On November 30, 2021, Alejandro Delgado made the presentation of the SiiLA Mexico Index (SMI), at the event hosted by GRI Club and SiiLA: "Offices & Logistics in Mexico: Market analysis and expert perception," which was co-chaired by Javier Llaca, COO of Fibra MTY, Salomón Noble, CEO of Intermex and Vicente Nieves, Managing Director of Artha Capital.
During the presentation, Delgado spoke of the importance of developing this index, which offers a comparative of the performance and valuation of properties in the commercial real estate market in the office and industrial segments in Mexico, following SiiLA Mexico's purpose of providing transparency to the market.
The methodology applied for the SMI General includes data collected by SiiLA Mexico's research team, such as average closing price, vacancy rate, occupancy costs and capitalization rate. It generates two returns, income and appreciation, and can be consulted at siila.com.mx
The SMI was compared with fixed income instruments such as BANXICO's 10-year bond and with other indices such as the S&P/BMV FIBRAS Index, and even with the SiiLA Brasil Index, which uses the same research methodology on Brazil's commercial real estate markets.
During said meeting, Javier Llaca, spoke of the high demand and excess liquidity in the industrial market experienced in recent quarters, especially in the north of the country, which he expects to continue for the next 4 to 5 years. He mentions that, in the same period, a compression of cap rates against rising inflation rates has also been observed, which will seek to make an adjustment in rental prices, specifically in the currency of the contracts.
Vicente Naves comments that the industrial market has taken advantage of phenomena such as USMCA, nearshoring and the increase in demand in industries such as e-commerce and manufacturing to grow in Mexico and boost the demand for space. Some of the challenges he sees will continue with the expansion of the industrial sector in the country are infrastructure issues, specifically talking about services such as water and energy, which are important to develop new spaces, such as data centers.
In a complementary manner, Salomón Noble adds that the increase in rental prices not only has to do with the increase in prices of inputs, inflation, among others; but with the current market movement, derived from the high demand and shortage of space, especially for manufacturing and logistics industries.
Regarding the office market, Llaca mentions that the recovery is expected to be long term, estimating at least the year 2024; however, in the last quarter reported, occupancy rates began to rise, especially in the Guadalajara market, where the FIBRA has 51,178 m2 in A+ class buildings. He comments that both developers and investors should consider the ability to offer flexible spaces to properties within their portfolios, in order to increase market turnover.
Meanwhile, Naves believes that there is an imminent recovery, which goes hand in hand with the need for space by growing companies such as technology companies; in addition to a reinvention of spaces, where security, comfort and amenities that respond to the real requirements of tenants are provided.
Find the most relevant information on each of the markets and sectors mentioned above, as well as the SiiLA Mexico Index at: siila.com.mx