Research

Mexico City | March 2023

Class A Office Market

Overview
Mexico City Q1 2023

jll.com.mx
 Class A Office Market Overview, Mexico City / Q1 2023

Office Market - Mexico City

Mexico Cityʼs office supply is concentrated in 10 sub-markets:

Central

West

South

North

CDMX

Class A Office Market Overview | CDMX 2

Class A Office Market Overview, Mexico City / Q1 2023

Total Stock Distribution | as of March 2023

Graphic 1: Total stock in completed buildings:

2,000,000

1,800,000

1,600,000 7,576,318
1,400,000 Total stock (square meters)
in completed buildings:
1,200,000

1,000,000
Square Meters

800,000

600,000

400,000

200,000

0
Santa Fe Polanco Insurgentes Reforma Norte Lomas Perisur Bosques Interlomas Lomas Altas
Sur
Completed Buildings

Source: JLL Q1 2023

Supply Distribution in Completed Buildings | as of March 2023

Santa Fe
16%
Norte
Polanco

1,784,240
21% Insurgentes Sur
11%
Reforma
Lomas
Total available stock: Perisur
8% Interlomas
Bosques
Lomas Altas
7%
23%
7%
1 3 3
%% %

3 Class A Office Market Overview | CDMX

 Class A Office Market Overview, Mexico City / Q1 2023

Available Sq M in Completed Buildings | Q1 2022 vs Q1 2023

sqm.
450,000

400,000

Total available stock: 350,000

Q1 2023 1,784,240 300,000

Q1 2022 1,778,656 250,000

200,000

150,000

100,000

50,000

0
Santa Fe Norte Polanco Insurgentes Reforma Lomas Perisur Interlomas Bosques Lomas Altas
Sur
Q1 2022 Q1 2023

Fitted Out vs Shell Availability | as of March 2023

1,784,240
450,000

231,647
400,000

Total available stock 350,000 73,489

Square meters

300,000
46,529
291,312

250,000
246,498

45%
200,000
100,722
185,288
150,000
of total offer is fitted 93,025 102,242
out space (subleased space 100,000
101,636 90,844
represents 6% of this space)
50,000
14,676
44,326
29,159 24,535 40,554 39,834 14,720
4,451 8,753
0
Santa Fe Norte Polanco Insurgentes Reforma Lomas Perisur Interlomas Bosques Lomas Altas
Sur

Shell Fitted out

Class A Office Market Overview | CDMX 4

 Class A Office Market Overview, Mexico City / Q1 2023

Total Demand Distribution | as of March 2023

18%
Santa Fe
Insurgentes

122,408
12%
Norte
Polanco
Reforma
*Closed Square Meters:
11% Lomas
36% Perisur
Bosques
TRANSACTION % m²
9% Interlomas
NET DEMAND 65% 79,223
RENEWAL 4% 5,342 Lomas Altas
RELOCATION FROM CLASS “A” TO “A” 28% 33,785 9%
1% 1% 3%
PRE-LEASE 0% 0
SUBLEASE 3% 3,147
PRE-LEASE PREVIOUS YEARS 0% 0
OCCUPATION SALES 6% 31,837
INVESTMENT SALES 1% 911
TOTAL 100 122,408

*Includes all activity registered during 2023 (sales, leases, renewals, etc.)
*Pre-leases previous years were in buildings delivered during this year
Source: JLL Research

Total Demand | Yearly comparison

300,000

250,000 242,854

215,056

200,000 186,756
Square meters

144,561
150,000

122,408
123,674
100,000 97,443 102,144 92,190
100,912
* Includes all activity 83,496
57,219
registered during the 76,448
period 50,000

Source: JLL Research 26,864

0
1T 2010 1T 2011 1T 2012 1T 2013 1T 2014 1T 2015 1T 2016 1T 2017 1T 2018 1T 2019 1T 2020 1T 2021 1T 2022 1T 2023

5 Class A Office Market Overview | CDMX

 Class A Office Market Overview, Mexico City / Q1 2023

Net Absorption*| From January to March 2023

40,000

30,000 27,933

18,210*
20,000

10,000
6,134

Net demand as of March 2023 1,057 1,029

0
-1,016 -1,054 -1,234
-1,016
-3,202
-10,000
-10,420

The market reached at the end of

the first quarter a positive net -20,000

absorption. Although the

oversupply and moderate -30,000

vacancy of office space persist,

the market continues with a -40,000
Santa Fe Lomas Interlomas Perisur Lomas Altas Bosques Insurgentes Norte Reforma Polanco
gradual recovery Sur

