved from individual companies taking care of their own space, usually within condominium offices, to professional global standards and practices within multi-national headquarters facilities. A changing political and economic climate during the 1990s fueled tremendous growth, and properties previously owner-managed began to outsource to professional management firms. Today, the industry in Mexico is reaching cruising speed relying on the latest technology and employing IREM-trained real estate experts.

Growth and global free trade initiatives are facilitating Mexico's management evolution. More and more international companies have established a presence in Mexico, which today has more free trade agreements than any other country.

After an aggressive building period of new offices in Mexico City from 1994 through 2002, supply of office space quicldy caught up with demand -and has now passed it. Aggressive construction of new offices continued in 2003 and the first quarter of 2004. During this time, 11 projects were completed adding approximately 236,000 square meters to the office inventory. Another 12 buildings are under construction, which will bring 172,000 square meters to an already oversupplied market within the next three years.

This overheated building spree has caused the current vacancy rates for Class A buildings to rise above 20 percent. Because of oversupply, market rental rates have dropped by more than 40 percent.

Believe it or not, this increased market competition is good news for the professional property management industry in Mexico. Professional managers bring to this new market a higher level of quality and sophistication in tenant services, preventive and predictive maintenance and investor return. International tenants moving to Mexico, given a choice, flock to professionally managed offices. …

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