Retail has been tough in the U.S., where asking rents along many major shopping thoroughfares are depressed and ground-up shopping center development has all but ground to a halt. It’s easy to understand the siren call of Mexico, where the retail outlook seems as sunny as the weather, thanks to a growing middle class and fewer shopping options.
Thor Equities, which experienced some hiccups in the last year or two, is taking advantage of the climate in Mexico with its Thor Urbana division, which has 23 million square feet of space under construction in the country. “Incomes are going up,” said Joseph Sitt, chairman of Thor Equities Group. “There’s a tremendous appetite for luxury, moderate, everything. Every brand you can think of is there or working to go there. A lot of luxury brands that aren’t in Mexico yet will be there in two years at the most.”
Moncler just opened in Mexico and, according to sources, Alexander McQueen, Alexander Wang, Chloé, Givenchy, Loewe and Dsquared2 have entered or are looking to enter the Mexican market. In addition, Versace and Tod’s are actively working to penetrate the Mexican market.
Thor has seen a lot more strength in the U.S. market. With all the click-to-bricks expansion and experiential retail openings, many vacancies are being filled in Manhattan. Asking rents have yet to recover in some submarkets, and aren’t back to former levels on Madison Avenue, where there’s still quite a number of vacancies. However, in the Flatiron District, where availability is tighter, rents may even be a little higher.
Four Thor Urbana projects in Mexico representing 7 million square feet of space, will be unveiled by the end of the month. Retail is a central component at three of the new mixed-use projects, while the fourth, Montage Los Cabos, a seaside destination, is comprised of 122 hotel rooms and 52 luxury residences, along with a smaller retail element.
“Not many U.S. developers are building new malls. Retail in the U.S. is so overbuilt,” said Sitt. “In Mexico, the economics are dramatically better.”
The Harbor Mérida, a new 1.65 million-square-foot lifestyle retail and entertainment center, bowed on Oct. 19, featuring more than 120 stores, including Sephora, Forever 21, Steve Madden, Under Armour, Innovasport and Miniso. The $135 million shopping center is the largest mall in southeast Mexico, located in a part of the Yucatan Peninsula that’s considered to be one of the most important financial hubs in the country. Consumers in the trading area have the highest income per capita and the neighborhood boasts the highest level of security.
Harbor Merida, which boasts an 85,000-square-foot artificial lake, devotes 35 percent of total square footage to food and beverage options, versus 9 percent to 10 percent at U.S. malls. However, that number is expected to reach 20 percent by 2025, according to JLL, a professional services firm that invests in real estate.
Lifestyle center Town Square Metepec, with more than 1.7 million buildable square feet, was unveiled Friday in one of the fastest-growing regions in the State of Mexico. Tenants include Forever 21, Old Navy, Flexzone, Bimba y Lola, Pandora, Swarovski, MAC Cosmetics, Lacoste, Kipling and Under Armour. Residents in Metepec’s vicinity have high purchasing power, but the center is expected to draw from farther afield and is easily reached by multiple routes. Toluca’s downtown is 10 minutes away and Santa Fe, 45 minutes.
“We used the same architects who designed The Grove and Palisades Village for Caruso,” Sitt said, referring to Boston-based Elkus Manfredi. “There’s a park and shell with dancing fountains, light and sound. It looks like Las Vegas with light shows and water.”
The 2-million-square-foot Landmark Guadalajara, designed by Sordo Madaleno Arquitectos, features A offices, luxury residences and retail, entertainment and technology to meet the needs of the sophisticated market. The property, bowing Nov. 22, in the exclusive Puerta de Hierro district in the State of Jalisco, will complement existing retail at Andares, an award-winning project that’s steps away.
“In Mexico, just like America, each state has a little different personality,” Sitt said. “Merida is like a cross between Dallas and Miami. Guadalajara is a tech city similar in personality to San Francisco.”
Sales per square foot in Mexico are about 95 percent of the U.S. average, Sitt said, adding, “the reason being that they have so much less retail that the sales are strong for the retailers that have opened there.”
Montage Los Cabos, which bowed on Nov. 2 in Santa Maria Bay, is a seaside destination with 122 hotel rooms and 52 luxury residences on 39 acres of white sand beach and the azure waters of Santa Maria Bay. While retail has a small presence at the project, with access to swimming, diving and snorkeling, who has time to shop?
Besides, Thor owns retail properties in Mexico’s high streets. For example, on Masaryk Street in Polanco, which is considered the Fifth Avenue of Mexico City, Thor is the largest landlord with five properties, according to Sitt.
Thor is also the biggest landlord in Playa del Carmen, where its Calle Corazon development features retailers such as H&M, Calvin Klein, Hollister, Lacoste, Michael Kors, Sephora, Puma and Tumi, Catch restaurant and a hotel. Also in Playa del Carmen, which bills itself as “the next High Street in Playa,” The Shops at 5ta y 8 is a new type of retail proposition for the resort area. Located in a trendy commercial area and populated by retailers such as Envy, Billabong, Skechers and Frida Kahlo restaurant, the complex is on the corner of 8th Street and Quinta Avenida, the main retail and tourist corridor of Quintana Roo, and a block from the ocean. With open spaces, terraces and restaurants, The Shops at 5ta y 8 aspires to be a major meeting place in Playa del Carmen.