Latin America | 2021

Research

Latin America office

market overview
October 2021
Contents

04 Introduction

06 Macroeconomic overview

08 Neuroarchitecture

10 Market insights across the region

14 City snapshots

28 JLL Latin America office clock

29 Market practices

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Latin America office market overview 3
 A year and a half into the COVID-19 pandemic, the world is still trying to come to terms
with its consequences and impact on everyday life. One way or another, we all have been
affected in terms of our lifestyle, which was probably disrupted in hardly foreseeable
manners. In such a scenario, with lingering uncertainty in both the shorter and longer
term, our region is focused on the mitigation of the negative shocks. Sure enough, 2020
saw all economies decline. The number of deaths was far above historical averages,
borders remained closed and, once the sanitary situation improved in Europe and the
United States, this part of the globe became the epicenter of the pandemic. In 2021,
the picture remains similar to that of the end of 2020, although brighter: now there is
some light at the end of the tunnel. Almost all countries were able to obtain vaccines for
their population, and some even managed to carry out highly effective immunization
campaigns. There are also growing signs of economic recovery, as the reopening and
return to more normal conditions appears on stronger footing than in 2020, with shorter
and more flexible intermittent shutdowns.

As was to be expected, the crisis had a considerable effect in real estate. An unprecedented
proportion of office space had to be shut down, for months on end. TThe impact on
indicators was as direct as it was resounding: the vacancy rate rose to all-time highs,
while the demand for new leases ground to an abrupt halt. Many projects had to be put
on pause and reconsidered. Just like 2020, the first half-year of 2021 was complex and
uncertain. However, the promise of a new normal more similar to the pre-pandemic
situation now seems closer at hand, laying the foundation for a more optimistic outlook
for the region. Thus, the worst difficulties appear to be past us, and we are more confident
on how the market will behave going forward. The future of real estate, both at a regional
and global level, will see an evolved industry, more focused on wellbeing, technology
and health, and likely structured around hybrid models that will favor an improved
work-life balance. It is on these bases, and under this conviction, that JLL presents this
report, in order to analyze the complexities we all recognize but also looking ahead. With
all certainty, Latin America has what it takes to return to growth and offer increasingly
dynamic markets, adapted to the new normal currently taking form. We believe that the
best way to evolve is through research, analysis and knowledge. Therefore, this report
aims to contribute to a better understanding of the region’s real estate industry, as a tool
for all those involved in the shaping of its future.

Shannon Robertson
Managing Director, Greater Latin America

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 Mexico Puerto Rico
119,900,000 3,194,000

Costa Rica
5,100,000
Colombia
49,800,000 Brazil
208,500,000

Peru
32,500,000

Bolivia
11,300,000

Paraguay
7,500,000

Chile Uruguay
17,600,000 3,400,000
Argentina
44,300,000

The population of the countries included in

this report numbers 503 million, amounting
to 75% of the total population of the region,
which in turn is equivalent to 6.5% of the
world’s total inhabitants.

Latin America office market overview 5

Macroeconomic overview
Comparing the end of 2019 with the end of 2020, the key economic indicators presented significant variations in all the countries
included in this report. Undoubtedly, this was mostly due to the serious impact of COVID-19, particularly regarding GDP levels, but
also in terms of inflation and employment.
With respect to GDP evolution, Argentina and Mexico stand out for their negative performance: after having been two of the few
countries in the region that saw their economies decline during 2019, in 2020 they were counted among the worst-hit nations,
being ahead only of Peru. In contrast, Paraguay is noticeable because of its relatively positive performance, given that, although its
domestic product had slightly declined in 2019, in 2020 it was by far the region’s least-affected economy, decreasing merely by one
percentage point.

GDP growth. By country. 2020

0.0

-1.0
-2.0

-4.0
-4.1 -3.9
-4.5
-6.0
-5.9 -5.8 -6.3
-6.8
-8.0
-7.8
-8.2

-10.0
-9.9

-11.1
-12.0
Peru Argentina Mexico Bolivia Colombia Uruguay Chile Costa Rica Brazil Puerto Rico Paraguay
Source: World Bank

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Inflation rate. By country. 2020*

Macro overview
Uruguay 9.8

Mexico 3.4

Brazil 3.2

Chile 3.0

Colombia 2.5

Peru 1.8

Paraguay 1.8

Bolivia 0.9

Costa Rica 0.7

0.0 2.0 4.0 6.0 8.0 10.0 12.0

Source: World Bank
Comparing the end of 2019 with the end of 2020, the key economic indicators presented significant Regarding inflation, the case
of Argentina once again negatively stands out, considering the growth of its annual CPI more than tripled that of the following
country among those included in this report, Uruguay. Be that as it may, inflation in Argentina was substantially below that
of 2019, while in Uruguay it registered a significant increase, seeing the highest level in five years. On the other hand, with the
exception of Chile, most of the other economies of the region recorded declines in the pace of price increases.
Unemployment rate. By country. 2020
18.0
17.1

16.0 15.4

14.0 13.7
12.7
12.0 11.7 11.5
11.2
10.7
10.0

8.0 7.6

6.2
6.0 5.6
4.7
4.0

2.0

0.0
Costa Rica Colombia Brazil Uruguay Argentina Chile Puerto Rico Paraguay Peru Bolivia Mexico
Source: World Bank

Lastly, as was to be expected, all the surveyed countries saw unemployment rise, with Costa Rica and Colombia presenting the
most significant jumps. Indeed, these two economies not only saw the highest unemployment rates in 2020 but also were among
those with the largest interannual increases with respect to the preceding year. Additionally, Peru’s case is worth noting, since
unemployment more than doubled between 2019 and 2020 (however, despite this, it still presents one of the lowest levels in the
region).
*Argentina and Puerto Rico were not considered in the analysis of the inflation rate, since the source used for the report –the World Bank– does not include
2020 inflation data for these countries.

Latin America office market overview 7

Neuroarchitecture

By: Sofía Perazzolo

Project and Development Services Corporate Accounts

Neuroarchitecture is the fusion between architecture and neuroscience, which is the integral study of the nervous system
considering its behavior, its functions, and its structure in order to understand its conducts and cognitive processes. This discipline
aims to comprehend how spaces can affect our brain and, on that basis, what their implications are on our behavior and
emotional state. Neuroarchitecture posits that the environment has a direct influence on the most primitive functioning patterns
of the brain, which are not controlled by our conscious perception.
Its goal is to design spaces not just based on intuition, but also according to solid, knowledge-based evidence.

What are the studies that generate this solid basis of
knowledge?
People’s reactions can be measured by observing heart
activity (from a neurophysiological standpoint) and through
encephalograms (from the perspective of brain activity).
Examples include the use of wristbands to measure
sweating rates, body sensors that measure heart activity,
body temperature and skin conductivity, as well as the
measurement of brain waves and eye movements, and
questionnaires conducted by mental health professionals.
Naturally, technology makes everything easier. Virtual reality
is a key tool, which allows for the simulation of different
scenarios, or a single scenario with different characteristics:
magnitudes and dimensions, colors, presence of vegetation,
etcetera, and thus carry out measurements.
How can neuroarchitecture be applied to corporate
architecture?
will also include spaces for collaboration, where creativity and
interaction will prevail; these will be of a more casual leaning.
Some of the variables to be considered in order to evolve from
designing spaces to designing experiences:
Presence of nature and exterior views
Multiple studies concluded that the inclusion of nature in
workspaces relaxes the mind. Its mere presence in interiors
(whether it be plants or natural materials such as wood, stone
or water) or even being able to see it through the window may
substantially lower anxiety and stress levels, and it may also
boost the creativity and productivity of employees. This was
implemented in healthcare: in several countries, it was shown
that patients that are within hospitals with views to nature –or
even to the city– recover and are discharged more rapidly than
those in rooms with internal views.
Chronobiology and circadian rhythms

