The office space market in Guadalajara has become one of the most attractive as it has shown a significant recovery in rental for new corporate spaces.
By the end of the second quarter of 2023, the office space market in Guadalajara positioned as one of the most attractive markets in the country as it showed a recovery in rental for new corporate spaces, above Monterrey and Mexico City.
Mr. Honorato Villa, CEO of ABC Appraisers, mentions that the average asking price in Guadalajara is 22 USD/m², compared to 24.3 USD/m² in Mexico City and 27 USD/m² in Nuevo León. Moreover, he points out that the monthly price per square meter went up by 14 percent in a one-year period (Q2 2022 compared to Q2 2023). On the other hand, comparing Q1 2023 vs. Q2 2023, the variation was 11 percent just for office space class A+ and class A.
He says that the current availability for Class A+ and Class A office space is 122,944 square meters (13.8 percent availability rate for operational buildings), which is the lowest it has been in the last few years. “The decrease in the availability rate is due to several factors: office vacancy hit less than in other cities, office attendance for those working on a hybrid model was higher and companies in the area took the opportunity to improve location and modernize spaces, among others.”
Demand for office space is on the rise, and if the trend continues during the second half of the year, the absorption rate could be even higher than in 2022. “During Q2 2023, demand for office space was up by six percent when compared to the same period in 2022, and if we compare Q1 2022 vs Q1 2023, it went up by four percent,” says Mr. Villa.
A report by ABC Appraisers shows that the office space market in Guadalajara recorded a gross absorption of 13,596 square meters of occupied offices during Q2 2023, positioning as the most attractive market among the country’s cities. Guadalajara has had positive absorption rates for four consecutive quarters, from Q3 2022 to Q2 2023, 43,000 square meters of office space have been occupied.
Puerta de Hierro, Providencia and Plaza del Sol are the areas that concentrate the most absorption as they are attractive corridors due to their connectivity, services, capital gains and proximity to residential areas.
“The outlook for the office market is positive, although pre-pandemic levels have not been reached yet. Businesses require space to operate and meet their clients. Office space is transitioning to become more flexible and user-friendly. Furthermore, home office and hybrid models are reducing the number of square meters companies require,” points out Mr. Villa.
He concludes that office space will be defined depending on the needs of each company, however the trend is to have green offices that significantly reduce their carbon footprint.
“Demand for office space is on the rise, and if the trend continues during the second half of the year, the absorption rate could be even higher than in 2022.” Honorato Villa, CEO of ABC Appraisers.
Office occupancy rates in Guadalajara
Compared to other cities, Guadalajara has managed to have positive occupancy rates for office space for three consecutive years, as opposed to Monterrey and Mexico City.
Nearshoring requires suitable spaces
Compared to other states in Mexico, Jalisco is a very attractive destination for Foreign Direct Investment. During the first six months of 2023, it captured USD1,390 billion, reaching the fourth position nationally, reveals the Government of Jalisco.
The manufacturing industry attracted the most FDI in absolute terms and it showed the highest growth. Financial and insurance services were second with a 12 percent growth: USD241 million in Q1 2022 compared to USD270 million in Q1 2023. “This sector has a very high demand for office space, mainly in AAA corridors or high economic power zones in Guadalajara,” mentions an ABC Appraisers report.
ABC Appraisers is a company dedicated to the valuation of tangible and intangible assets in western Mexico.
Guadalajara, the capital of Jalisco is one of the most important cities in Mexico. It has a population of five million people and has one of the lowest unemployment rates in the country. Guadalajara is also one of the cities with the lowest working poverty rates in Mexico, 21 percent according to the Monthly Economic Bulletin (August 2023) published by the Jalisco Institute of Statistical Information and Geography (IIEG).
According to IIEG, the three counties that generated the most formal jobs in absolute terms during July 2023 were: Guadalajara (3,673 new jobs), Tlajomulco de Zúñiga (927 new jobs) and Ameca (850 new jobs).
Guadalajara is considered to be the Mexican Silicon Valley as it has first-class technological centers: IBM came to Mexico in the 70s and other companies soon followed: HP, Sanmina, Flextronics, Jabil and Oracle. The project Digital Creative City started in 2012 and the idea was to create a hub to have technology and software development working under the same roof.
Investments from the US and the UK are flowing to Guadalajara. They are the countries with the greatest participation in the foreign investment that Jalisco receives and they will demand office space.
Mr. Honorato Villa mentions nearshoring will contribute to increased demand for office space, not only in Jalisco but in other states. “Nearshoring will benefit different economic sectors and manufacturing companies and logistic services companies will seek to have suitable spaces to operate.”
