Latin America has historically presented the least optimal levels of development worldwide. The current political discourse of populist governments focuses on the stage of conquest and resentment with Europe. However, the new generations see beyond, because the Latin American region is rich in creativity and new forms of economic entrepreneurship that are still making their way in the face of the administrative, political, economic and social delays of the region. Pawel Kentaro Grendys, an expert in Latin American real estate, provides insight into how commercial real estate in the region is changing.
According to the International Council of Shopping Centers (ICSC), there is currently a transformation in the commercial real estate sector. Although it is true that there is global talk of an era of regeneration, there are some trends that affect commercial real estate in Latin America.
Understanding that trends are changes in the behavior or attitudes of consumers towards an industry, it will then be necessary to analyze them and visualize the future to make the necessary adjustments and give way to this new stage in retail. In the same way, it will be necessary to identify the changes generated in commercial real estate and determine what are those trends that are directly affecting the sector in this new commercial era.
As noted by Euromonitor International, the increase in the use of technology is one of the three megatrends that will impact the retail industry in Latin America. The other two are consumers’ penchant for health products, and the decline in middle-class disposable income.
Another feature of the technology is the omni-channel presence in retail strategies, the online-offline presence of brands will offer greater benefits than just using any of them, becoming a relationship and complement. Additionally, this type of purchase is more complete and offers a total experience for consumers.
Today 94.6% of commercial sales in Latin America are generated by retailers with physical establishments. Explains Kentaro, “The importance of physical commerce for Latin American shoppers is reiterated by several studies. These indicate that 91% of Mexican and Brazilian consumers prefer to buy in physical stores after searching on the Internet or offline.”
The growth of Baby Boomers, the access of Millennials to the economic market and the increase in urban density in the capitals of Latin America have generated new characteristics within the spaces of commercial real estate. Under the ICSC, Latin American commercial property developers are responding to the global placemaking trend by incorporating innovative retailers, experiential tenants, and non-commercial property uses into their projects, from their initial construction or during major remodels.
“In addition to simply improving the tenant mix,” adds Kentaro, “a variety of commercial real estate developers are taking this a step further to create mixed-use properties. These projects often include one or more of the following elements: office space, hospitality, residential and common area, achieving functional spaces and successful projects in Latin America.”
These commercial properties offer a “third place” outside of home or office to meet with friends and family in a safe, clean and open environment. These community centers go beyond providing a place to shop and entertainment. They also offer a place for educational, artistic, cultural and humanitarian activities.
Whether you are looking to buy or rent real estate in the LatAm region, the process tends to be even more complicated, as many documents are usually required that, in many cases, are not possessed, such as proof of taxes, proof of formal employment, or a local bond. However, relying on the experts for assistance can offset those challenges.