While addressing office design, it is important firstly to
detect where the emphasis is to be put in each of the spaces,
depending on their function, in order to understand what
behaviors, emotions or activities are to be favored. This
means that, for instance, a focus room or a phone booth
will be designed to encourage concentration and peace of
mind, while avoiding distractions and external stimuli. In
turn, a cafeteria or a canteen will foster interaction, contact,
spontaneity or meetings, while a lactation room will be
prepared for intimacy, calmness and privacy. However, we
Sunlight is fundamental for the correct regulation of the
immune and endocrine systems. The key is in being exposed
to natural light throughout the day and the different seasons
of the year, as the lack of sunlight results in sleep disorders,
fatigue, lack of concentration, depression and stress. Thus,
artificial and natural light are one more dimension of design,
since their intensity or color temperature also affect people’s
behavior and mood. Cold light has a stimulating effect, while
warm light relaxes. Furthermore, in all cases, high intensity

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light incites activity and low intensity light encourages
relaxation and rest.
Ceiling height
Another interesting conclusion is that ceiling height may also
have an impact on behavior and problem-solving capabilities,
favoring different types of mental processes. It has been
shown that high ceilings encourage creative, artistic and
imaginative activities; however, when it comes to high-focus
activities, involving calculations or routine tasks, low ceilings
work better.
Noise
Noise is one of the first elements that come to mind while
considering workplaces. It is one of the main causes of
distraction and declines in productivity, as well as of the
increase in stress levels and employee dissatisfaction. Noise
might alter our ability to reason, retain information and focus.
Morphology, materials and geometries
When designing workspaces, shapes and materials, too, can
trigger different mental processes. The abundance of hard
surfaces produces echo, which generates stress. There are
studies indicating that people prefer curves and soft lines
since, instinctively, they feel threatened by sharp objects.
Furthermore, very sharp angles produce a state of alertness.
Proxemics and eye contact
Proxemics is a discipline dealing with the study of the spatial
relationship of the individuals with themselves and other
persons. Thus, it is key for the creation of a good regulation
of interpersonal social distance within offices, according to
the use and degree of privacy of each of their spaces. On the
other hand, eye contact is the basis of human connections,
both biologically and culturally. Looking at each other helps
us to better interpretate messages; thus, the location of the
Neuroarchitecture
equipment and the planning of office spaces can contribute to
maximize (or minimize) opportunities for socialization.
Be that as it may, it is important to stress that
neuroarchitecture works with general patterns of brain
functioning, and that each person is unique on account of
genetic, cultural and environmental elements. This means
that the same space can have different effects on people;
therefore, the analysis and correct understanding of the target
public is essential for the success of its application in design.
Why is it such a significant design tool?
The environment undoubtedly affects our behavior and
brain. Just as it is assumed that we need to invest in a better
nutrition, physical activity and leisure, we should also invest in
our workspaces and rethink them.
Together with the arrival of COVID-19 came the lockdowns and
the restrictions to mobility. Thus, the importance of the design
of our day-to-day spaces became more clear, as well as how
difficult is to spend so much time in the same place.
Humans are emotional beings, and every time they enter a
room, they react to its characteristics. We spend 89 % of the
time indoors, and 30 % of the elements that determine our
health and wellbeing correspond to the psychological impact
of their design. This means that the places where we live
and work have to be up to the task, and contribute to a rich
sensory experience.
Latin America office market overview 9
Market insights across the region
During 2021, the cities analyzed in this report totaled 28,555,000 square meters of corporate office space, which represents a
4.6% increase with respect to the stock registered in 2020. Of this total, 25.9% corresponds to Ciudad de México, while 14.1%
corresponds to São Paulo. In contrast, the office inventory of Santa Cruz de la Sierra amounts to merely 0.6% of the surveyed area.
It is expected that 2,822,700 square meters will have been added by 2023; that is, in two years the stock will grow by 9.9%. Ciudad
de México will add nearly 800,000 of this area, while Buenos Aires will add almost 438,000. Conversely, Rio de Janeiro does not
register any project. In percentage terms, Guadalajara will grow the most (27.5%), followed by Buenos Aires (21.7%).

Stock, vacancy rate & average asking rents

Class A asking rents (USD/sq. m/month)

35.0

Buenos Aires
30.0
Montevideo Mexico City

25.0
São Paulo
Santiago

20.0 Guadalajara Monterrey

San Jose
Rio de Janeiro
San Juan Lima
15.0 Bogotá
Asunción

10.0
0.0 10.0 20.0 30.0 40.0 50.0

Vacancy rate (%)

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Once again, Rio de Janeiro presented the highest vacancy rate Year-on-year net absorption
in the region. Indeed, 39.3% of its stock was available as of the

Market insights
end of the second quarter of 2021. This value nearly doubles 1,400,000

the region’s average rate (20.5%). On the other hand, and just
900,000
like in the previous year, Santiago recorded the lowest vacancy 683,896

rate, at 10.0%. Thus, and for the first time in recent years, 400,000
no city registered a single-digit vacancy rate, reflecting the
pandemic’s strong impact and the economic difficulties that -100,000
the region has been going through since 2020.
-600,000
Stock evolution. 2020 - 2023
-1,100,000 -1,034,388
32,000,000
31,378,160
-1,600,000
31,000,000 H2 2015 - H1 H2 2016 - H1 H2 2017 - H1 H2 2018 - H1 H2 2019 - H1 H2 2020 - H1
2016 2017 2018 2019 2020 2021
30,000,000 Y-o-Y Average

29,000,000 Regarding asking sale prices, in 2021 the region’s average for
28,000,000 Class A offices was USD 3,300 per square meter. Once again,
Buenos Aires presented the highest average price for Class A
27,000,000 units (USD 5,000 per square meter). With respect to Class B
26,000,000
space, the highest average corresponded to Ciudad de México
and Buenos Aires, at USD 2,500 per square meter. Santa Cruz
25,000,000 de la Sierra recorded the lowest prices for both categories
2020 2021F 2022F 2023F
(USD 1,900 per square meter and USD 1,000 per square meter).
Stock Production
Class A average asking rent and vacancy rate
Furthermore, demand also evidenced signs of deterioration
during this period. In point of fact, the second semester of 45.0
2020 and the first half of 2021 saw negative absorption, as 40.0 39.3
1,034,000 square meters were released in the cities under 35.0
analysis. Therefore, for the first time on record, there was net 30.0
29.1 28.6
negative absorption at a regional level. The two cities that saw 25.0 23.1 24.9 23.8
25.4
23.9 22.5 19.0
most office space brought to market were Ciudad de México 20.0 22.4 21.8
21.3 18.4 17.5 18.0
15.0 16.3 17.9 17.7
and São Paulo (with 324,100 square meters and 180,750 15.1 16.2 15.8
10.0 10.0 11.0 13.5
square meters, respectively), while Rio de Janeiro was the 9.7
5.0
only market with positive absorption (19,200 square meters).
0.0
It should be noted, however, that the pace of space givebacks
deaccelerated in the second quarter of 2021, which saw the
best performance of the last four three-month periods, in
contrast with the first quarter of 2021, when a record number
Class A rental average (USD/sq. m/month) Vacancy rate (%)
of square meters were released.
In terms of asking rental prices, Montevideo registered the Lastly, the highest average cap rate for Class A offices
region’s highest-priced city, with an average monthly price of corresponded to San José, at 10.5%. In terms of Class B space,
USD 29.1 per square meter of Class A space. The second most the highest cap rate was registered in Monterrey, Rio de
expensive city in the region was Buenos Aires, averaging USD Janeiro and Buenos Aires, averaging 11.0%.
28.6 per square meter per month for its Class A buildings.
Conversely, Santa Cruz de la Sierra and Asunción registered
the lowest average asking prices for Class A office space, at
USD 13.5 per square meter per month.

