Developer To Bring American-Style Rentals To Mexico City Multifamily Sector

After a dozen years expanding the international presence of one of the United States' largest multifamily developers, Mark Hafner is rolling the dice that Mexico City is ready for the shift to a high-end that rental market cities in the U.S. have been experiencing for years.

Hafner was a senior managing director at Greystar, where he led the firm's international expansion, before founding HASTA Capital in October, where he serves as CEO. He envisions Mexico City apartments that include all the trappings of American luxury apartment towers: swimming pools, dog parks, lounges and other amenities.

In Mexico City, more than 21 million people live in the metropolitan area — more populous than New York City, Los Angeles or any other market in the Western Hemisphere — and luxury apartment buildings are rare commodities with few active players.

“Basically, in Mexico, they don't have a purpose-built rental housing market,” Hafner said.

There are plenty of multifamily units, but Hafner said they are mainly condominiums owned by individual local investors who then rent them out with no on-premise management or focused amenity base. For many renters, they simply walk the streets, looking for “for rent” signs on windows.

“There's a huge demand, particularly in the upper-tier market, for those kind of services,” he said.

That is the reason Hafner, who splits his time between his home in Sarasota and Mexico City, founded his company there, rather than his home country.

Hafner is part of a lineup of international development and real estate professionals featured at Bisnow's Caribbean & Latin American Investment Forum, domestic developers eyeing opportunities for growth overseas.

So far, HASTA has a site under contract on which it will build a 300-unit apartment tower, and Hafner said the firm has several other sites in negotiations.

It is an open playing field for many developers, with only a few thousand professionally managed apartment and housing units in the city, according to a recent story in the Wall Street Journal. 

For developers, the local government has been loosening stringent anti-eviction laws and rent caps that are making it more appealing to take a chance on a rental market. That has led to an expansion of Mexico's rental market from 21% of the housing stock five years ago to nearly 24% now, Hafner said. He said the firm expects rents to range between $800/month for one-bedroom units to $1,500/month for two-bedroom units, attracting a growing affluent, young and mobile population.

“We debate in the U.S. if we're in the seventh inning, eighth inning. Really in Mexico, the game hasn't even started yet,” he said. “I feel that we're in the very, very beginning … of really a secular shift of how people live in Mexico.”