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E-Commerce and How It Affects Real Estate in Latin America (LatAm)

By Guillermo Sepulveda (Mexico City)

This week I posted a video (embedded below) of an interview I conducted a couple of months ago, when I sat down with Andrew Strenk at the global leaders’ breakfast at ICSC RECon in Las Vegas.

Andrew is a retail expert and president of Strategic Planning Concepts International (SPCI), a prestigious consulting firm based in Southern California. His experience in Latin America (LatAm) over the past 30 years has made him an authority on retail real estate development in the region.

I wanted to take the opportunity to discuss with Andrew the manner in which e-commerce is growing in LatAm and the effects this phenomenon is already having on the region’s retailers and, consequently, its real estate market.

E-commerce in LatAm

An eMarketer ( forecast pegs Latin America’s 2019 e-commerce sales at US $85 billion from 155.5 million consumers. By 2022, the region’s annual online sales are expected to reach the US $95-billion mark.
Mexico, whose online sales represent 29% of LatAm’s total e-commerce sales according to the forecast ranked second in 2018 to regional leader Brazil, whose sales were 34% of the total and Argentina in third place with a distant 6%. However, Mexico is the fastest growing retail e-commerce market with an expected whopping 36% in 2019!

It is important to point out that Latin Americans still represent only 10.4% of all Internet users in the world. Hence, there is tremendous potential for growth as consumers have access to and become comfortable with the security of online transactions.

Growth factors

Three main factors are propelling e-commerce growth in the region:

  1. A young population: The average age in the LatAm region is 30, whereas this figure is 38 and 33 in the U.S. and Europe, respectively.
  2. Infrastructure: Better Internet hardware with more market penetration.
  3. Smartphones: The usage of these devices is spreading rapidly among an avid population.


This last point about rising smartphone usage is key, because transactions are not only being conducted from a laptop, but also – more frequently – from hand-held mobile devices under what has been referred to as “M-Commerce”. In 2018, according to eMarketer, 27.5% of LatAm’s retail e-commerce sales were conducted from cellular phones.

The challenges

However, retailers must overcome several challenges before they can propel the region’s online retail sales growth even further. Retailers will have to invest in logistics services and facilities that can ensure rapid delivery, a component that is key to consumer satisfaction in this type of sale. It is precisely in this logistics component where real estate plays a crucial role in the on-line sales model. Companies that can enhance this component will have a competitive advantage.

In the specific case of Mexico, we are already seeing companies such as Liverpool, Elektra, Amazon and others building or leasing large industrial spaces (in excess of 500,000 square feet feet) for distribution centers. In coming years, we will also see the growth of smaller facilities – not only on the outskirts of large cities, but also within the urban grid – that store inventory for last-mile-delivery, allowing retailers to be closer to their customers and ,thus, get their products to them faster and more efficiently.

Indeed, LatAm faces many e-commerce challenges in the near future, but that sector is also where the real estate opportunities lie.

(Guillermo Sepulveda is a Principal of Avison Young and Managing Director of the company’s Mexico region. Based in the firm’s Mexico City office, he specializes in investment sales, advisory, tenant representation and project management.)