Latin American office market, with positive behavior, but still with challenges

During 2022, the office market of Latin America It had a positive behavior, after previous years where it was severely impacted by the spread of Covid-19 throughout the world.

According to an analysis with the real estate firm Newmark, at the end of the second half of 2022 the office market In the eight regions of Latin America that the company monitors, it added a total inventory of 25.17 million square meters (m2), that is, a growth of only 0.72% compared to the first half of the previous year.

Likewise, during the previous year the vacancy rate was reduced from 23.7% to 23%, that is, more spaces were occupied, without this really representing significant progress in these eight markets.

For this year, the perspective is a continuous recovery of this market, already with hybrid work models landed in the different countries of Latin America.

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“A greater return to work spaces is expected, even though the hybrid model will continue to prevail in many corporations. The interconnection and team collaboration, as well as the motivating and dedicated spaces of the workshopswill keep employees and employers interested in returning,” explained Giovanni D’Agostino, president in Mexico and regional director for Latin America at Newmark.

Mexican markets, with positive signs

According to the firm’s analysis, the three most important markets in Mexico within the corporate segment showed positive signs during the previous year, both in supply and demand.

For example, in Mexico City, during the second half of 2022, a net absorption of 63,063 m2 was registered, that is, an increase in activity of almost 50%, compared to the first period of the previous year, according to Newmark.

“We can see that this (second half of 2022) has been the best period recorded since the start of the health emergency and short-term stability of the office market“Newmark said in the analysis.

Likewise, in Guadalajara, the firm highlighted the stability of this market, since at the end of the second half of 2022, positive numbers were registered both in occupancies, which, in turn, led to a decrease in the vacancy rate, as the from 19% to 16.4% in the entire previous year.

In the Monterrey market, it was observed that during the second half of 2022, the recovery trend was consolidated, since in that semester it registered an occupation of 43,084 m2, which helped reduce the vacancy rate from 26% to 22%. at the end of the year.

“This contraction is attributable to the decrease in vacancy and the slowdown in the construction of new spaces. If these market conditions continue in 2023, a slight increase in starting prices and availability below 20% could be expected” Newmark said.

other markets

In addition to the markets of Mexico, other regions in Latin America had positive behaviors in 2022, for example, in São Paulo, Brazil, there was a decrease in vacancy and a greater dynamism of occupations, of 27,000 m2.

In Rio de Janeiro, Brazil, an occupation of 23,000 square meters was registered and the vacancy rate closed the year at 33.6%, the lowest since the end of 2016.

In Bogotá, Colombia, this market registered positive absorptions and occupations of the available spaces; however, Newmark is surprised by the absence of large office projects close to completion.

Other markets such as San José, Costa Rica; Panama, Panama and Buenos Aires, Argentina, also registered positive numbers; however, there are also important challenges such as little progress in the occupation of spaces and the lack of construction of new real estate.