MULTI-SECTOR DEVELOPERS
Despite the massive expansion of Mexico City over the few past decades, the capital still shows room for growth, especially in middle-income segments.
Initially, we were successfully manufacturing fashion labels that we would sell to department stores. We later decided to create our own distribution centers and build our own stores. We started doing small-scale projects as our family was already investing in real estate and found a lack of offerings in Mexico City and the wider country; there were no good shopping centers, office buildings, or residential projects. We did our first project in Masaryk called Centro, which had the first Louis Vuitton store in Mexico. It was a great success and brought in higher-end labels and restaurants. Over the years, we have developed 67 projects in five different divisions from the ground up, including hospitality facilities, industrial parks, residential buildings, shopping malls, and office buildings.
Mexico has a large deficit of new housing. The need for new homes is much larger than the supply. Catching up with demand is a slow process, because it takes a lot of time to get new land and to convert the city. The market is huge in Mexico City, but it is not easy to develop new buildings. The regulations are quite strict and you have to know the market. The price of land has also substantially increased, meaning companies have to be efficient in terms of their value chain. It is important to develop and ensure high quality designs, no matter the segment. For each project, we do an architectural contest where we invite three different architectural firms with experience in the segment to create designs. We try to always bring new ideas into the mix. We want to make things that are beautiful and transform the neighborhood and community along with the project.
We have been a family business for more than 30 years. We have developed high-income residential projects; however, 10 years ago, we expanded our scope to the middle-income market, as it is almost impossible to find a site that we truly like in the high-income market. We now work on more middle-income, though again unique, projects. Our largest project is called Parques Polanco, the only project in the city with nearly 1,400 apartments as well as a large park and a shopping mall. We now focus on large, mixed-use projects. We strongly believe in architectural design and work with the top architects, most of them Mexican.
We started out as homebuilders of low-income housing. We moved from Mexico City to Querétaro to start the business because Querétaro, at the time, did not have many companies in the segment. We were able to grow steadily; however, the turning point and critical factor that went into growing in those years were strategic alliances. Since the beginning, we have been big in creating joint ventures (JVs) with international companies. When we were building these low-income housing operations, we were able to partner with a US company who at that point was entering the Mexican market and we decided to create a JV with them. We were part of that JV until 2004. Then we exited and formed a new JV, this time in the industrial real estate sector, to build Parque Industrial Querétaro. This is now the largest park in Querétaro and represents around 30% of wages reported to the social security in Querétaro, as we have over 36,000 employees at the park.
The first member of the Mariscal family to come to Mexico came in the 1700s. When Mexico began expanding its road system in the 1800s, our great-great grandfather was in charge of constructing some of these. Our grandfather's generation founded Marhnos in 1954. The company focused on building hotels, and Marhnos built many of the original buildings in Acapulco. The most high-profile project the company worked on in its first chapter (1954-1974) was the American Embassy building in Mexico City in 1963. After this, the US became an important client for us because we built the consulates in Guadalajara, Tijuana, and Monterrey. We also built the embassies in Guatemala and El Salvador. The US government is an example of the kind of client we like to form a close and lasting relationship with.
Around 16 years ago, I realized that Mexico needed something new and fresh. We were the first company to believe in the Reforma Corridor; therefore, in 2003 we looked at two sites there. At the time, there was nothing but old buildings, so we decided to buy land that today no one can touch. Today this is the most important corner in the country, not only in Mexico City. When I started Pulso I decided to bring in bright people. We began without a great deal of cash but with great confidence in what we could do. Mexico needed iconic elements and bright people; hence, we focused on key areas. First, the capital; Mexico City still has the capacity to grow. The second is tourism. We have resorts in the three most important destinations in Mexico: Los Cabos, Puerto Vallarta, and Cancún and the Mayan Riviera, which receive 85% of tourists in Mexico. Finally, Mexico has a large middle class, so there are excellent opportunities in retail.
Insar started 16 years ago in Monterrey, Mexico; I started this business on my own a year and a half ago. From the beginning I had my own style of doing business in the real estate sector. My first project was a property of 20ha, which we started developing for selling lots. We made a great alliance with one of the biggest US companies in the world doing a vertical project of 264 apartments on 2ha. We had a great landscape and things to do outside for kids and families, and I started to learn more about how architects do things in megaprojects. We were in an alliance for 11 years and finished only six years ago. I have seen other companies build a project, but forget about their clients once the latter have purchased an apartment. Nor do I approve of government corruption. It is important to have trust, and that is how it begins, by having transparency and doing things well.
The vision with our first project was to create small developments in areas of the city like Condesa, Roma, and Cuauhtémoc; part of the vision also included having economies of scale by having many small projects in the same area. At the same time, we were constructing small buildings. However, we realized that getting permits and licenses for a small apartment building was the same as for a large one. Furthermore, in terms of administration costs, we needed nearly the same amount of people for a small as for a larger building. In addition, in a small apartment building when the fixed costs are divided between seven apartments, it is rather expensive; in a larger building the costs are relatively smaller. Thus, we ended up developing one of the largest developments in downtown Mexico City, Puerta Alameda, the likes of which had not been seen downtown since the 1950s. We were the first ones to develop with a vision of middle- and high-income developments.
MULTI-SECTOR DEVELOPERS
TABLE OF CONTENTS
Interview
Alicia Bárcena, Executive Secretary , UN Economic Commission for Latin America and the Caribbean (ECLAC)
TBY talks to Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), on Mexico's structural reforms in line with the 2030 Agenda and maintaining consistent growth.
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Frederic García, President, Consejo Ejecutivo de Empresas Globales (CEEG)
TBY talks to Frederic García, President of Consejo Ejecutivo de Empresas Globales (CEEG), on making Mexico a more attractive FDI destination and promoting growth and development in the South and Southeast.
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Dr. Enrique Cabrero Mendoza, Director General, National Council of Science and Technology (CONACYT)
TBY talks to Dr. Enrique Cabrero Mendoza, Director General of National Council of Science and Technology (CONACYT), on investing more in science, technology, and innovation and positioning Mexico as a knowledge economy.
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Sergio Ayala, General Manager, GIFAN
TBY talks to Sergio Ayala & Alberto Rementeria, Directors of GIFAN, on identifying and capturing niche markets in Mexico, importing healthy and profitable solutions in the food industry, and working with forward-thinking, medium-sized companies.
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Carlos Morales Paulín, Country Manager, Telefónica
TBY talks to Carlos Morales Paulín, Country Manager of Telefónica, on how to provide the best customer service on the market, an ultra-competitive suite of products, and forcing the competition to improve customer standards in the process.
read articleFocus: Digital Television Transition
Digitalizati-ON!
Starting with the first analog blackout in Tijuana, Baja California in June 2013, Mexico has achieved an effective national transition to digital television. According to data from the Federal Telecommunications Institute, 95% of the population benefits nowadays from digital terrestrial television (DTT).
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