Latin American Office Occupancy In Slow Recovery as Companies Remain Cautious

The adverse economic outlook in the region could put the brakes on office space expansion, while employees remain reluctant to return to the office

In Latin America, prime-office segment occupancy grew in 2022 and is projected to continue growing this year, despite an economic slowdown predicted by international organizations.
February 21, 2023 | 01:54 PM

Read this story in


Bloomberg Línea — The global office real estate market was valued at $44.27 billion in 2021, increasing to $48.64 billion in 2022, according to the latest report by Fortune Business Insights, and which foresees that expansion continuing over the coming years, and which is projected to reach a value of $80.62 billion by 2029, a growth rate of 7.48% per year.

The growth in office occupation follows the economic recovery after the Covid-19 pandemic. In Latin America, prime-office segment occupancy grew in 2022 and is projected to continue growing this year, despite an economic slowdown predicted by international organizations.

São Paulo’s Rental Market Recovers As Companies Return to Offices

For real estate solutions company JLL, since the second half of 2022, the uncertainty in the global macroeconomic context has slowed the financing of new corporate and commercial real estate projects, an effect that could be sustained “until interest rates come down again, which could generate a significant gap in the future between the almost non-existent supply of desired spaces and an unsatisfied demand in a clearer economic outlook,” according to a recent JLL report.

The global office real estate market is projected to be valued at $80.62 billion by 2029. dfd

What is the outlook in Latin American cities?

“Many investors remain cautious and are delaying decision making,” Francisco Ruiz, director of research at JLL Colombia, told Bloomberg Línea. “In most markets around the world, transaction revaluation is now common, and a prolonged period of price discovery is affecting investment conditions.”


In the case of Buenos Aires, office inventory increased in 2022, while the vacancy rate was lower than during the previous two years.

According to the company, office inventory stood at 2,033,110 square meters at the close of 2022, a growth of 6,000 square meters compared to the third quarter of the year, and a positive net absorption of 28,200 square meters, the best level since the first quarter of 2020, that is, before the pandemic.

Why Brazil’s Bradesco Bought a Majority Stake in Real Estate Fund Manager BV DTVM

Square-meter-per-month rentals fell again in the Argentine capital to the lowest level in the last 10 years, reaching $22.80.


Meanwhile, in Lima,the vacancy rate decreased 3.2% at the end of 2022 compared to the first half of the year, closing the year at 25.5%, making for more than 336,000 square meters of available office space. The average price per square meter for office space in the Peruvian capital through December was $16.07.

“In the case of Chile, total vacancy decreased 0.2 percentage points compared to the previous quarter, closing 2022 with a total vacancy of 11%, equivalent to 376,000 m2 of office space available for lease,” explained Alessandro Piffardi, research & valuation analyst at JLL, explaining the behavior of the ‘prime’ office segment in Santiago de Chile.

In the Chilean capital, the monthly asking rent in the ‘Class A’ market is 0.53 UF per square meter, which at February 20, 2023 values means $23.52 per square meter.

In Bogotá, prime office rental prices reached 100,000 pesosz, an average of $20.34 per square meter per month.


JLL pointed out that for the Colombian capital there has been a decrease in the availability of high quality corporate space and an increase in prices. However, the effect is the opposite in spaces that are outdated due to age and/or “poor ownership structure”, JLL said.

A gloomy economic outlook in the region will slow decision-making by companies regarding a return to the office, constricting demand for office space during the year, according to JLL.dfd
Zonamerica to Improve Its Operation with $100M in Real Estate Projects

The outlook for prime office space

According to the Fortune Business Insights report, the IT and communication technology sector, in need of adequate infrastructure development, will contribute to the growth of the office real estate market in Latin America and globally. The hybrid work model is also projected to remain a feature of the labor market in most countries, despite a progressive return to the office.

“Radical changes in when and where employees work have already sparked renewed interest in flexible workspaces rooted in hotel-like amenities, and have reframed the purpose of the physical office as a place of collaboration,” according to JLL.

Brazilian PC Maker Positivo Sees Desktop Sales Recover As Workers Return to Offices

As for where companies stand on the latest trend, KPMG’s CEO Outlook 2022 South America survey finds that for 52% of South American CEOs and 44% of global group executives, there was a positive impact in terms of hiring, when asked about the impact of hybrid or remote work on organizations in the last two years.

Despite the favorable results, the CEOs surveyed also responded to how they envision the work environment for employees whose roles were traditionally office-based for the next three years.

“According to 64% of the leaders of each of the groups, work will return to being completely face-to-face by 2025″, the study states.

Which Neighborhoods Have the Priciest Property In LatAm’s 4 Most Expensive Cities?