Latin America office market overview 11

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Latin America office market overview 13
Buenos Aires
Argentina

Key market indicators analysis

2.0M -28,424
■ The corporate office stock of Buenos Aires remained Stock Net Absorption (sq. m)
unchanged during the second quarter of 2021 with respect (sq. m) Q2 2021
to the first quarter, totaling 2,020,000 square meters.
■ In terms of vacancy, the period saw once again a quarter-
on-quarter increase, for an unprecedented seventh time in a 438K 28.6
row. Thus, the vacancy rate reached a historical record high, Production (sq. m) Average Class A rent
at 16.3%. Compared with the pre-pandemic value (7.4%), 2021 - 2023 (USD/sq. m/month)
the surge amounts to 120%.
■ It is expected that the rest of 2021 will see the addition
of 151,000 square meters, which would amount to a 7.5% 16.3
increase of the stock, which would then total 2,171,000 Vacancy rate (%)
square meters.
Q2 2021
■ The second quarter of 2021 saw a similar performance
to that of the preceding months, registering a negative
absorption of -28,300 square meters, at least in part due to Evolution of asking rents
the fact that several companies gave back significant space
in submarkets including Macrocentro Sur, Norte GBA and 35.0
Sur CABA. 33.0 33.9

■ The accumulated absorption since the start of the 31.0

32.6
31.7
32.5

pandemic amounts to -122,400 square meters, with Class 29.0 30.0

B buildings being the ones that released most of the space 27.0
28.5 28.6

(-100,200 square meters).

25.0
25.4
■ The second quarter of 2021 saw an average asking rental
25.2
24.6 24.3 24.3
23.0 23.6
rate of USD 24.9 per month, that is, a very similar value to 23.2
21.0
that of during the first three months of the year: USD 24.8
per square meter. The decline of the general average with 19.0

respect to the historical average (USD 25.9) resulted from 17.0

the considerable increase in offered office space. 15.0

Q2 Q2 Q2 Q2 Q2 Q2 Q2

Market performance 2015 2016 2017

Class A average rents (USD/sq. m/month)
2018 2019 2020 2021
Class B average rents (USD/sq. m/month)

Market status: the market is tenant favorable due to

the sharp decline in demand for new office space & high
amount of available inventory in the market, which is Evolution of vacancy rate and net absorption
driving up competition.
Market forecast: the market is expected to remain tenant- 80,000 18.0

favorable through year end 2022 60,000 16.0

Occupier trends: the negotiations for rent reductions seen 40,000

14.0
in 2020 continued during the first months of 2021, and 12.0
then started to dwindle as the severity of the pandemic 20,000

diminished. 0
10.0

Landlord trends:during the first half of 2021 landlords -20,000

8.0

were not nearly as flexible as in the previous year, and it is 6.0

expected they will become even less open to negotiations -40,000

4.0
as the health situation improves and a gradual return to -60,000 2.0
the office ensues.
-80,000 0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018 2019 2020 2021
Net absorption (sq. m) Vacancy rate (%)

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Santa Cruz de la Sierra
Bolivia

Key market indicators analysis

177K 19.8K
■ The corporate-grade office stock of Santa Cruz de la Sierra Stock Production (sq. m)
amounted to 177,200 square meters in 2021. Thus, it still has (sq. m) 2021 - 2023
the smallest inventory of the region.
■ During the current year, 30,700 square meters have been

added to the stock, due to the inauguration of a Class A

13.5 9.2
building complex in the Equipetrol Norte submarket. Average Class A rent Average Class B rent
(USD/sq. m/month) (USD/sq. m/month)
■ Currently there are 63,000 square meters of registered

developments under construction and in project phase,

which will be added to the stock between 2021 and 2024.
Most of these properties will be Class A buildings, which Evolution of stock and production (sq. m)
will bring about an interesting renovation of the inventory,
resulting in a modern, up-to-date supply of office space for 250,000

the city, in line with the typical demands of multinational

corporations. 200,000

■ The Urubó submarket will concentrate most of the

space that is currently in project phase, since the one 150,000

development registered in this area includes 41,300 square

meters. The rest of the area to be added will correspond to 100,000
the Equipetrol Norte submarket.
■ The average asking price per square meter registered 50,000

in 2021 amounted to USD 11.3 per month. For Class A

properties the average was USD 13.5 per square meter per 0
month, which represents a 16.0% decline in comparison
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021F

2022F

2023F
to 2020. Furthermore, the newest, highest-quality building Stock Production

of the city registered USD 24.0. In contrast, in 2021 Class

B space recorded an average asking price of USD 9.2 per
square meter per month. Stock distribution (%) by submarket

Market performance
5%
Market status: the market began a gradual recovery during 6%

the second semester of 2020 and the first half of 2021, as it 8%

Equipetrol Norte

regained some normalcy. Norte

Market forecast: just like in 2020, it is expected that the Costanera empresarial

9%
market will continue to be favorable to tenants, since they Equipetrol Sur

have more negotiating power. 56%

Centro

Urubó
Occupier trends: a great proportion of companies continue
to operate in residential buildings. However, in recent years 16%

a significant number of businesses have relocated to better

quality office space, and this is expected to continue.
Landlords trends: during the last two years there appeared
a number of developers with a corporate profile similar to
that of more sophisticated markets of the region.

Latin America office market overview 15

Rio de Janeiro
Brazil

Key market indicators analysis

1.7M 24,626
■ Space givebacks saw a 23% decrease in the second Stock Net Absorption (sq. m)
quarter compared to the first quarter, which may signal (sq. m) Q2 2021
that a market recovery is underway, driven by the advance
of vaccination in the country. It should be noted that the
market had already registered considerable givebacks 0 17.7
before the pandemic. Production (sq. m) Average Class A rent
■ The total gross absorption registered in the second quarter
2021 - 2023 (USD/sq. m/month)
of 2021 resulted in an increase of 36,700 square meters
compared to the previous quarter. The four most prominent
submarkets were: Centro (with 16,400 square meters), Porto
39.3
Maravilha (with 15,400 square meters), Barra da Tijuca (with Vacancy rate (%)
10,000 square meters) and Orla (with 5,100 square meters). Q2 2021
■ The second quarter of 2021 closed with the vacancy rate

falling by 1.3 percentage points in relation to the preceding Evolution of asking rents
quarter and a decline of 1.1 percentage points with respect
to the same period in 2020, registering the second lowest 40.0

rate in the city since 2017 (39.3%). Moreover, no new

additions to the stock are expected in the next two years. 35.0

33.5 34.1
■ The average asking price continued its downward trend 30.0
32.0

during the second quarter of 2021, declining by 2.1% 29.6

28.4
27.3
compared to the first three months of the year and 8.4% 25.0
25.1
in interannual terms. This price movement was already 22.4
20.0 21.6
expected due to the current market situation, mainly 20.7

because the landlords have shown an increased flexibility 15.0 16.3

17.7

with regard to asking prices in order to stimulate interest for 14.5

13.0
the vacant space, which was bound to happen since early 10.0

2020. Q2 Q2 Q2 Q2 Q2 Q2 Q2
2015 2016 2017 2018 2019 2020 2021
Class A average rents (USD/sq. m/month) Class B average rents (USD/sq. m/month)
Market performance
Market status: the market has not presented a large volume
of negotiations, and areas that had been pre-leased last year Evolution of vacancy rate and net absorption
have caused vacancy to remain stable and even drop a little.
60,000 50.0
Market forecast: the remaining of the year is expected
45.0
to see a neutral market, without major changes in both 40,000
40.0
absorptions and returns. 20,000 35.0
Market forecast: the remaining of the year is expected 30.0
to see a neutral market, without major changes in both 0
25.0
absorptions and returns. -20,000
20.0
Occupier trends: occupants have many options and good -40,000 15.0
negotiation conditions. Many companies are planning to 10.0
return to their offices in view of the progress of vaccination. -60,000
5.0

Landlord trends: there are no plans for new buildings in the -80,000 0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
city, all projects are at a standstill. Due to the high vacancy
2015 2016 2017 2018 2019 2020 2021
rate, the owners are more willing to make concessions and Net absorption (sq. m) Vacancy rate (%)
discounts in negotiations.

