Experts from CBRE released a report outlining the earthquake’s impact on major commercial real estate asset classes in Mexico. Highlights from the firm’s initial findings on the retail sector include:
- Neighborhood and community shopping centers in Taxqueña and Coapa, located in the southern section of Mexico City, reported the most impact.
- Street-level retail space in mixed-use buildings and residential buildings were also affected, especially in the Roma-Condesa submarket where as many as five buildings collapsed.
- Consumer goods and building supply retailers will see increased sales volume, which will supplement current growth in Mexico City retail activity, especially for home-improvement goods and grocery centers.
The 7.1 magnitude earthquake stunned Mexico City and surrounding states of Mexico, Morelos, and Puebla. As many as 1,800 properties, mostly residential, are believed to be damaged. In the aftermath, CBRE Research continues to assess the impact on local and national commercial real estate, according to the firm.
“While Mexico continues improving construction standards and codes, there are numerous properties that because of age, sediment, location or other challenges are structurally vulnerable to earthquakes,” says Spencer Levy, Head of Research, Americas | Senior Economic Advisor at CBRE.
Despite the devastating power of the earthquake, which displaced businesses and thousands of residents in one of the world’s most densely populated regions, damage to commercial real estate was relatively minor, he adds.
“Only a small amount of the overall stock of office space was impacted, with most of this damage limited to Class B and C properties,” Levy says. “As a result, we expect to see a ‘flight to quality’ as demand increases for modern buildings that are considered structurally sound.”
Mexico City is also the main logistics hub for the rest of the country, so infrastructure upgrades will be made to get supply chains quickly rebooted, he says.