Santa Fe's growing pains: suburb becomes the spot for businesses to set up, but at a cost.

From the helicopter pad on the roof of the 24-story Ericsson building, one can easily see the voracious sprawl of the western Mexico City suburb of Santa Fe. Looking in any direction, buildings in various stages of development can be spotted, some mere skeletons flocked by cranes, and others completed and decorated with "for rent" signs.

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This new construction is nestled among the dozens of major Mexican and multinational corporate offices already dotting the landscape. Gazing at this scene, it's hard to believe that just a decade ago, Santa Fe was an immense municipal landfill.

"Santa Fe has become an attractive new pole for important investment, both Mexican and foreign," Mexico City Economic Development Secretary Jenny Saltiel told BUSINESS MEXICO.

In the past 10 years--especially since 2000--Santa Fe has become the fastest-growing area of the capital, with more office space under construction than any other part of the city, according to a study by real estate firm Cushman & Wakefield (see box, opposite page).

In 1992, what is today the Santander-Serfin building was the only corporate structure in Santa Fe. Now, there are 48 office buildings and 11 more under construction. And as jobs move to Santa Fe, homes, shops and hotels are following.

It may be the chic place for businesses and people to move these days, but Santa Fe is experiencing serious growing pains. Many of the increasing number of people working and living in Santa Fe say city services aren't keeping up with expansion, a disparity that could threaten the zone's potential for future growth, according to business leaders.

"Santa Fe is the future for corporations in Mexico," said Raul Lucido de la Parra, vice president of government affairs and corporate communication for Ericsson, which moved its corporate offices to Santa Fe in May. "But there are obviously big points that have to be improved like trash collection, security, potholes and, most importantly, public transportation."

DREADFUL COMMUTE

Anyone who commutes to Santa Fe will readily complain about the area's transportation nightmare. There is no subway line to Santa Fe. During rush hour, buses are packed so tightly that it's hard to breathe if you're not near an open window, and cars often move slower than pedestrians.

"Santa Fe has been growing in the last few years in a very important way, and it will keep growing," said Jose Luis Cortes, chair of the architecture department at the Universidad Iberoamericana, who has witnessed Santa Fe's growth since the school moved there in 1988. "But we want it to have a more humane development, where a pedestrian can walk easily, where there's better public transportation."

On a recent Monday morning during rush hour, as the westbound Reforma traffic crawled past the fancy homes in the Lomas neighborhoods, college students driving to class were advancing so slowly that they could read--and highlight--texts during their commute.

"The roads don't cover the demand of the people who work here," said Irma Uribe Romero, who travels a relatively modest 30 minutes by car to her job as sales chief at the Liverpool department store at the Santa Fe mall. "They need to accelerate the process, modernize it, put in more viable transportation."

For Hector Escalante, the commute south to Santa Fe from Coacalo in the neighborning State of Mexico was enough to make him move. When he began working as a computer engineer with Sun Microsystems in Santa Fe three years ago, his commute was two hours each way. He only lasted two weeks making the commute before he moved closer to Santa Fe, to the city's outer Cuajimalpa district.

"I was losing four hours of my life every day in traffic. I might as well have been living in Cuernavaca," he said in reference to the capital of Morelos state, located 85 kilometers south of Mexico City.

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Victor Lachica, president and CEO of Cushman & Wakefield Mexico called Santa Fe "a great place once you get there."

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Traffic congestion in and around Santa Fe should improve soon, however. The local government is building two roads that are being financed by Santa Fe corporations and are scheduled for completion next September. One is a north-south route that will run parallel to the western part of the Periferico highway. The other will expand Centenario into an expressway, with three bridges that will connect it to two main thoroughfares in the city's west.

Mario Zepeda, the city's planning director in the Mexico City Transportation Secretariat, estimates workers traveling to Santa Fe from the south and the center of the city will see their commute shrink from an hour to 20 minutes.

"This is a very important project that is substantially improving access to Santa Fe," Zepeda said. However, there are currently no plans for a subway stop there.