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São Paulo
Brazil

Key market indicators analysis

4.0M -41,188
■ The occupancy rate saw an increase of 21% compared to Stock Net absorption (sq. m)
first quarter of 2021. Of the recorded occupied area, 27% (sq. m) Q2 2021
is in the Marginal Central submarket, followed by Berrini/
Chucri with 21% and Faria Lima with 12%.
■ There are nine projects scheduled to be delivered this
242K 22.5
year. Due to the current situation, expectations are that the Production (sq. m) Average Class A rent
launch of new projects will be reduced in the upcoming 2021 - 2023 (USD/sq. m/month)
years.
■ The second quarter of 2021 ended with an increase of

0.8 percentage points in the vacancy rate compared to

24.9
Vacancy rate (%)
first quarter, and 7.6 percentage points with respect to the
Q2 2021
second quarter of 2020. The pandemic accelerated the
process of footprint reduction by some companies in the
city. Evolution of asking rents
■ In the second quarter of 2021, the average asking price

increased 6.4% compared to first quarter of the year and 35.0

10.2% with respect to the second quarter of 2020, due to the 33.0 32.5
fact that high-quality spaces returned to the market again, 30.0

causing the average price in the city to rise. The second

27.1
reason was the new high-end properties that entered the 25.0
25.3
market with 100% availability, interfering with the general 24.2 24.0 23.5
22.5
performance. 20.0
19.7
18.1
17.5
Market performance 15.0 16.0
14.3

Market status: the market recovered some ground in 10.0

12.6

terms of the number of transactions but it still suffers from Q2 Q2 Q2 Q2 Q2 Q2 Q2

givebacks of space, since many companies reduced their 2015 2016 2017 2018 2019 2020 2021
Class A average rents (USD/sq. m/month) Class B average rents (USD/sq. m/month)
operations. The vacancy rate continues to rise.
Market forecast: while this year is expected to see a
negative net absorption, the market may improve in the
second half of the year. Reductions will continue to occur Evolution of vacancy rate and net absorption
both for economic reasons and due to the trend towards 120,000 30.0
remote work. 100,000
Occupier trends: many tenants continue to choose to 80,000 25.0

reduce their operations, but it is already possible to see 60,000

20.0
the movement of large companies taking advantage of 40,000

opportunities in the market, mainly due to the advance of 20,000

15.0
vaccination in the country; there is a faster return to the 0

offices. -20,000
10.0
-40,000
Landlord trends: property owners in the worst-affected
-60,000 5.0
regions remain more amenable to negotiations. A decrease -80,000
in the projection of new buildings for the coming years is -100,000 0.0
also observed. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018 2019 2020 2021
Net absorption (sq. m) Vacancy rate (%)

Latin America office market overview 17

Santiago
Chile

Key market indicators analysis

3.3M -41,687
■ The Santiago office market recorded considerable Stock Net absorption (sq. m)
variations in the main market indicators in the last twelve (sq. m) Q2 2021
months, as a reaction to the economic crisis brought about
by the COVID-19 pandemic. However, the most significant
changes took place during the first half of 2021, since the 192K 22.4
increase in availability in each of the two quarters was Production (sq. m) Average Class A rent
higher than the total annual figure for 2020, impacting 2021 - 2023 (USD/sq. m/month)
rental rates.
■ As of the end of the first half of 2021, there have been no

deliveries, and the increase in the vacancy rate is merely

10.0
the result of the termination of lease agreements, which Vacancy rate (%)
happened for different reasons. The general vacancy rate Q2 2021
increased by 1.2 percentage points quarter-on-quarter and
3.4 percentage points year-on-year. Evolution of asking rents
■ Regarding asking rental rates, they also saw a downward

trend in the last twelve months, with a year-on-year 24.0

decrease in the average asking rental rate for of 9.4% for 22.6
22.0 22.4
class A space and 3.8% for class B space. 21.7
22.3
21.6
21.1
■ If the rate of new lease signings versus those being
20.0 20.5

terminated is maintained, the vacancy rate may close the 18.0 18.4
year at around 13%, which would continue to put downward 17.1 17.3
17.8 17.8
17.3
pressure on asking rental rates. 16.0
15.6
14.0
Market performance
12.0

Market status: the market is currently pro-tenant. Demand

10.0
has slowed down despite the low deliveries, increasing Q2 Q2 Q2 Q2 Q2 Q2 Q2

vacancy rate considerably in the last six months, affecting 2015 2016 2017 2018 2019 2020 2021

rental values. Class A average rents (USD/sq. m/month) Class B average rents (USD/sq. m/month)

Market forecast: the next three years are expected to see a

pro-tenant market.
Evolution of vacancy rate and net absorption
Occupier trends: companies looking for new leases
expect more flexibility in the agreements as well as lower 80,000 12.0
rental rates. Some of the occupants with ongoing lease
agreements are analyzing the optimal footprint they will 60,000
10.0

need for the next period. 40,000

8.0
Landlord trends: institutional landlords, who have 20,000
historically been operating in the market and value long- 6.0
term relationships with tenants, are being more flexible 0

in the lease agreements negotiations. Non-institutional -20,000

4.0

landlords, for their part, aggressively offer low rental rates

2.0
for the first 12 months and flexibility throughout the lease -40,000

period. -60,000 0.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018 2019 2020 2021
Net absorption (sq. m) Vacancy rate (%)

18 JLL
Bogotá
Colombia

Key market indicators analysis

2.7M -79,288
■ The corporate office market continues to be affected Stock Net absorption (sq. m)
by the global pandemic and its economic and sanitary (sq. m) H1 2021
consequences. The vacancy rate in Bogotá reached 17.5%,
a strong uptick when compared to the 13.5% vacancy rate
observed in 2020. The footprint reductions that are taking 184K 16.2
place in 2021 tend to be strategical and planned decisions Production (sq. m) Average Class A rent
made by larger companies who have room for financial 2021 - 2023 (USD/sq. m/month)
maneuvering but are adapting new office tendencies.
■ The corporate office stock grew very little during the first

semester of 2021, reaching approximately 2,700,000 square

17.5
meters. Vacancy rate (%)
Q2 2021
■ Net absorption nearly reached -80,000 square meters,

even lower than the absorption in 2020. Demand has been

hampered through two channels. First, financial pressures Evolution of asking rents. Class A buildings
prompted companies to seek cost savings. Second, the wide
(forced) adoption of remote working caused users to start 27.0

rethinking their workplaces and seek more efficient uses of

space. 25.0 25.4

■ Production is expected to remain at historically low

23.0
levels within the next three years, with an aggregate of
approximately 184,000 square meters. 21.0
22.2 22.2
21.4
■ The average asking rental rate decreased approximately
20.1
8.5% for class A office spaces, as a consequence of the high 19.0

vacancy rate.
17.0 17.7

Market performance 16.2

15.0
Market status: a flight-to-quality and “flight-to-flex” trend Q2 Q2 Q2 Q2 Q2 Q2 Q2
2015 2016 2017 2018 2019 2020 2021
is being observed, while vacancy levels are high and rental
prices continues to decrease.
Market forecast: the office market is expected to return to
normal vacancy levels within the next three years.
Evolution of vacancy rate and net absorption
Occupier trends: the transactions that have taken place in 250,000 20.0

