Companies are turning classic Mexico City homes into corporate headquarters. Is Mexico City on the verge of a real estate makeover?
In 2010, two global companies announced a merger and set out to build the premium beer market in Mexico. Cuauhtémoc Moctezuma Heineken Mexico faced an up-hill task; Mexicans take their national beer very seriously, and the premium beer segment captures only 5 percent of the market.
With its new brand and identity, the Holland brewery sought to make a splash even with the location of its corporate headquarters. In 2011, the company welcomed employees to their new offices, a 1,300-square meter casona vieja (“old home”) in Polanco, a trendy neighborhood located in one of the most sought-after business districts in the city. The historic building, now called the Heineken House, is protected by Mexico’s National Institute of Fine Arts.
Cuauhtémoc Moctezuma Heineken Mexico’s move is one of many office relocations that are changing the face of Mexico City neighborhoods. Despite highway construction to reduce the city’s infamous traffic congestion and new skyscrapers in the central business districts, some local and international corporations are recreating their offices in classic Mexico City homes.
Enterprises such as Expansion (Grupo Expansión), The Colosio Foundation (Fundación Colosio), and creative agency Makken are among others that have chosen to reshape these residences into functioning workplaces.
Cuauhtémoc Moctezuma Heineken Mexico’s decision was based on the company´s brand identity and desire to create an open, friendly, horizontal space that encourages communication among employees. Antonio Rueda Ventosa, director at ART Arquitectos and point person for the project, said that more organizations are embracing this workplace arrangement, especially international companies that arrive in Mexico with a more dynamic work philosophy than what is typical for Latin America.
Mexico City´s central business district is not easy to define. This sprawling city contains several central submarkets, where casonas viejas mix with the massive office towers that dominate the skyline.
Companies pay between $28 to $31 per square meter to locate in a Mexico City office tower in Polanco. Monthly rents can vary in a casona vieja, some similar to office tower prices or in some cases lower, approximately $25 to $35 per square meter in Polanco and other fashionable neighborhoods such as Reforma and Lomas de Chapultepec. Even more affordable houses-turned-offices can be found in the Insurgentes and Perisur neighborhoods.
“The rent rate can be up to 20 percent less than a standard Class A skyscraper … [but additional costs] can add up. Setting up shop in highly dense neighborhoods often means fewer parking spaces, smaller office space and an overall lack of safety systems, such as alarms and sprinklers that are required in traditional office buildings. Those potential liabilities far outweigh any rent savings.”
Hector Klerian, International Director of JLL – Mexico
“The rent rate can be up to 20 percent less than a standard Class A skyscraper,” said Hector Klerian, International Director of JLL – Mexico. But he warns that the total cost of transforming one of the homes can be much higher.
According to JLL, seeking professional advisory is highly recommended when leasing these types of properties. While many old homes are a great, attractive option and possess excellent and unique brand exposure for the client, it is important to highlight some potential downfalls to the situation.
“Those costs can add up. Setting up shop in highly dense neighborhoods often means fewer parking spaces, smaller office space and an overall lack of safety systems, such as alarms and sprinklers that are required in traditional office buildings. Those potential liabilities far outweigh any rent savings,” Klerian said.
With businesses moving in, traffic congestion is up in these neighborhoods, as employees stream in each day for work. But local shops and restaurants don´t seem to mind. Doña Maria González, who owns a small taco food truck in Polanco, says increased foot traffic has been good for business.
“My customer base and loyalty has increased very much,” said Gonzalez, who has been serving customers from the same spot for 30 years. “I leave my home at 4 a.m., so traffic doesn´t really affect me. As more offices open up in the area, people walk to avoid traffic and my sales go up.”
While the construction of new office towers continue to build the city skyline, traditional old homes maintain the colloquial look and feel the city and culture is applauded for. As far for office space demand there is one thing for certain; Mexico City offers a vast variety of options for those in search of their ideal workplace environment.