Thought a break from “doom and gloom” would be appreciated. The resort areas dependent on snowbirds buying second and retirement housing may be hurting, but the real world isn’t doing so badly.
Mexican Real Estate Market Continues to Thrive – Commercial Property News – Barbra Murray, Contributing Editor – 30 October 08
The real estate market in the U.S. is taking a bit of a beating due to the financial crisis, but the property market in neighboring Mexico appears to be escaping any negative consequential effects, according to a Global In-Sights webcast by CB Richard Ellis Inc. Bolstered by solid economic fundamentals, $75 billion in Central Bank reserves and the absence of a housing crisis, Mexico has been able to maintain a strong real estate market.
The office and industrial sectors continue to perform well in major metropolitan areas in Mexico. In such leading office markets as Mexico City, the overall average vacancy rate is 6.6 percent, and the average vacancy rate for Class A space, in particular, is 4.09 percent. Demand for office space in the city has led to the conversion of industrial sites outside of the Central Business District. Additionally, businesses are developing their own sites. It’s not just Mexico City that is faring well; Monterrey, for example, has a 5.25 percent Class A office vacancy rate. As for investors, they continue to be attracted to Mexico, drawn in by minimal risk and low equity cost.
In the industrial sector, the overall average industrial vacancy rate in Mexico City is just 6.2 percent. Industrial and logistics properties are highly coveted, due in no small part to increasing oil prices, which, in certain logistical scenarios, have prompted manufacturers to forego China for Mexico. And as the Mexican government invests further in infrastructure, the industrial market is expected to experience even greater demand.
Indeed, as per the Global In-Sights webcast, with the investment community seeking global diversification, a bevy of commercial real estate sectors in Mexico–not just office and industrial, but retail and hotel, as well–have grown increasingly active. Examples abound. Early this month, news emerged that ING Clarion partners and Silicon Border Development had worked out the final details of a joint venture and financing plans for the development of the 10,000-acre Silicon Border Science Park in Baja California, Mexico.
In August, ProLogis, the largest provider of distribution facilities in the world, announced the expansion of its presence in the country with the commencement of the first phase of ProLogis Park Centro Industrial Juarez in Ciudad Juarez, a facility that will encompass 3 million square feet of industrial warehouse space at full build-out.
Mid-year, Prudential Real Estate Investors formed a joint venture with Grupo Concord to develop the second phase of the CostaBaja Resort & Marina outside of La Paz, Baja California Sur; Prudential plans to invest as much as $800 million in the project over a period of several years.
And in April, the Ritz Carlton Hotel Co. revealed plans with resort developer Ernesto Coppel for the Ritz-Carlton Los Cabos Quivira, a 200-room hotel property with 200 ultra upscale residences in Los Cabos.
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