CBRE Global Research and Consulting

Panam, Office Market

Market View
Quick Stats (Class A)
The second half of 2013 could end
with Panamas economic growth at
8.5% according to the Ministerio de
Economa y Finanzas (Ministry of
Finance and Economy). As a result,
inflation, which is currently at 3.7%, is
forecast to decrease. Unemployment
rates have not been affected and
remain at 4%
Port operations are grouped within
the transportation and
communications sector of the Gross
Domestic Product (GDP). This sector
also includes the Panama Canal,
airports and the telecommunication
The office market continues to remain
healthy. Even though availabilities
have increased (reflected by the
change in vacancy rate from 9.6% to
17.3%), it has been possible to keep
the occupancy rate above 80%
percent, in comparison to the previous
semester., This demonstrates that the
demand for space continues to grow
for new companies seeking to
establish their central offices in our
country. It also reflects the
development in commercial activities
that has been underway and laws
created by the government, which
benefit these types of multinational
companies.
2nd Sem 2013
VACANCY
17.3%
LEASE PRICE
$ 24.77
2nd Sem 2013
1
st
Sem
2013
Vacancy 17.3%
Lease Price $24.77 ---
Sales Price $2,824.22
Construction 217,736m
SALES PRICE
$ 2,824.22
CONSTRUCTION
217,736m
Arrows indicate the trend for the time period indicated and
do not represent a positive or negative value.
1
News
The vacancy rate increased in the last semester,
changing from 9.6% to 17.3%.
The average lease price has remained stable for this
year, indicating $24.77 m/month.
The sales price is within the average in comparison to
the previous semester, indicating $2,824.22/ m.
Square meters decreased, changing from 391,419m
to 217,736m.
airports and the telecommunication
market among others. Reported as
representing more than 24% of the
GDP for the second quarter of 2013,
this group of activities is the most
important for the Panamanian
economy.
Continuing to focus on expansion in
this sector is important for Panam. As
representatives from the Manzanillo
International Terminal have pointed
out, new ports need to be constructed
to reach the short range goal of
moving 15 million containers
annually. This would be slightly more
than twice the current container
activity, which is 6.8 million
containers. The purpose is to have
more port installations with
connectivity. Challenges in logistics
are constantly increasing at the
international level, as countries open
their markets. And the unique
geographic location of Panama is a
fundamental factor in the present and
future of the sector.
companies.
More than 100 thousand occupancy
permits have been recorded for the
year so far. In this semester, five
buildings, which were constructed with
occupancy permits, entered into
available inventory in the submarkets
for the Lnea Costera, Costa del Este y
the East Periphery.
The average sales price per square
meter for offices has remained above
two thousand dollars, with the sales
price for Class A office buildings
averaging $2,824.22 and the sales
price for Class B office buildings
averaging $2,336.31 for this six
month period.
.
2
n
d

S
s
e
m

2
0
1
3






P
a
n
a
m

,

O
f
f
i
c
e

M
a
r
k
e
t

|

M
a
r
k
e
t
V
i
e
w
Motivated primarily by public sector investment, the
growth rate for the Panamanian economy will remain at
8.1% for 2013, but with the annual inflation rate above
4%, according to an analysis done by the Spanish
financial group Banco Bilbao Vizcaya
Panama City: Class A Office Market
Graph 1: Economic Conditions
8%
10%
GDP
Inflation
8.1%
4%
Submarket
Rentable Area
(m)
Available Area
(m)
Vacancy Rate
Under Construction
(m)
Average Lease
(USD/m/mes)
Banking District 47,007 14,347 30.5% 129,667 $20.00 $25.00
Sur 82,286 19,219 23.4% 33,108 $18.00 $24.00
SanFrancisco 181,426 22,589 12.5% 0 $25.00 $28.00
East Periphery (Costa del Este, Corredor Sur,
Santa Mara Business District)
150,643 23,720 15.7% 54,961 $25.00 $28.00
Total Class A 461,362 79,875 17.3% 217,736 $24.77
Total Class B + C 685,464 87,101 12.8% 134,210 $20.42
Total 1,146,826 166,976 14.5% 351,946
2 2
financial group Banco Bilbao Vizcaya
Argentaria (BBVA).
The Panamanian economy will also maintain its growth
rate due to private sector development of large
residential, mining and energy projects.
0%
2%
4%
6%
8%
2009 2010 2011 2012 2013
Graph 2: Vacancy Rate vs.
Lease Values
$ 0
$ 5
$ 10
$ 15
$ 20
$ 25
$ 30
0%
2%
4%
6%
8%
10%
2010 2S 2011 2S 2012 2S 2013 1S 2013 2S
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2010 2S 2011 2S 2012 2S 2013 1S 2013 2S
Graph 3: Under Construction (m)
Construction
217, 736m (Class A)
Lease Values
Vacancy
$24.77 m
2
/month
17.3%
2
n
d

