Offices in Buenos Aires. With optimism, specialists reveal the area most sought after by companies
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The market is showing positive signs: net absorption closed with an increase of 93% compared to the previous period; In addition, the vacancy percentage of square meters has diminished.
2022 ended well for the office market: the last quarter of the year reflected a good performance of the indicators. In fact, it was the second in a row with encouraging data.
Some concrete numbers: net absorption closed with an increase of 93% compared to the previous period. In addition, the dynamism of the vacancy of square meters diminished.
To complete the picture, it should be noted that most of the companies continued with their process of returning to their offices under the hybrid modality. The data released by Cushman & Wakefield generate positive prospects for 2023. “The average vacancy rate decreased by one percentage point, and the average rental asking price closed the quarter at US$23.7 m²/month, a figure similar to that of the previous period”, details Carolina Wundes, market research coordinator for the company that produced the report.
The last quarter of last year closed with a net absorption of 18,483 square meters, with 24,957 taken over by companies and only 6,740 vacant. The submarket that saw the most movement was the Panamericana corridor, with 9,370 square meters absorbed and no vacancy, showing that the flight-to-quality trend continues. This means that some companies are taking advantage of the context to leap into the quality of their office space.
This scenario has turned favourable for renters. There is an offer of quality spaces at attractive prices, which generates a reconsideration regarding the workspaces’ location, occupied surface and characteristics. “Although for now, from saying to doing, it seems there is a long way to go since the companies that opt for this movement are still limited. Most hope to have a clearer picture”, says Andrés Di Nallo, broker of the division, offices and commercial premises of Adrián Mercado.
“In the final stretch of 2022, we began to see, with some enthusiasm, a positive net absorption. Currently, vacancy remains stable, with a slight downward trend, while prices seem to have reached equilibrium”, analyzes Karina Longo, manager of valuations & research at Newmark Argentina.
Martin Potito, director of LJ Ramos, agrees that the main indicators to measure activity produced positive numbers and, to a certain extent, were better than expected at the beginning of the year. “Rental prices, in some cases, began to show some recovery. In addition, a greater number of inquiries was registered ”, he confesses.
Regarding the other submarkets, Puerto Madero, Retiro, Plaza San Martín, Catalinas and Plaza Roma, all in the centre of the city of Buenos Aires, also showed a good performance. While the hardest hit area was the 9 de Julio Avenue corridor, with 2036 square meters released.
For his part, José Viñas, director of Brokerage at Cushman & Wakefield, adds that “the average rental price for class A offices showed minimal variation throughout the year and in this quarter it became more visible with a decrease of US$0.1 m² per month, compared to the previous quarter. This is interesting and encourages the trend of flight to quality Because these values, being in dollars at the Banco Nación exchange rate, are decoupled from inflation in pesos”, he analyses.
The most appreciated submarket in the market continues to be the one on Avenida Libertador, mainly in the section of Buenos Aires that crosses the neighbourhoods of Belgrano and Nuñez, with an average rental value per square meter of US$30.
Among the areas that promise to have a greater role, the Libertador corridor on the CABA side stands out, with the development of the Innovation Park, a project that will provide new office spaces. “Another of the real estate stars will be the new building in Campos Salles y Arribeños that Raghsa is developing. “It is presented as the novelty of the coming years, following the success already achieved by the Libertador Business Center,” says Mercedes Pagliettini, senior broker at Cushman & Wakefield. Looking to the future, Potito estimates that some 110,000 square meters will be delivered by 2023, the majority in the northern area of the AMBA and in Retiro”.
“There was a timid and incipient recovery of the main market indicators, particularly vacancy and net absorption, although their stabilization around deteriorated values that are still far from their historical averages is confirmed,” says Guido Mosin, Research Manager Transactions & Consulting Services of the firm JLL.
Prices, for their part, continued to be depressed, mainly due to the reluctance of demand to validate the values before the pandemic. On the other hand, although a new offer has been entered, there is still a delay in the delivery of new projects, says the broker.
Gonzalo Neira, director of transactions at JLL, adds that many companies sought to protect their capital during 2022. “We have participated in purchase and sale operations for over US$300 million. Mostly, they have been transactions by companies not looking to make money but rather to protect their capital. We estimate that this year will be a year of scarce business, where we will need to bring our creativity to light and offer attractive solutions for investors, developers and clients who are, every day, more demanding and with clear requirements and needs”, he anticipates.
One of the novelties in the final stretch of 2022 was the inauguration of Lex Tower, a 31-story AAA office complex (with a total area of around 25,000 m2) in Corrientes and Paraná, which is being rented at a perfect pace. There the rental reference value is US$23 (BNA) per m2.
Looking ahead to this year, although the indicators show a reactivation in the level of absorption and vacancy, there is still a remnant of the product of the pandemic crisis. For this reason, the office market is maintained for the fifth consecutive quarter, with 243,718 square meters under construction, and the same projected area of 729,095 square meters continues until 2026.
One of the complexes that will open in 2023 is District Quartier. The venture that revitalizes Paseo del Bajo has three mixed-use buildings, one with AAA-class offices, large, open, flexible floors, and incredible views of the river and the city. “Basically, it is the first Buenos Aires mixed-use complex on a metropolitan scale. Among the properties that make it up is an office building, one of the lofts, another of studios and a large commercial promenade.
This coming year, according to specialists, is marked by expectations. “The presidential elections are the ones that will set the pace for the economy in general and the office market in particular. In this context, supply and demand are expected to remain attentive to what happens in economic matters. We believe that the fundamental variables of this market will not have great variations until we glimpse the political and economic future of the country”, says Longo.
Potito clarifies that “in the case of lower category buildings, a few years old and with little maintenance, which arouses little interest in demand, they will see an even greater drop in their prices, both for rent and for sale.”
Against this background, it is expected that companies delay in making definitions regarding office spaces. On the other hand, it is estimated that the purchase and sale operations will show a different reality since these would be expedited, “, especially by companies that find themselves with great liquidity in pesos, that try to protect their capital in a context of high volatility” says Longo.
The humour of the different referents of the sector is good. “As we get past the economic problems, sales and rental operations will increase, as well values. In addition, we expect incentives that make real estate investments an excellent refuge for investors”, concludes Guillermo Parera, general manager of Desarrolladora Branson, who carried out the Lex project.
Source: La Nacion
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