2021 for the lease of new areas are seen in industries such 18.0
200,000
as BPO (Business Process Outsourcing) and technology 16.0

companies. In the case of existing leases, tenants are 150,000 14.0

starting to negotiate temporary rent reductions for the next 100,000

12.0

6 - 12 months. 10.0

Landlord trends: a number of landlords have shown 50,000

8.0

flexibility while negotiating. However, some of them are 0 6.0

strictly enforcing the penalties stipulated in the lease 4.0

-50,000
agreements. 2.0

-100,000 0.0
Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2
2015 2016 2017 2018 2019 2020 2021
Net absorption (sq. m) Vacancy rate (%)

Latin America office market overview 19

San José
Costa Rica

Key market indicators analysis

1.3M 19.0
■ The corporate office stock increased slightly during Stock Vacancy rate (%)
the first half of 2021, amounting to 1,367,980 square (sq. m) Q2 2021
meters. Some properties that were initially expected to be
completed in 2020 have now been executed and added
to the market, while most of the projects that started 146K 21.3
construction during 2020 remain in their construction phase Production (sq. m) Average Class A rent
and are expected to be inaugurated in 2022. 2021 - 2023 (USD/sq. m/month)
■ The vacancy rate surged during the first half of 2021,

closing at 18.8%. This amounts to a rise of 4.8% when

compared to 2020’s mark of 14%. This significant increase 18.0
can be directly traced to the COVID-19 pandemic, as Average Class B rent
fewer lease agreements were signed and existing tenants (USD/sq. m/month)
reduced their footprint, capitalizing on the favorable market
conditions. It is expected that vacancy will continue to rise
in 2022, since several projects are scheduled to enter the Evolution of stock and production (sq. m)
market. 1,550,000

■ The average asking market rental rate amounted to USD

1,514,771

1,500,000
19 per square meter in the first half of 2021 and remains
unchanged compared to 2020. 1,450,000

■ 2021 has been a poor year for production, as few meters 1,400,000

have been added to the market’s stock thus far. It is

expected that 146,791 square meters will be added during
1,350,000

2022, 59% of which will be concentrated in Heredia. 1,300,000

Market performance
1,250,000

1,200,000

Market status: during 2021, the office market reported

positive dynamism compared to 2020, considering that 1,150,000
2019 2020 2021 2022F

domestic and foreign companies were still waiting for the Total stock (m²) Production

evolution of the pandemic.

Market forecast: closures have been lower than expected
due to pressure from landlords to lease or sell their spaces. Stock distribution (%) by submarket
Conditions remain in favor of tenants and it is expected that
by the end of 2021 prices will begin to stabilize.
Occupier trends: during 2021, lease agreements have been 3%
11%
renegotiated with the aim of obtaining lower rental rates Heredia
and/or more flexible contracts. Escazu
Landlord trends: institutional landlords continue to strive 12%
42% Santa Ana
to maintain long-term relationships with their clients and Rohmoser
remain flexible in negotiations. Non-institutional landlords, Este
for their part, continue to be less flexible. Cartago
15%

17%

20 JLL
Guadalajara
Mexico

Key market indicators analysis

458K -3,359
■ The Puerta de Hierro submarket has the largest stock Stock Net absorption (sq. m)
of office space, with a total of 174,245 square meters (sq. m) Q2 2021
distributed in twelve class A buildings (38% of Guadalajara’s
total), followed by the Américas submarket with 127,171
square meters in seven buildings. 126K 18.4
■ The total availability rate in Guadalajara presented a slight
Production (sq. m) Average Class A rent
decrease compared to the previous quarter, at 15.1%. 2021 - 2023 (USD/sq. m/month)
■ The vacancy rate is highest in the Puerta de Hierro

submarket, at 21.07%, followed by Américas with 11.13%

and Zona Sur with 10.63%, while the area with the lowest
15.1
Vacancy rate (%)
rate is Vallarta, with 7.93%.
Q2 2021
■ Puerta de Hierro is also the submarket with the largest

inventory of buildings under construction, with four projects

totalling 52,862 square meters. Evolution of asking rents
■ The Zona Sur submarket concentrates 43% of the planned
26.0
office space, followed by 35% in Puerta de Hierro, 15% in
25.0
Américas, and 7% in the Vallarta submarket. 24.0

■ Despite the instability and uncertainty at a national level, 22.0

23.0

Guadalajara continues to be an area that receives significant

20.0
foreign investment, largely because the main city’s main 20.0 20.0 19.9

industry is composed of technology companies with 18.0

18.3 18.4

revenues in US dollars. 16.0

Market performance 14.0

12.0
Market status: tenant-favorable market conditions are
expected to continue. Landlords are starting to grant 10.0
Q2 Q2 Q2 Q2 Q2 Q2 Q2
incentives to current tenants in their buildings, mostly in the
2015 2016 2017 2018 2019 2020 2021
form of rent reductions.
Market forecast: tenant-favorable market conditions are
expected to continue. Landlords will be under pressure Evolution of vacancy rate. Class A
to accommodate tenants’ requests mainly by providing
a cap in the exchange rate or rent reductions. Landlords 25.0

are starting to grant incentives to current tenants in their

buildings, mostly in the form of rent reductions. 20.0
Occupier trends: the majority of tenants whose contracts
are about to expire have approached the landlords to obtain 15.0
rent reductions, leveraging the favorable market conditions.
Some of them have reduced their footprint, due to the
10.0
implementarion of hybrid work.
Landlord trends: some landlords have been offering rent
reductions to secure long-term renewals or, in some cases, 5.0

to secure any renewal.

0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021

Latin America office market overview 21

Mexico City
Mexico

Key market indicators analysis

7.3M -53,262
■ After more than one year into the COVID-19 pandemic, Stock Net absorption (sq. m)
its impact on the office market continues causing negative (sq. m) Q2 2021
effects, with the vacancy rate at its highest and a low level of
demand for office space.
■ As a result of oversupply combined with a high number
798K 23.9
of tenants vacating premises, the vacancy rate reached Production (sq. m) Average Class A rent
23%. Available space increased 33% when compared to the 2021 - 2023 (USD/sq. m/month)
previous year.
■ During the first half of 2021, new supply reached 71,333

square meters, delivered in four new office buildings; 53%

23.1
Vacancy rate(%)
of this new space is still available. The rest of the year is
Q2 2021
expected to see the further addition of 260,808 square
meters.
■ There is a large pipeline, consisting of more than 800,000 Evolution of asking rents
square meters distributed in 36 buildings, which are
expected to be delivered within the next three years. 30.0

28.0
■ Total leasing activity during the second quarter of 2021
27.3
26.0
presented a 34% decline when compared to the same 25.2 25.6 25.3
24.0 24.9
period of the previous year. 24.3 23.9
22.0 22.9
■ As a consequence of the considerable office space vacated
20.0
during the first half of 2021, the market registered a negative 19.3
19.8 20.0 19.9 20.1 20.4
18.0
net absorption: -160,644 square meters, of which nearly 35%
16.0
are under sublease.
14.0
■ The city’s average asking lease rent recorded a slight
12.0
decrease in the second quarter of 2021 when compared to 10.0
the preceding quarter, amounting to USD 23.9 per square Q2 Q2 Q2 Q2 Q2 Q2 Q2

meter per month. 2015 2016 2017 2018 2019 2020 2021
Class A average rents (USD/sq. m/month) Class B average rents (USD/sq. m/month)