* Net demand: Supply as of Q4 2022 + new supply delivered during the period Q1 2023 – Supply as of Q1 2023
Source: JLL Research

New Space Absorption | as of March 2023

Santa Fe
19% Norte

270,843
Insurgentes

30% Polanco

*New Space absorption 17% Reforma

(square meters)
Lomas

Perisur
Transaction Type % m²
2%
NET DEMAND 100% 79,223 2% 11% Bosques
PRE-LEASE PREVIOUS YEARS 0% 0 9%
OCCUPATION SALES 0% 0 10% Interlomas
TOTAL 100 79,223
*Renegotiations, subleases, investments and relocations from
Class A to Class A Buildings are not included
Source: JLL Research

Class A Office Market Overview | CDMX 6

Class A Office Market Overview, Mexico City / Q1 2023

New Space Absorption* | year on year comparison

200,000

149,862
150,000
Square Meters

120,122

97,520
100,000
79,324
79,223
59,713

50,000
48,915 50,834 51,738 47,569
42,600
40,872
17,722

15,195
0
1T 2010 1T 2011 1T 2012 1T 2013 1T 2014 1T 2015 1T 2016 1T 2017 1T 2018 1T 2019 1T 2020 1T 2021 1T 2022 1T 2023

*Renegotiations, subleases, investments and relocations from Class A to Class A Buildings are excluded

Source: JLL Research

Buildings Under Construction | as of March 2023

Reforma, Insurgentes
and Polanco will be the

483,288
submarkets with the
28%
highest growth in the
coming years 34%
Square Meters Under
Construction to be delivered in Insurgentes
the coming years Reforma
Projected Delivery Date and RSM of Buildings
Polanco
Currently Under Construction Bosques
Number of
1%
Year Total Sq.m Available Sq. Meters 2% 20%
Buildings 4% Santa Fe
2023 12 264,734 244,713
2024 8 218,554 208,354 11% Norte
Total 20 483,288 453,067
Lomas

7 Class A Office Market Overview | CDMX

 Class A Office Market Overview, Mexico City / Q1 2023

Pipeline* | as of March 2023

25%
Reforma

1,182,051* Santa Fe

12% Norte
Square Meters at Project Polanco
Planning Stage 34%
Insurgentes
11% Lomas
59% of this pipeline is projected to be
Perisur
constructed in the Reforma and Santa
Fe corridors, however many of these 1%4% 9% Lomas Altas
4%
projects still do not have a start date
due to the oversupply that the market
currently presents

* Construction not yet started

Source: JLL Research

Supply and Demand by year | as of March 2023

2,000

23.6% 23.5%
1,800 23.6%

1,600
20.1%

23.5%
1,400

1,200
15.0% 14.0% 15.0%
City’s vacancy rate 1,000
13.0% 13.0%
12.0% 12.0%
800 11.0% 11.0% 11.0%

9.0%
600
7.0% 6.0%
400 5.0%

200

0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023*

Supply New space absorption Vacancy Rate

Source: JLL Research

Class A Office Market Overview | CDMX 8

Class A Office Market Overview, Mexico City / Q1 2023

Vacancy Rate by Submarket | Completed Buildings

Tasa de Desocupación por Submercado a Marzo 2023

60%

49.2%
50%

40%
35.0%

27.9%
Mexico City 30% 26.3%
Vacancy Rate:
23.5% 20%
21.0% 19.3%
17.8% 17.5%
15.5% 13.6%

10%

0%
Refor ma Polanco Lom as Santa Fe Bosque s Lom as Altas Inte rloma s Nort e Perisur Insu rgen tes
Sur

Source: JLL Research

Office Market Snapshot | As of March 2023

Number Available Sq. M Available Sq. M Vacancy Rate

of Completed Total Stock in Completed in Buildings in Completed
Submarket
Buildings (Sq. M) Buildings Under Construction Buildings