FROM SAND MINES TO SKYSCRAPERS

Before the mid-1980s, there was almost no corporate activity in Santa Fe. But as the Mexico City metropolitan area grew--doubling from 8 million to 16 million people between 1970 and 1990--development options became limited. So in the late 1980s, the city's former real estate arm, Servimet, began to develop Santa Fe.

Investing in Santa Fe "made a lot of sense because the rest of the city was saturated," said Luis Gutierrez, CEO of G. Accion, one of the first developers to invest in Santa Fe, in 1989. Now, Santa Fe's landfills have become little parks and office buildings have sprung from the former sand mines. The area is desirable because it has less pollution than other parts of the city, thanks to wind patterns. Since January 2001, more than 5 billion pesos have been invested in Santa Fe's office buildings, shops, restaurants and hotels, according to Saltiel.

Santa Fe is home to the largest mall in Latin America, two universities and major corporations such as IBM, Bimbo and Sony. Nearly a quarter of the corporations in Santa Fe are foreign, Saltiel said.

"We looked at different parts of the city, and we chose Santa Fe for several reasons," Ericsson's Lucido said. "It was one of the only places in the city with space available for our 500 employees. Many of the principal businesses in Mexico are concentrating here, so many of the companies we do business with are here."

He also cited the low cost of the building. Since land is cheaper in Santa Fe, office space tends to be more affordable than in Polanco and Lomas and along Paseo de la Reforma. But living in Santa Fe is not such a bargain. Because of high demand and the fact that the buildings are new, housing prices are higher in Santa Fe than in many other parts of the city.

Patricia Condey, a Remax real estate agent who has worked in Santa Fe for three years, said half of her clients who want to live in Santa Fe are foreigners working in one of the area's multinational companies. Many of the rest are students from other states seeking housing close to the Universidad Iberoamericana or the new campus of the Monterrey Technological Institute.

"The real estate market is incredibly strong right now in Santa Fe," Condey said. "I don't think the growth in Santa Fe will stop. They'll keep making new buildings as long as there's space."

DON'T GROW TOO MUCH

But Lachica of Cushman & Wakefield said he doesn't think the corporate growth can continue for long. He pointed out that of the 560,000 square meters of office space in Santa Fe, 120,000 square meters are available. And in the past two years, office building prices have dropped 20%.

"The market is oversupplying the area," Lachica said. "The area is arriving at a point where it doesn't make sense to keep developing."

For that reason, G. Accion is curbing its investment in the zone, Gutierrez said. The company that has developed five office buildings in Santa Fe since 1989 has no plans to continue investing there, the CEO said.

However, there's another reason G. Accion has decided not to continue developing in Santa Fe: the area's problems with transportation and city services. "We are concerned about the accessibility, the water and other services, the poorly maintained gardens and the urban image of Santa Fe," Gutierrez said.

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City officials said they had no comment about the future of services in Santa Fe, citing recent leadership changes in the districts where Santa Fe is located. "It's too early to talk about plans for the future," said Rafael Gonzalez, the Alvaro Obregon district's public relations coordinator, one of three districts that share responsibility for Santa Fe.

But for Cortes, the architect at the Universidad Iberoamericana, it is not too early to focus on fixing problems created by Santa Fe's explosive growth.

In Santa Fe and in all of Mexico City, the task of this generation is to fix the mistakes of the past, to reorder the city so that it functions better," he said. "Santa Fe must be improved, and it's essential that in the next few years no one makes any major mistakes."

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Mexico City office space under construction, year-end 2002.

Total: 490,000 square meters

Interlomas: 12,502 square meters

Lomas Altas: 0

Perinorte: 8,010 square meters

Perisur: 32,500 square meters

Santa Fe: 162,300 square meters

Insurgentes: 60,105 square meters

Reforma: 95,747 square meters

Bosques de las Lomas: 16,576 square meters

Lomas de Chapultepec: 81,748 square meters

Polanco: 19,586 square meters

Source: Cushman & Wakefield

Corrie MacLaggan, a native of Austin, Texas, is a Mexico City-based freelance writer.