4th Edition of WTCA Prime Office Index LatAm Proves Projections for the Premium Office Segment Are Increasingly Positive in Latin America
- The index started at -40% in 2020 and closed at 2% for the first half of 2022 with expectations to continue growing.
- Leasing is projected to recover faster than the sales segment.
- Premium office users value buildings with features and technologies that make them environmentally sustainable.
BOGOTÁ, Colombia, June 28, 2022 /PRNewswire/ — The World Trade Centers Association® (WTCA®) — a global network connecting over 300 World Trade Center® (WTC®) locations in nearly 100 countries — has launched the 4th edition of its WTCA Prime Office Index Latin America (LatAm) in collaboration with global business publication Latin Trade. After gradually reducing the restrictions generated by the pandemic caused by COVID-19, the real estate sector — one of the hardest hit, specifically in the premium office segment — is beginning to indicate a positive trend in the market. This has been evident to experts since December 2021 and continues to grow, according to the latest WTCA report.
This index, which consults experts in more than 20 cities in Latin America, seeks to track the recent behavior and future prospects of premium office leases and sales in Latin America every six months. For the first half of 2022, the results are positive by 2%, one point higher than the previous semester, and there are expectations that this trend will continue to occur in the future, both in the leasing market and in the sales market as there is a better economic situation. There is confidence that higher prices will be achieved. This reflects the economic recovery that the countries of the region are having after the COVID-19 pandemic.
Another of the main findings was that by the end of 2022, the index is expected to continue to rise, both for the leasing and sales markets.
Premium office leases during the first half of 2022 showed a positive trend driven by rising prices, a more favorable economic situation, and more offices located at the highest price level. Although the premium office market has recovered after the pandemic, it still does not achieve its maximum occupancy. Despite this and many companies reducing the size of their offices, 35% of respondents reported price increases. In addition, 50% establish that the average price of leases during the year’s first half is between U.S. $ 12 and U.S. $ 18 per square meter.
“While in the second half of 2021, the economic situation was the factor that most negatively affected the leasing of premium offices in Latin America, the first half of 2022 was characterized by an increase in the percentage of experts who consider that the economic situation is favorable for leases,” said Carlos Ronderos, WTCA Latin America Regional Director.
However, both the behavior of the premium sales market for the first half of 2022 and the expectations for the second half are projected in positive territory. About 75% of respondents consider that the sale price of an office remained stable, and 65% expect it to continue by the end of this year. Despite the results obtained, the sector still has a lot of uncertainty due to inflation and the conflict between Russia and Ukraine. In short, the sales market has reacted more slowly than the leasing market, among other reasons, due to increases in interest rates.
On the other hand, environmental sustainability in premium offices is beginning to be part of the panorama evaluated by experts, as all industries are focusing on achieving the objectives established in the Paris Agreements. The report highlights that a vital path has been traveled, as 50% of respondents say that in their cities, premium office users very much value buildings with features and technologies that make them environmentally sustainable. In addition, it is suggested that different governments should establish tax incentives and rules that require the incorporation of environmental criteria into new construction projects.
The trend for the end of 2022 and the beginning of 2023 is for the market to continue growing. Expectations for the second half of 2022 show that optimism about the economic situation will continue, and that lease prices will remain stable. Experts expect vacancy times to go down, as well as the time it takes to lease offices. In the office sales segment, although no major changes in the economic situation are predicted, it is expected that sales times will remain stable and that sales prices will be projected upwards.
For the full report, visit https://issuu.com/wtca/docs/wtca_latam_index_june_2022?fr=sNmEwNjMxODMwNg.
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The World Trade Centers Association (WTCA) is a network of more than 300 highly connected, mutually supporting businesses and organizations in 92 countries. As the owner of the “World Trade Center” and “WTC” trademarks, the WTCA licenses exclusive rights to these brands for Members to use in conjunction with their independently-owned, iconic properties, facilities and trade services offerings. Through a robust portfolio of events, programming and resources that it offers its Members, the goal of the WTCA is to help local economies thrive by encouraging and facilitating trade and investment across the globe through Member engagement. To learn more, visit www.wtca.org.
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