In Mexico, Monterrey Is Taking the Reins on Development

5 min readJun 5, 2018


Image credit: Flickr Contributor Mauro Medina Susarrey

In 2013, Mexico witnessed the collapse of three of its largest housing developers. Five years later, the nation has seen a boom in investment and multifamily construction. As Mexico’s real estate industry continues to expand, a growing share of young residents and families have begun locate in secondary cities like Queretaro, Guadalajara, or Monterrey, a mountainous urban community in the northeast.

With its lush landscape, commercial industries, and large share of international corporations, Monterrey has cultivated a unique brand as a center for both sustainability and development. To learn more about the city’s real estate sector, we caught up with Javier Leal, the Design and Planning Director at Capital Natural, a Monterrey-based development firm. On June 6, Leal will participate in a panel discussion at City Nation Place Americas, a two-day conference co-hosted by the NYUSPS Urban Lab at the Schack Institute of Real Estate.

How does development in Mexico differ from the United States? What are some of the obstacles and advantages of your location in Monterrey?

There are many differences in the way development works between the two countries. When it comes to market rate real estate development, commercial projects are planned in significantly less time in Mexico. Based on my personal experience and conversations with people working in both countries, a project in the U.S. takes around three times longer to complete (including financial analysis, design, and construction planning). In Mexico, this means the process is cheaper, with fewer consultants on the table. But it also leads to huge gaps and issues that have to be addressed during construction, which potentially impact the overall cost.

Another main difference is the level of public involvement, both from the community and from public officials. Unlike many American cities, Monterrey has a high level of citizen empowerment. Projects in Monterrey do not need any type of official approval from the community, as long as they fit under the legal framework. On the flip side, there is unfortunately a very high level of corruption from city officials demanding “special fees” for fast tracking, zoning variance, etc. This has created a pervasive cycle of poor urban form and opportunity costs for good public-private projects and long-term relationships.

Your organization focuses heavily on sustainable development. How important are green certifications to attracting new tenants?

We might be the real estate organization with the highest and truest interest in investing in sustainable development in Monterrey. Our office was the first interior space with LEED platinum in Mexico, which says a lot about our values and commitment. We focus on and invest in both passive design strategies and building technology to achieve the best product for our clients. We attain green certifications as a result of that.

“Open, connected, and walkable developments are both good business and beneficial for the community at large.”

The certifications themselves are less important for residential tenants. Because of the relatively new condo market in the city, there are many first-time tenants who are less sensible about changes in maintenance costs. On the other hand, retail and office tenants are much more sensible about their monthly costs, and therefore attracted to long-term investments in a building with a green certification.

You’re based in an area with lots of international corporations. How do you cater to these companies in your development efforts? What qualities do large corporations tend to value most?

Fortunately, we do not have to cater too much to the specific needs of multiple corporations. Nowadays, corporations seek the same high-quality buildings, which provide their clients with safe places to work that are environmentally efficient and have good natural light and ventilation. In order to achieve this and make sure that we’re developing the best product, we look not only for international green certifications, but also for ADA and other health and fire regulations. In addition to good buildings, companies look for great locations within cities that are accessible to public transportation, food, and services. Arboleda serves many of these needs at the heart of a young business district in Monterrey.

Tell us more about your Arboleda project, which recently completed its first phase of development. How is the project helping to shape the brand of Monterrey, or even Mexico at large?

Due to its geographic location, Monterrey has always had a strong influence in the U.S. — particularly in our neighboring state, Texas. Our identity is very much influenced by our collective desires and our strong industrial sector. Real estate development in the past 20 years in Monterrey has neglected public space and the human scale. Arboleda hopes to prove that open, connected, and walkable developments are both good business and beneficial for the community at large.

We’re riding the “city revolution” wave and moving our brand away from the image of the industrial, grey city with a strong individual mindset. Now that we’ve opened our first phase of development, we’ve had a great response from the community. We hope the public and private sectors realize that this is a more desirable way to grow. By doing it well, we can collectively shape the future of the city as one of the best places to live in the world.

How do you balance the priorities of an investor with your own vision for a development?

At Capital Natural, we look for investors that share our values of environmental sustainability and positive social impact. Return on investment does not always contradict value for the community and city. We believe that two components make our business work: First, a walkable place with good design. And second, a strong operational efficiency that can ensure a long-term return on investment. Through our own projects, we’ve seen that this model generates value over time, mitigates risk, and lets us capture a significant piece of the market.

Javier Leal is the Design and Planning Director at Capital Natural, an investment management firm with a strategic focus on real estate and infrastructure development. The firm currently operates $500 million worth of funds in Monterrey, Mexico.