ICSC: International Council of Shopping Centers

Mexico retail boom attracts investors

Publish Date: April 30, 2013

Category: SCT Newswire Articles
Topics: fibras, grupo acosta verde, grupo frisa, mall, mexico, reits, walmart


Mexico’s retail and mall industries are booming this year. In March the country’s main retail trade group, Asociación Nacional de Tiendas Departamentales y Autoservicios raised its estimate of the investment its members will make this year in new stores and distribution centers, technology and equipment by $32 million, to $4 billion. The investment is also $400 million larger than what members spent in 2012. ANTAD predicts that the 103 retail chains it represents will see sales rise by some 11.5 percent this year over last year. “Mexico is in vogue,” said Vicente Yánez Solloa, the trade group’s executive president. “It is one of the economies with big growth possibility in light of the problems still faced by European countries and even the United States.”

Walmart, the biggest retailer in Mexico, announced that it would open 250 stores in Mexico this year across its various formats. Mexico’s Liverpool department store chain has earmarked $510 million to open four stores and three shopping centers this year. Grocery retailer Comercial Mexicana is set to spend nearly $290 million on 12 new supermarkets and two Restaurante California units. Shasa, one of Mexico’s leading women’s fashion retailers, is rolling out 10 stores this year and will keep expanding its 80 existing stores to a larger format. “Last year our sales in the Mexican market registered double-digit growth,” said Gabriela Fragoso, Shasa’s marketing manager.

The outlook remains bright. The Mexican gross domestic product is projected to grow by at least 3.5 percent this year, after having expanding last year at 3.9 percent rate. Inflation has eased a bit, from 3.82 percent in 2011 to 3.57 percent last year, and as of January the unemployment rate stood at just 5.4 percent. Last year’s election of the pro-business Enrique Peña Nieto as president boosted investor confidence in this country of 112 million.

“Mexico’s economy is very healthy, with a small external debt, high dollar reserves, a Mexican peso that has not varied considerably in the past three years and a new government that generates more confidence in the business community,” said Juan Ignacio Rodríguez, partner in charge of the real estate planning division of Mexico City–based MAC Arquitectos Consultores.

The Mexican real estate industry is also benefiting from the continued growth of FIBRAS (fideicomisos de infraestructura y bienes raices — Mexico’s version of REITs) and publicly listed structured equity securities called CKDs, whose main source of capital is the burgeoning pension funds. Two of the country’s leading mall developers — Mexico Retail Properties and Planigrupo — have issued CKDs, while Fibra Uno, Mexico’s biggest REIT, raised $1.7 billion in January on the Mexican stock market to fund its acquisition of malls and other real estate. Fibra Uno’s mall portfolio includes La Isla Shopping Center, and Forum by the Sea, both in Cancún.

This year and next, 13 shopping centers will be opening in Mexico. At least 50 other projects could break ground this year or in 2014, says Rodríguez, who notes that these figures account only for centers with at least one anchor and a minimum 30 stores. While grocery-anchored malls once reigned supreme, the new wave is focusing on a mix of restaurants, movie theaters and other types of entertainment, Rodríguez says. The Antea Lifestyle Center, in Querétaro; Galerías Marina, in Mazatlán; and Patio Santa Fe, in the municipality of Alvaro Obregón, state of Michoacán, are among the projects under construction.

Investors are conservative these days, eager to avoid the overbuilding of the decade between 2000 and 2010, when foreign capital was plentiful, observers say. Back then, the number of centers increased from nearly 300 in 2000 to about 500 in 2010. At the end of last year, Mexico had about 600 centers, according to MAC Arquitectos. For all the latter-day caution, developers have struggled to fill some of the new properties, because they are too big for the market, inadequately pre-leased or poorly located, executives point out.

Grupo Frisa, with a 43-mall portfolio, reports slight index-linked sales growth for last year plus an improved occupancy rate. And mall developer Grupo Acosta Verde, which will open at least five malls this year, says the number of visitors increased 9 percent last year. “There is still more to be developed in Mexico, particularly in small and medium-sized cities that are growing and need the services offered by shopping centers,” said Edgar Rodríguez, Grupo Frisa’s director of operations.


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