In an exclusive preview of 2018’s edition, Mexico Infrastructure & Sustainability Review spoke to Enrique Villanueva, Development Director of Pulso Inmobiliario, where he discusses the challenges of constructing Mexico City’s newest iconic building, Torre Manacar.
Q: How will mixed-use projects replace traditional commercial centers in Mexico?
A: Commercial shopping centers with the usual three anchor stores are on the way to extinction. In the US, this is already happening and although in Mexico people still prefer them due to security reasons, it will not be long before these kinds of developments begin disappearing. Torre Manacar’s commercial center will be smaller but will provide communities with something different. Stores and tenants have decided to place their flagships in Torre Manacar. For instance, Sports World will have more than 3,500m2 of space, Cinemex has 13 Premium theaters and H&M occupies three floors.
The development includes an entire floor of only restaurants for all types of budgets and tastes, which is important for the area. The project has a mega screen on the third floor that can be seen from all levels in the shopping area, and where we will project events, adverts, promotions, videos and create a unique environment in Mexico City. Mexico’s shopping centers will turn into lifestyle centers where people go to do more than just shop. Our Torre Manacar project was designed by Teodoro González de León, one of Mexico’s most prestigious architects. He told us that the area in which we are constructing Torre Manacar was once called Centro Urbano Manacar, one of the first mixed-used projects in the early 1960s. It had a tower of offices, a shopping center and a huge movie theater with a backdrop created by the famous painter Carlos Mérida, which will now be placed in our office access lobby. The original size of the terrain was 5,030m2 and we decided to purchase another 3,296m2 surrounding the area to make the project larger and be able to develop on a complete block with access points from all four streets. With a height of 31 levels and a total land area of 8,328m2, this project will bring this historic place back to life. The shape of the tower was designed to leave a large open area in the middle as a plaza to be used by passersby and it will connect to the new roundabout the government is building on Insurgentes.
Q: Why did Pulso Inmobiliario choose Insurgentes Sur as the location for Torre Manacar?
A: Apart from the technical and engineering challenges, the concept of Torre Manacar was a challenge itself. It will become the “Icon of the South” and we believe that the Insurgentes Sur corridor, which runs from Viaducto to UNAM, is a diamond in the rough. At the moment, prices in the Reforma, Polanco and Santa Fe neighborhoods of Mexico City are extremely high. These neighborhoods also have many infrastructure and mobility problems. Insurgentes Sur has great potential to bring back corporates into the southern part of the city. It has good infrastructure, public transport, a good mix of land uses and demographics. A successful project is not just about having a good space for offices. It is also about having a blend of social classes so that a mixed-use project can actually make sense. Our first development on Insurgentes Sur, City Center on Insurgentes Sur, was our pilot project to measure the potential of the area and it was a success. Cisco decided to move its corporate headquarters there and the remaining spaces were leased before it was fully constructed. To realize the area’s full potential, we decided to create an even bigger project. Pulso Inmobiliario wants to create iconic buildings that are unique to the surroundings. Sustainability is one of the biggest objectives for all our projects, as well as finding ways to exceed the expectations of our investors and of the future end-users of our developments.
Q: What challenges did the company encounter during the construction of Torre Manacar and how does it differ from its previous projects?
A: It took us approximately 12 months to excavate 12 basement-level floors. More than 25,000 cargo trucks filled with dirt were used to complete the excavation, which, if they were all lined up, would reach the distance from Mexico City to Queretaro. The logistics of this process wereextremely intricate and required the coordination of many teams to ensure its efficiency. Eleven of these floors will be dedicated to parking and one to the food court and entertainment. One problem with constructing buildings on Reforma, for example New York Life and Mapfre, is that when excavating around 1.5m, water is typically struck. The terrain is so difficult that it is only possible to construct four to five floors below ground. The further south, the tougher the terrain, which made constructing Torre Manacar a lot easier. However, the process of excavation and cementing the foundations was much more complex.
The commercial center is already 100 percent leased and opened to the public in July 2017, with two months still go before the corporate building is actually completed. Our strategy is to rent a large portion of the building to an important corporate tenant and smaller spaces to other companies. Usually those companies that provide services to the corporate rent spaces within the same building. Pulso Inmobiliario also likes to have complete control of the real estate stages – the negotiation and purchasing of the land, permits, project and design management construction, commercialization and operation of the building. We also have our own purchasing department, which allows us to buy in bulk and to have greater negotiating power when it comes to things like elevators, steel, facades and cement.
Q: How has Pulso Inmobilario’s financial strategy evolved through the years?
A: Banks prefer to provide loans when the developer is about to finish or has already finished construction, assuming less risk. For the New York Life building, we first secured a lease contract with New York Life to provide Santander the guarantee they needed to give us the loan. Our latest projects are now funded through three to four partners, which are family businesses that have been investing with us for years, while 40-60 percent of the investment comes through bank loans. We have developed a strong relationship with all commercial banks in Mexico, making it a lot easier to obtain loans. We use two to three syndicate loans for each project. The Breathless Riviera Cancun hotel we recently constructed was in partnership with Sabadell, which was syndicated with Bancomext and BBVA Bancomer. This financial scheme allows us to develop or construct two hotels, two commercial centers and two corporate buildings at the same time.
Q: Why is there a lack of international players in Mexico’s real estate market and what is your outlook for the sector in the coming years?
A: International players enter a market when local players can no longer supply the market. Banks are not providing companies with the desired interest rates and the exchange rate deeply impacts negotiations and transactions, especially in a highly dollarized industry. Investing in real estate is a good business because it is a safe investment, it is long-term and yields high returns. Although real estate is risky at first, it is a noble business and we give work to thousands of Mexican families across the development and operation of our projects, thereby supporting the Mexican economy and the growth of our country. We are planning to construct another project in the Insurgentes Sur corridor, which will be much larger than Manacar and will be a true mixed-use development.
We want to continue building better projects that have a strong impact on the communities surrounding it. A common error in Mexico is that projects are designed to meet only current needs and not the needs of the future. We must anticipate how the city and society will evolve and what the market will require in the future. We are also looking into creating new financial structures to raise resources, whether that be through institutional or independent funds. This will happen in the future, but the rough start to 2017 pushed us to take a more cautious approach. We have not given up on the idea, but we are making sure we carry out the proper analysis before we move forward. Our main goal is to continue building projects that impact society in a positive way. We want to create urban landmarks in Mexico. For example, the Satelite Towers created by Luis Barragan brought the northern part of the city to life. We need to continue creating these urban landmarks so that people can relate to and feel they are part of an area. Our culture has the need to identify itself with its surroundings through private or public infrastructure such as public squares, parks and all types of urban projects.
Pulso Inmobiliario began operations in 2000 with the goal of developing projects of the highest quality, exclusively in premium locations. Over the last decade, Pulso has developed more than 350,000m2 of AAA offices and has 300,000m2 in the pipeline