S
s
e
m

2
0
1
3






P
a
n
a
m

,

O
f
f
i
c
e

M
a
r
k
e
t

|

M
a
r
k
e
t
V
i
e
w
In comparison to the previous semester, the vacancy rate
registered an increase during this second semester,
moving from 9.6% to 17.3%, due to the additional
volume of new square meters entering the different main
submarkets.
This increase is related to the inventory that entered, but
there continues to be demand for this real estate market,
which has not experienced a significant impact. For the
office market in Panama City, in the submarkets under
study, the 82% occupancy rate reflects more than three
hundred fifty thousand square meters of total occupied
area, continuing to demonstrate the strong activity in
the country.
In the second semester of 2013, the average lease price
for buildings with Class A facilities remained unchanged,
reflecting $24.77/m/month. It shows a downward trend
due to the real estate inventory that has entered for this
year. There was an increase for Class B office buildings
and the average lease price went from
$15.64/m/month to $20.42/m/month.
Graph 4: Vacancy Rate
Graph 5: Average Lease Price
0%
2%
4%
6%
8%
10%
2010 2S 2011 2S 2012 2S 2013 1S 2013 2S
Vacancy 17.3% (Class A)
$ 10
$ 15
$ 20
$ 25
$ 30
Average Lease Price $24.77 m/mth (Class A)
3 3
Among the submarkets with the highest average lease
prices are the East Periphery submarkets (which includes
Costa del Este) at $26.33/m/month, followed by the
San Francisco submarket at $25.19/m/mes and the
Banking District submarket at $22.00/m/month.
The average sales price also remained stable from the
first semester to the second semester of the year. For
Class A buildings it was $2,824.22/m/month.
The following are average prices shown by the
submarkets: South $3,096/m, Banking District with
$2,892/m and the San Francisco submarket, which
stayed at an average sales price of $2,550/m.
Graph 6: Average Sales Price
$ 0
$ 5
$ 10
2010 2S 2011 2S 2012 2S 2013 1S 2013 2S
0
500
1,000
1,500
2,000
2,500
3,000
2010 2S 2011 2S 2012 2S 2013 1S 2013 2S
$2,824.22 ($/m - Class A)
2
n
d

S
e
m

2
0
1
3





P
a
n
a
m

,

O
f
f
i
c
e

M
a
r
k
e
t

|
M
a
r
k
e
t
V
i
e
w
Submarket Statistics
Submarket Total m Market Coverage
1. Banking District (rea Bancaria) 348,974 30.4%
2. South (Sur) 161,281 14.1%
3. San Francisco 256,387 22.4%
4. Bethania 95,436 8.3%
5. East Periphery (Periferia Este) 230,785 20.1%
6. Panam Pacifico 34,200 3%
7. Reverted Areas (reas Revertidas) 19,763 1.7%
44
Panama Research
Gissel Haylett
Panama Research
CBRE
Plaza Credicorp Bank, Ofic. 502
Calle 50, No.120
Apartado 833-0333
Panam, Repblica de Panam
t: +507-210-1675
Carla Lpez, Architect
Director, Consulting and Appraisal Services
Panama Research
CBRE
Plaza Credicorp Bank, Ofic. 502
Calle 50, No.120
Apartado 833-0333
Panam, Repblica de Panam
t: +507-210-1675
e: clopez@cbre.com
FOLLOW US
GOOGLE+
http://www.cbre.com.pa/
FACEBOOK
cbrepanama
TWITTER
@CBREpa
Total 1,146,826 100%
Global Research and Consulting
This report was prepared by the CBRE Panama Research Team which forms part of CBRE Global Research and Consulting a
network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric
forecasting and consulting solutions to real estate investors and occupiers around the globe.
Disclaimer
Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not
doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to
confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and
professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of the CBRE
Global Chief Economist