Market performance
Market status: tenant-favorable market conditions are Evolution of vacancy rate and net absorption
expected to continue. Landlords are starting to grant
incentives to current tenants in their buildings, mostly in the 200,000 25.0

form of rent reductions. 150,000

20.0
Market forecast: tenant-favorable market conditions are 100,000
expected to continue. Landlords will be under pressure
15.0
to accommodate tenants’ requests mainly by providing 50,000

a cap in the exchange rate or rent reductions. Landlords

0
are starting to grant incentives to current tenants in their 10.0

buildings, mostly in the form of rent reductions. -50,000

Occupier trends: the majority of tenants whose contracts -100,000

5.0

are about to expire have approached the landlords to obtain

rent reductions, leveraging the favorable market conditions. -150,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
0.0

Some of them have reduced their footprint, due to the 2015 2016 2017 2018 2019 2020 2021
implementarion of hybrid work. Net absorption (sq. m) Vacancy rate (%)

Landlord trends: some landlords have been offering rent

reductions to secure long-term renewals or, in some cases,
to secure any renewal.

22 JLL
Monterrey
Mexico

Key market indicators analysis

1.5M -4,711
■ The office stock increased approximately 4% compared to Stock Net absorption (sq. m)
the previous year, and amounts to around 1,600,000 square (sq. m) Q2 2021
meters. It is expected to continue growing in the coming
years.
■ The second quarter of 2021 saw the absorption of 2,600
223K 21.8
square meters of office space. However, the period closed Production (sq. m) Average Class A rent
with a negative absorption of -4,700 square meters. 2021 - 2023 (USD/sq. m/month)
■ There are currently circa 223,000 square meters of

rentable area under construction, distributed in 18

developments. The submarkets that will see the addition of
23.8
Vacancy rate (%)
more space will be Centro/Obispado and Santa María/San
Q2 2021
Jerónimo.
■ As a result of the oversupply and the amount of new space

that has recently entered the market, the vacancy rate stood Evolution of asking rents
at 24%
24.0
■ Rental prices remained relatively stable during the second

quarter of 2021; however, they continue within a moderate 22.0

21.8
downward trend, mostly due to the oversupply in the 21.0
20.0
market.
18.7
■ The market is generally tenant-favorable, and it is
18.0 18.5 18.5
17.8 18.1
17.4
expected to remain so for the next two or three years. 16.0 16.5

Market performance 14.0

14.0 13.9
13.5
12.0 12.5 12.8
Market status: tenant-favorable market conditions are
expected to continue. Landlords are starting to grant 10.0

incentives to current tenants in their buildings, mostly in the Q2 Q2 Q2 Q2 Q2 Q2 Q2

2015 2016 2017 2018 2019 2020 2021
form of rent reductions. Class A average rents (USD/sq. m/month) Class B average rents (USD/sq. m/month)

Market forecast: tenant-favorable market conditions are

expected to continue. Landlords will be under pressure
to accommodate tenants’ requests mainly by providing Evolution of vacancy rate and net absorption
a cap in the exchange rate or rent reductions. Landlords
are starting to grant incentives to current tenants in their 40,000 25.0

buildings, mostly in the form of rent reductions.

30,000
Occupier trends: the majority of tenants whose contracts 20.0

are about to expire have approached the landlords to obtain 20,000

rent reductions, leveraging the favorable market conditions. 15.0

Some of them have reduced their footprint, due to the 10,000

implementarion of hybrid work. 10.0

0
Landlord trends: some landlords have been offering rent
reductions to secure long-term renewals or, in some cases, -10,000
5.0

to secure any renewal.

-20,000 0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018 2019 2020 2021
Net absorption (sq. m) Vacancy rate (%)

Latin America office market overview 23

Asunción
Paraguay

Key market indicators analysis

287K 66K
■ The corporate-grade office stock of Asunción amounted Stock Production (sq. m)
to 287,200 square meters at the end of the first half of 2021. (sq. m) 2021 - 2023
It is one of the smallest inventories of the region. Of the
total area, 40% corresponds to Class A space and, in terms
of submarkets, more than half (52%) is concentrated in 18.0 13.5
Aviadores del Chaco. Vacancy rate(%) Average Class A rent
■ The city’s supply of corporate office space is characterized
Q2 2021 (USD/sq. m/month)
by smaller floor plans in comparison to those observed in
more consolidated markets (between 80 square meters and
400 square meters).
Average asking rents. By submarket
■ Currently there are 27,750 square meters of Class A space 16.0
under construction, which are expected to be delivered in
14.0
the second half of 2021 and during 2022, all of them in the
Aviadores del Chaco submarket. Additionally, there are 12.0 12.7
38,500 square meters of Class A space in project phase. 11.5
11.0
10.0 10.6 10.5
■ Regarding vacancy, the rate registered at the end of the

first half-year of 2021 was 18.0%, which represents an 8.0

increase compared to the values recorded in 2020. It should 6.0

be noted that the rate is considerably higher among Class B
5.0
spaces: at 22.0%, it doubles the value registered for Class A 4.0

offices (11.0%). 2.0

■ The average asking rental price at mid-2021 amounted
0.0
to USD 11.1 per square meter per month. Class A spaces in Aviadores Villa Morra España Artigas Brasilia Microcentro
particular recorded a monthly average asking price of USD
13.5 per square meter.
Stock distribution (%) by submarket
Market performance
Market status: the market experienced a partial recovery of
the crisis triggered by the irruption of COVID-19. 4%
3% 2%

Market forecast: in the short term the market is expected to 6% Aviadores

stabilize in terms of negotiation margins, with a downward Microcentro

bias in prices, which will probably result in a more favorable Villa Morra

environment for tenants 16% Artigas

52% España
Occupier trends: in Asunción a considerable share of
Brasilia
important companies operate in residential buildings.
Otros
Although this number has been decreasing in recent
years, thanks to the increase in the stock of modern office 17%
buildings, there still remains a significant amount of firms
that are yet to move to corporate spaces. It is expected that
this will continue to drive demand.
Landlord trends: it is expected that the trend seen in recent
years toward a process of increased diversification and
sophistication –concerning landlords and developers– will
continue.
*The survey and analysis of this market was carried out in
collaboration with Raíces Real Estate, JLL partner in Paraguay

24 JLL
Lima
Peru

Key market indicators analysis

2.6M -10,005
■ During the first half of 2021, the corporate office market Stock Net absorption (sq. m)
of Lima saw the addition of three new Class B buildings (sq. m) Q2 2021
totaling 12,348 square meters. With these new additions,
the stock amounts to 2,660,050 square meters.
■ The general vacancy rate closed the first six months of
347K 15.8
2021 with an increase of 2.1% with respect to the second Production (sq. m) Average Class A rent
semester of 2020 (23.3%), at 25.4%. 2021 - 2023 (USD/sq. m/month)
■ The market’s net absorption turned negative once again

during the first half of 2021, amounting to -46,286 square

meters, below that of the first six months of 2020 (-108,698
25.4
Vacancy rate (%)
square meters). The occupation of spaces registered a
Q2 2021
more dynamic performance, mainly among lower quality
buildings.
■ Office space givebacks amounted to 79,412 square meters Evolution of asking rents
during the first half of 2021. The Este, Miraflores and San
Isidro CBD submarkets registered the highest levels of the 18.0

period, concentrating 71% of the total. 17.0

■ The occupation of office space amounted to 31,716 square 16.0 16.4

16.2 16.0
meters during the first half-year of 2021, that is, a 33% 15.0
15.78

increase compared to the second semester of 2020 (21,132

square meters). 14.0 14.3
14.1 14.1

■ Rental rates continue their downward trend, generated 13.0 13.4

by the economic impact of the pandemic and political 12.0

uncertainty, with the average for higher-quality space at 11.0
USD 15.7, while lower-quality offices average USD 13.4.
10.0
■ It is expected that the last half of the year will see the Q2 Q4 Q2 Q2
addition of 78,084 square meters of office space, of which 2019 2019 2020 2021

59% will correspond to higher-quality properties.For 2022, Class A rental average (USD/sq. m/mo.) Class B rental average (USD/sq. m/mo.)

the stock is expected to increase by 64,298 square meters.