25 Reforma 885,520 137,352 131,899 15.51%

65 Polanco 1,398,208 293,026 94,096 20.96 %

75 Lomas 681,913 131,402 3,960 19.27%

78 Santa Fe 1,492,584 416,935 9,694 27.93%

23 Bosques 325,960 44,284 54,227 13.59 %

7 Lomas Altas 89,244 23,473 - 26.30%

15 Interlomas 157,704 55,230 - 35.02 %

39 Norte 741,475 364,801 8,992 49.20%

44 Perisur 647,359 115,379 - 17.82%

74 Insurgentes 1,156,350 202,358 150,199 17.50%

445 Total 7,576,318 1,784,240 453,067 23.55%

Source: JLL Research

9 Class A Office Market Overview | CDMX

 Class A Office Market Overview, Mexico City / Q1 2023

Rental Rate Trend | Average Asking Rent� (USD /Sq.m/ month)

$30

$28.00
$28.00 $28.00
$28

$27.00 $27.00

$26.00 $26.00
$25.93
$26

$25.45
$25.00
$24.85 $24.75
$24
$24.00 $24.27
$23.71
$23.47 $23.53
$23.00

$22

$20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Asking prices do not include OPEX / CAM charges

Source: JLL Research

Sale Prices (Asking Price) | Available Office Space (non-leased)

Sale Price by submarket in Submarket Sale Price (USD / Sq.M)

available, Reforma USD $3,700 - $4,200
(non-leased), office space.
Polanco USD $3,100 - $4,500

Lomas de Chapultepec USD $4,600 - $5,500

Lomas Altas USD $3,900

Bosques de las Lomas USD $5,100

Santa Fe USD $3,200 - $5,000

Interlomas USD $3,000

Insurgentes USD $3,800 - $4,500

Perisur USD $2,800 - $3,800

Norte USD $2,500

* Asking Prices Source: JLL Research

Class A Office Market Overview | CDMX 10

Class A Office Market Overview, Mexico City / Q1 2023

Rental Ranges | (*) Asking Rents

Property Clock
Asking Rent
Submarket (USD / Sq. M / Month) Short Term Trend
Rental Rents
Reforma USD $27.00 - $34.00 Growth Falling
Slowing
Polanco USD $24.00 - $28.00

Lomas de Chapultepec USD $25.00 - $35.00 Rental Rents

Growth
Bottoming
Lomas Altas USD $19.00 - $22.00 P(A) Accelerating
Guadalajara Out
Bosques de las Lomas USD $22.00 - $27.00

Santa Fe USD $18.00 - $24.00 P(A)

Mexico Monterrey
City
Interlomas USD $16.00 - $22.00 P(A)

Insurgentes USD $21.00 - $28.00

Perisur USD $18.00 - $25.00

Norte USD $14.00 - $23.00 P(A)

P(A) Probability Increase Decrease Stable

Source: JLL Research

Market Conditions
2023 2024 2025

Landlord Favorable
Neutral
Tenant Favorable

11 Class A Office Market Overview | CDMX

Conclusions
Office Market Overview as of March 2023

1
At the end of the first quarter of the year, the market
continues its gradual recovery, reaching a positive net
2
Total leasing activity from January to March showed
a 47% rise, when compared to the same period last
absorption and a stable vacancy rate: year.

Due to oversupply and the gradual recovery of the At the end of the first quarter of the year, thanks to the
market, the office market is tenant favorable, and gradual recovery in market activity, the market reached
will remain so for at least 2 more years. 18,210 Sq.m of positive net absorption.

3
Vacancy rate remains stable in 23.5% with a slight
downward trend when compared to the end of
2022, 23.6%

The vacancy of office space is anticipated to

decrease compared to the previous two years, when
the market presented an unexpected return of
space, this derived from the implementation of The city’s average asking rent remains stable with a
hybrid work models and the home office. A reactiva- slight upward trend: USD $23.71 (USD/Sq. M /m) JLL
tion in market activity is expected. considers that Mexico City’s office market, has
already reached the lowest point of this cycle and
There is a large pipeline of 483,288 square meters the beginning of a slight recovery can be expected.
expected to be delivered over the next two years.
This will represent an increase in the current stock
of approximately 6%. However, these buildings are
advancing at a lower pace than the times when the
market was more active.

