Caracas is the most expensive office market in Latin America.

 

According to fresh data, asking rentals for offices in Caracas, Venezuela have risen by 80 percent in the first half of the year compared to the same period last year.

According to Jones Lang LaSalle data, average rates for Class A office space in Caracas reached $150 per square meter by mid-year, compared to an average of $20 to $35 per square meter in most other Latin American cities. The increase was largely attributable to currency depreciation. apartment for sale in pearl qatar

High rents in Caracas, quoted at the official rate, which is paid by any company doing business outside of Venezuela, are prompting businesses to explore for alternatives, according to Scott A. Figler, a consultant with Jones Lang LaSalle Latin America.

Mr. Figler explained, "Many companies are looking to buy their office to hedge against inflation and future devaluations, as currency limitations make it harder to move capital out of the country." "Rather than letting their money decay in the financial system, they'd rather have it invested in bricks."

Venezuela is confronted with political and economic uncertainty. According to JLL, the country produced 18,000 square meters of office space and net absorption of 23,000 square meters in the first half of the year, making it one of Latin America's weakest markets.

Top-tier office space is in very high demand. According to a report by CBRE, the average Class A asking rate in Caracas increased by 63.2 percent in the second quarter of 2013, as supply failed to keep up with demand.

Other Latin American countries are seeing increases in asking rents as well, though to a lesser extent.

According to CBRE research, "the overall trend for regional increase in average asking rates is somewhat upward," and "strong demand from international and domestic occupiers continues to push rents." "However, the high levels of demand have been mitigated by a very active development pipeline, which has resulted in a number of big building deliveries and additional options and availabilities for occupiers, as well as a slowing of the region's economies."

According to JLL, rents are rising in Colombian cities such as Bogota, Medellin, and Cali, as well as Lima and Guadalajara, where landlords have more power due to a supply constraint.

Mr. Figler claims that the office markets in So Paulo and Rio de Janeiro are equal to those in Manhattan, Miami, and San Francisco. By the middle of the year, rents in Rio de Janeiro were averaging $57 per square meter.

"There are geographic limits in Rio — mountains, water, etc. — that limit where construction can take place...the office sector is competing with hotels for premium space, which drives up rents," he told WPC News.

"Rents are costly in Sao Paulo because the city is so enormous and broad, and entry is so difficult, that regions with a preferred position and good access... command a significant premium."

Office rents in San Jose, Buenos Aires, Santiago, and Guayaquil, on the other hand, have been flat or dropping due to oversupply or poor demand, according to JLL. According to JLL, Panama has the highest office vacancy rate in the area, at 30%.

Across Latin American office markets, a similar trend of workplace decentralization is gaining traction.

"In certain cities, the difference between office rents in the Central Business District and office rents in other less concentrated submarkets has widened to the point where companies are leaving the CBD," Mr. Figler said. "We're seeing it in Bogota, Lima, Buenos Aires, Caracas, and Panama City in particular."