Market performance Evolution of vacancy rate and net absorption

80,000 30.0
Market status: market conditions continue to favor tenants.
Market forecast: it is expected that the occupation of spaces 60,000
25.0
will gain pace, stimulating a gradual short-term recovery of 40,000

the market. 20,000

20.0

Occupier trends: most of the new occupants favor spaces of 0 15.0

no more than 250 square meters, prioritizing properties with
-20,000
available space in the same floor or in a contiguous floor. 10.0

Landlord trends: landlords continue to adapt to the new -40,000

5.0
economic scenarios, granting more flexible conditions to -60,000

their tenants, such as lease terms of less than 3 years and -80,000 0.0
more competitive prices. Additionally, they offer enhanced Q2 Q4 Q2 Q4 Q1 Q2

sustainability measures and new technologies that increase 2019 2020 2021
Net absorption (sq. m) Vacancy rate (%)
the quality and profitability of their properties.

Latin America office market overview 25

San Juan
Puerto Rico

Key market indicators analysis

401K 23.3
■ The pandemic accelerated relocation trends within the Stock Average Class A rent
island, as proximity to traditional urban centers losses (sq. m) (USD/sq. ft/year)
significance in an increasingly digital economy.
■ The three main office regions in the San Juan

metropolitan area are Hato Rey (42% of the stock), the

Average rents - Top 5 office municipalities
Guaynabo Metro Office Park (21%), and Caparra (19%). 30.0
The rest of the stock is scattered in small, isolated pockets
around the metropolitan area, with the most significant 25.0
office leasing activity taking place in the southern parts, 23.4 23.8 23.7 23.7

particularly in Hato Rey and Guaynabo. 20.0 21.7

■ The asking prices for Class A office space increased by

4.14% since the second half of 2020, while those for Class 15.0
14.8 14.9 14.6
14.1 13.6
B space rose by 56.57% in the same period. The sharp
10.0
variations are at least partially due to office demand
bottoming out on account of the COVID-19 pandemic. Be 5.0
that as it may, prices in the San Juan metropolitan area –
and in Puerto Rico, in general– have been increasing steadily 0.0
over the last few years. San Juan Guaynabo Bayamon Carolina Caguas
Class A average rent (USD/Square Foot/Year) Class B average rent (USD/Square Foot/Year)

Market performance
Market status: the Puerto Rican office market has finally Main offices regions distribution
begun to anticipate an end to the pandemic during the first
months of 2021: the return to work has led to both Class A
and B property rents to increase since the second half of
2020, while employee traffic is not completely back to its 18%
Hato Rey
pre-COVID levels yet.
Market forecast: the office market is expected to experience Guaynabo Metro Office Park

strong occupancy growth, due to several factors particular 42%

Caparra
to the island. These include the initial stages of privatization
of the public sector, which is expected to drive the demand 19% Others

for office space, the restructuring of the government’s debt,

which will drive economic growth, and lastly, the sale of
state-owned assets to restructure the debt will also be a
driver of the demand for office space. 21%

Occupier trends: companies shifting the focus to remote

work may reduce their footprints as fewer employees need
access to a physical office, while organizations unable or
unwilling to have their employees work from home will
need larger spaces to provide proper separation.
Landlord trends: as in other markets, in general, landlords
have been open to discussions and receptive of their
tenants’ concerns.

26 JLL
Montevideo
Uruguay

Key market indicators analysis

340K 8,098
■ As of the end of the first semester of 2021, the office stock Stock Net Absorption (sq. m)
amounted to 340,600 square meters, one of the smallest (sq. m) 2020 - 2021
inventories of the region.
■ All the new properties added are located in free trade

zones. These resulted in an increase of the inventory by

59K 29.1
23,600 square meters, that is, a growth of 7%. Moreover, the Production (sq. m) Average Class A rent
next few years are expected to see the addition of 36,000 2021 - 2023 (USD/sq. m/month)
square meters of new office space.
■ In terms of vacancy, the first half-year of 2021 closed with

a rate of 9.7% (interannual increase of 27.6%). It should

9.7
Vacancy rate (%)
be noted, however, that the vacancy rate of Class B space
Q2 2021
(18.2%) more than doubles that recorded among Class A
properties (7.8%).
■ With respect to asking prices, the average per square Asking rents. By submarket
meter per month amounted to USD 24.2. Class A buildings
presented an average of USD 29.1 per square meter, while 35.0

Class B space averaged USD 17.0 per square meter. 30.0 31.0 30.5
■ The city’s corporate office market is characterized by 28.1
the existence of several free trade zones, which grant 25.0
25.0
fiscal benefits to the companies that occupy spaces there. 20.0
Therefore, the properties located in these areas tend to
attract more demand, which is also helped by the fact that 15.0 16.0
they include the market’s highest-quality units, averaging
10.0
USD 31.9 per square meter per month.
5.0
Market performance
0.0
Market status: the market is recovering from the crisis Zonamerica Punta Carretas - Carrasco Centro Norte Centro
Pocitos Nuevo
triggered by COVID-19, but it is still below prepandemic
levels.
Market forecast: it is expected that the market will reach
prepandemic levels in the short term. Furthermore, an
Evolution of vacancy rate
integration between remote work, on-site work and 12.0
coworking practices is likely to occur.
Occupier trends: most companies have either reduced or 10.0
released corporate space. There are, however, areas that 9.7
9.1
proved relatively resilient. On the one hand, the properties 8.0
located within free trade zones were able to maintain 7.6
occupation levels without renegotiations. On the other, the 6.0
buildings located in residential areas saw a considerable
improvement in their performance. 4.0

Landlord trends: a slow recovery is taking place, with

2.0
some landlords still having to agree to closing values 20%
or 30% below initial asking prices. The owners of vacant
0.0
spaces are offering more flexible lease agreements to attract
Q2 2019 Q2 2020 Q2 2021
companies.