Class A Office Market Overview | CDMX 12

Annex I
Class A vs. B | Differences

Concept Class “A” Class “B”

Parking Rule rentable square meters 1 per each 45+ rentable square meters
Ceiling Height 3.5+ meters =< 3.5 meters
Age <20 years 20-40+ years

High Speed : high and low rise divisions for buildings Regular Speed : elevators when available, some with
Elevators with 10+ floors, with smart card access; service/freight elevators
freight elevators
Emergency = > 2 stairs < 2 stairs
Staircase Pressurized emergency and service staircase Non- pressurized

Emergency Highest Standards – International Standards Standards based on Mexican Codes

Fire Alarms, hydrants, smoke detectors, sprinklers Some may include fire alarms, hydrants, and smoke detectors, no
systems
and emergency generators sprinkler system and emergency generators in some cases

Most of the buildings are not designed for today's technology

Technology Fiber-optics and products.There are no separate ducts for the voice, data and
electrical connection
Air Conditioning Available Not always available
Efficient: Not efficient:
• Regular shapes • Irregular floor plates
Floor Efficiency • Few columns / Perimetral • Several Columns / Non-perimetral
• Over 500 square meters • Under 500 square meters
• Over 80% efficiency • Up to 80% efficiency

LEED Yes (some buildings) No

Certification

Annex II
Submarkets Description

Reforma
-Reforma is one of the most prominent office corridors in the country
- Mexico´s most iconic landmarks, museums and embassies are located in this
corridor, as well as first class hotels such as: St. Regis, Four Seasons and the
Sheraton Maria Isabel
- Excellent amenities and transportation including fine restaurants, banks, subway
stations, buses, taxis, bicycle rental
- Includes areas known as Zona Rosa, Cuauhtemoc and Juarez which are mixed
residential and business districts
-Tenants such as the BBVA Bancomer, Mapfre, Monterrey New York Life, Bank of
Tokyo, HSBC, Deloitte and many government agencies are located in this area
-The Mexico City Airport is located within a 20-30 minute drive
-The Reforma corridor is an ideal choice for tenants looking for a central and very
well interconnected location despite the occasional traffic jam or public
demonstration. It provides easy access from all cardinal points and convenient
amenities to their employees, clients or contacts.
Submarkets Description

Polanco

- Polanco is considered one of the best corridors in Mexico City due to their vast
majority of services such as: public transportation, restaurants and first class
hotels
- Polanco has been currently extended into former industrial areas known as
“New Polanco” which includes Irrigation, Anahuac and the Granada
neighborhoods
- Parking is limited and traffic jams occur due to the high density of companies
working in this corridor
- Tenants such as Nestle, Grupo Carso, Ernst & Young and many retail companies
are located in this area
-The Mexico City Airport is located within a 30-40 minute drive
- Various residential and office developments are under construction since this
area is more flexible in terms in regard of land use

Lomas de Chapultepec

- Lomas de Chapultepec is one of the most demanded corridors by multinationals

in Mexico City
- Excellent location results in providing companies one of the best accesses from
all cardinal points to their employees, clients or contacts
- Mix of residential area and office buildings result in a vast offer of services such as
banks, restaurants and public transportation within walking distance
- Tenants such as Credit Suisse, Facebook, Google, Macquarie Group and many
law firms are located in this area
- The Mexico City Airport is located within a 30-40 minute drive
- Many first class hotels are in close proximity including: JW Marriott, Presidente
Intercontinental and Hyatt Regency

Lomas Altas

- Lomas Altas is a small strip located at the intersection of Constituyentes

and Paseo de la Reforma Avenues
- Lomas Altas has also been the choice of many medical offices due to the
proximity to residential areas
- Very few amenities within walking distance
- The nearest subway line is four kilometers away
- This sub-market features only few Class A buildings
- Mexico City Airport is located within a 30-40 minute drive
Submarkets Description

Santa Fe

- Santa Fe is the largest sub market of Mexico City and offers large floor
plates in modern Class “A” office buildings
- Provides excellent amenities and services including restaurants, first class
hotels and the Santa Fe Mall, one of the largest in Latin America, but some
areas of Santa Fe do not have access within reasonable walking distance
- Difficult and limited access has been resolved with new access from south
of the city known as Supervía Poniente, but traffic jams occur due to the
high density of companies working in this corridor
- Lack of public transportation, no Subway (Metro) serves the area, a train
serving from Toluca is being constructed and will have a stop in Santa Fe
- Tenants such as Grupo Bimbo, CitiBanamex, GE, Ford and Santander are
some important companies located in this area
- Mexico City Airport is located within a 35-45 minute drive

Bosques de las Lomas I

- Old Bosques was established in the early 80’s

- Located immediately adjacent to high end single family residential areas
- Lacks sufficient parking facilities for all occupants and visitors
- The majority of the office buildings have been built in a canyon that limits
views and natural light
- Good choice for companies that desire a “low cost” suburban address in a
corporate building
- Mexico City Airport is located within a 35-45 minute drive
- Few large spaces of class “A” office space, vast majority of available space
is located in class “B” office buildingscoche.
Submarkets Description

Bosques de las Lomas II

- New Bosques commenced development in the early 90’s

- The most important project in this sub-market is the Arcos Bosques
Corporativo complex
- Mix of residential area and office buildings result in a vast offer of services
such as banks, restaurants and hotels (e.g. Live Aqua)
- The access to many lines of public transportation is limited as well as its
proximity to a subway station
- Tenants such as Toyota, GICSA, Basham Ringe Correa and many retail
companies are located in this area
- Many of these tenants have self-contained facilities with employee
cafeterias and full service copy centers
- Mexico City Airport is located within a 35-45 minute drive

Interlomas
- Interlomas is located west of Mexico City and inside the State of Mexico,
which represents lower property taxes in this area
- Because of its location, it presents difficult access from all cardinal points of
Mexico City and lacks of public transportation that serves central areas
- There is an abundance of amenities and supporting services in the
immediate area. These include: strip centers, car agencies, restaurants of all
types, grocery stores, big box retailers, entertainment centers, and the Paseo
Interlomas Shopping Center
- Surrounded by burgeoning high-end residential areas
- Tenants such as Procter & Gamble, Henkel, General Mills and Philips are
located in this area
- Mexico City Airport is located within a 50-60 minute drive
Submarkets Description

Insurgentes

- Insurgentes is one of the most demanded submarkets in Mexico City due

to it´s central location that offers excellent public transportation and
services off all kind in the largest avenues of the city
- Many amenities and services are located within the sub-market including:
restaurants, shopping centers, cultural centers, and entertainment
centers
- Tenants such as L´Oréal, Crédito Real, Bancomer, PPD, Grupo Bursatil
Mexicano´, Metlife, GNP, Novartis are some of the most important tenants
located in this area
- Currently there are several buildings under construction in this
sub-market

Perisur
- Perisur is located on or near the Periférico Sur one of Mexico’s most
important highways
- Very accessible to Mexico City’s high quality southern residential areas
- Several first class business hotels, cultural and commercial amenities
surround the area
- Tenants such as Astra Zeneca, Johnson & Johnson, Adidas, TV Azteca,
Kuehne + Nagel, Government Agencies and many retail companies are
located in this area
- Not easily accessible from the more central business areas of Mexico City.,
e.g. Polanco, Reforma, Lomas, etc.
- Mexico City Airport is located within a 45-60 minute drive

Norte

- The Norte submarket started to grow and it is located on the northern

corridor of Periferico which easily connects the business district in the
State of Mexico
- Very accessible to Mexico City’s high quality northern residential areas
- It is the fastest growing submarket in Mexico City, which will result in high
quality buildings at accessible prices for those companies that look for
relocate its headquarters in the northern tip of the city
- It is the market with the most vacancy in Mexico City
- Tenants such as AT&T, Bancomer, Grupo AXO and many industrial
companies are located in this area
- Mexico City Airport is located within a 50-60 minute drive
JLL Mexico
JLL starts operations in Mexico in 1992, as a fully owned subsidiary of
JLL Inc.
We are a financial and professional services firm that specializes in real estate and investment management. A Fortune
500 company with annual income of US$18 billion, JLL provides comprehensive real estate services to clients looking to
improve value through real estate acquisition, occupation and investment.
With over 102,000 professionals, JLL renders services to its clients through 300 offices located in 80 countries around the
world. We are leaders in the property and integrated facilities management industry with a global portfolio of 4.6B of
square feet managed worldwide and 37,500 leasing transactions, totaling 1.07B square feet leased.

+2100 7 5M sqm
Professionals in Mexico Offices: Mexico City, Guadalajara, Country transactions
Monterrey, Tijuana, Los Cabos,
Queretaro and Merida

$800 M 3.7M 1.5M

USD Sqm In construction Sqm of Property under
in transactions management projects management

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We are a financial and professional services firm that
specializes in real estate and investment management. A
Fortune 500 company with annual income of US$19.4
billion, JLL provides comprehensive real estate services
to clients looking to improve value through real estate
acquisition, occupation and investment. With over
102,000 professionals, JLL renders services to its clients
through 300 offices located in 80 countries around the
world. We are leaders in the property and integrated
facilities management industry with a global portfolio of
4.6B of square feet managed worldwide and 37,500
leasing transactions, totaling 1.07B square feet leased.
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