Latin America office market overview 27

JLL Latin America office clock

Montevideo, Asunción

Buenos Aires, Santiago, San José

Rental growth Rents Bogota

slowing falling

Rental growth Rents

accelerating bottoming out

Lima

Monterrey, Guadalajara, Rio de Janeiro

Mexico City, São Paulo

28 JLL
Market practices
Argentina Brazil Chile Colombia
Unit of measurement Square meters Square meters Square meters Square meters

Rent units USD/sq. m/month R$/sq. m/month (Brazilian Real) Unidades de Fomento (UF) COP/sq. m/month (Colombian
Pesos)
Typical lease term 3-5 years 5 years 3-5 years 5 years

Frequency of rent payment Monthly Monthly Monthly Monthly

Deposit/Guarantee Case-by-case, explicit indexation
by CPI is prohibited by law
Statutory right to renew No (unless an option to renew is
agreed at the outset and specified
in lease)
Rent free period 1-3 months
Annual increase of CPI. After 3
years or upon renewal, the parties
gain the right of rent review, to
bring it back to market rates
After 5 years per Brazilian law
Case-by-case, often 1-3 months
In UF, indexed daily
No (unless an option to renew is
agreed at the outset and specified
in the lease)
Case-by-case, often 1-3 months
Annual increases of CPI +
(0% - 3%)
Yes; length of renewal term
typically specified in lease
1-3 months

Early termination After 6 months, 1.5 months of rent Normally tenant pays 3 month Non typically in this market, The tenant is responsible for
penalty. After 1 year, 1 months of of rent penalty, reduced in however they can negotiated. entirety of the contract unless
rent penalty proportion to the elapsed time of Termination after year 3 of the otherwise stipulated in the lease
the contract term with a penalty of 6 or 12 agreement. Termination after year
months rent is not uncommon 3 with a 6 month rent penalty is
typical
Agency fees 1-4% of sale price 1-6% of purchase price 4% of total sale price (If both 3% of total sales price
parties have representatives,
agency fees can be split 50/50)
Common land titles Freehold Freehold Freehold Freehold

Peru Mexico Uruguay

Unit of measurement Square meters Square meters Square meters

Rent units USD/sq. m/month USD/sq. m/month USD/sq. m/month

Typical lease term 3-5 years 3-5 years 5 years

Frequency of rent payment Monthly Monthly Monthly

Deposit/Guarantee Case-by-case, though typically
some indexed percentage of CPI
Statutory right to renew No (unless an option to renew is
agreed at the outset and specified
in the lease)
Rent free period Case-by-case, typically 1-3
months. While this often occurs, it
is not standarized in Lima and is
usually dependent on tenant im-
provement allowances provided
Early termination Case-by-case
US Consumer Price Index, unless
rent quoted in Pesos, then Mexi-
can Consumer Price Index
No
Case-by-case
Negotiable (with termination fees)
Case-by-case, generally adjusted
using Consumer Price Index
No (unless an option to renew
is ageed at outset and specified
in lease)
Case-by-case
Case-by-case

Agency fees 3-5% of the sale price payable by 3% of the total sale price and split 3% + VAT (22%) of total sales price
the seller between the two brokers Not applicable to rents or service-
charges
Common land titles Freehold Freehold Freehold

Latin America office market overview 29

Key market indicators
In square meters
Country City Total stock Quarterly Vacancy Net Class A Class B Average Cap rate (%)
(Class A & B) production rate (%) absorption rental rental purchase
average average price range
(USD/sq. m/ (USD/sq. (USD/sq. m)
month) m/month)

Argentina Buenos Aires 2,020,284 0 16.3 -28,424 28.6 23.2 5,000 - 2,500 6.5 - 11.0

Bolivia Santa Cruz de la Sierra 161,830 15,380 - - 13.5 9.2 1,900 - 1,000 7.0 - 10.0

Brazil Rio de Janeiro 1,762,479 0 39.3 24,626 17.7 14.5 2,300 - 2,000 8.5 - 11.0

Brazil São Paulo 4,035,201 61,170 24.9 -41,188 22.5 14.3 4,400 - 3,000 7.0 - 9.0

Chile Santiago 3,374,692 0 10.0 -41,687 22.4 17.3 4,000 - 3,300 7.5 - 10.5

Colombia Bogotá 2,706,533 26,943 17.5 -79,288 16.2 - - 7.5 - 9.5

Costa Rica San José 1,367,980 0 19.0 - 21.3 18.0 - 10.5 - 10.5

Mexico Guadalajara 458,271 0 15.1 -3,359 18.4 - - 9.0 - N/A

Mexico Mexico City 7,385,121 1,383 23.1 -53,262 23.9 20.4 4,000 - 2,500 7.6 - 10.5

Mexico Monterrey 1,593,709 7,450 23.8 -4,711 21.8 16.5 3,000 - 1,250 8.5 - 11.0

Paraguay Asuncion 287,188 0 18.0 - 13.5 - - -

Peru Lima 2,660,050 0 25.4 -10,005 15.8 13.4 2,085 - 1,988 7.0 - 10.0

Puerto Rico San Juan 401,525 0 11.0 - 17.9 10.9 1,257 - 811- 7.5 - 9.5

Uruguay Montevideo 323,599 5,750 7.6 9,392 27.0 17.9 2,500 - 5,000 5.5 - 7.5

In square feet
Country City Total stock Quarterly Vacancy Net Class A Class B Average Cap rate (%)
(Class A & B) production rate (%) absorption rental rental purchase
average average price range
(USD/sq. f/ (USD/sq. f/ (USD/sq. f)
annum) annum)

Argentina Buenos Aires 21,738,256 0 16.3 -305,842 25.6 20.8 5,000 - 2,500 6.5 - 11.0
Bolivia Santa Cruz de la Sierra 1,741,291 165,489 - - 12.1 8.2 1,900 - 1,000 7.0 - 10.0
Brazil Rio de Janeiro 18,964,274 0 39.3 264,976 15.9 13.0 2,300 - 2,000 8.5 - 11.0
Brazil São Paulo 43,418,763 658,189 24.9 -443,183 20.2 12.8 4,400 - 3,000 7.0 - 9.0
Chile Santiago 36,311,686 0 10 -448,552 20.1 15.5 4,000 - 3,300 7.5 - 10.5
Colombia Bogotá 29,122,295 289,907 17.5 -853,139 14.5 - - 7.5 - 9.5
Costa Rica San José 14,719,465 0 19 - 19.1 16.1 - 10.5 - 10.5
Mexico Guadalajara 4,930,996 0 15.1 -36,143 16.5 - - 9.0 - N/A
Mexico Mexico City 79,463,902 14,881 23.1 -573,099 21.4 18.3 4,000 - 2,500 7.6 - 10.5
Mexico Monterrey 17,148,309 80,162 23.8 -50,690 19.5 14.8 3,000 - 1,250 8.5 - 11.0
Paraguay Asunción 3,090,143 0 18.0 - 12.1 - - -
Peru Lima 28,622,138 0 25.4 -107,654 14.2 12.0 2,085 - 1,988 7.0 - 10.0
Puerto Rico San Juan 4,320,409 0 11.0 - 16.1 9.8 1,257 - 811- 7.5 - 9.5
Uruguay Montevideo 3,481,925 61,870 7.6 101,058 24.2 16.1 2,500 - 5,000 5.5 - 7.5

30 JLL
Argentina, Bolivia, Colombia Contributing authors
Paraguay & Uruguay
Francisco Ruiz Marcelo Aguilar, Agustín Alcoleas, Mercedes
Guido Mosin Research Manager Balmaceda, Felipe Bertolino, Nicolás
Research Manager francisco.ruiz@am.jll.com Borrescio, Martín Couso, Dolores Díaz,
guido.mosin@am.jll.com +571 7441410 Henry Keenan, Alejandro López, Ana
+54 11 3984 8600 Cristina Martinez Hossne, Edith Morales,
Mexico Felipe Pabón, Adriana Pinzón, María Laura
Brazil Rodriguez.
Gabriela Fernandez Morales
Renan Cardoso Market Research
Research Manager gabriela.morales@am.jll.com
renan.cardoso@am.jll.com +52 55 5980 4850
+55 11 3043 6259
Peru
Chile
Luis Enrrique Sanchez
Javiera Basso Research Consultant
Valuation Consultant luisenrrique.sanchez@am.jll.com
javiera.basso@am.jll.com +51 1 717 9080
+56 2 2374 0070

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Latin America office market overview 31