The World Trade Centers Association® (WTCA®), a global network of more than 300 World Trade Center® (WTC®) locations in nearly 100 countries, has launched its 5th edition of the WTCA Prime Office Index Latin America (LatAm) in partnership with global business publication Latin Trade. Through this index, the WTCA seeks to highlight the current situation and outlook for premium office leasing and sales in Latin America. In December 2021, the index closed with a positive result of 1.2% One year later, the trend maintained, and in December 2022, the index closed at 5.4%, a total growth of 4.2 percentage points compared to the same period last year.
This index, which consults experts from more than 20 cities in Latin America, seeks to track the recent performance and prospects of leasing and sales of premium office space in Latin America on a semi-annual basis. For the second half of 2022, the results grew 3.2 percentage points versus the first half of 2022. The overall trend is one of stability, and the expectation is continued improvement. Overall, the results show that perceptions of the current situation and expectations for the first half of 2023 are better for leasing than for premium office sales in Latin America.
The study identified that the performance of the premium office leasing market would maintain a positive trend as prices continue to rise. About 40% of the experts surveyed emphasized that prices increased during the semester. Towards 2023, 50% of the experts believe that vacancy times will decrease, and only 5% think they will grow.
As for the premium office sales market during the second half of 2022, the performance was slightly less favorable than that expected by experts in the year’s first half. About 75% of those interviewed said sale prices remained stable, while 20% saw increases. Premium office sales for the first half of 2023 show positive outcomes, as more respondents believe that average prices will continue to increase and that the waiting time to sell will decrease. Still, some respondents again stated, as they did in the previous survey, that political uncertainty, rising inflation and interest rates present significant challenges for the sector.
Although company employees have been working remotely since the pandemic, there has been a gradual return to in-person work in Latin America. Many companies and employees see this return in a positive light. In addition, 45% of those surveyed say that companies will discourage remote work for their employees; 40% believe that they will not change their current model; and the remaining 5% believe that they will encourage remote work. Remote and hybrid models do not affect the premium office market. However, 70% of the experts consider that the permanent arrival of remote or mixed forms of work would reduce the selling price of premium offices by less than 10%.
“The responses, although varying, generally pointed to the fact that there are no major risks to the prime office building infrastructure as it has been recovering from the pandemic without interruption over the past two years. Companies have adapted to a hybrid work format and still need office space to provide employees the option to work in-person and are reinventing the office space with post-pandemic trends including more environmentally sustainable offices, better technological infrastructure (i.e., internet connections), and better lifestyle services (i.e., gyms, training centers, child daycare, among others). For 2023, the challenge is clear — it is important to incentivize companies to rent or buy premium offices to meet the interest of companies who want to encourage employee presence in their office spaces. And, at the same time, to meet the needs of employees who also wish to return to the office, they must provide conditions that generate well-being in the work environment,” stated Carlos Ronderos, WTCA Regional Director, Latin America.
For the full report, visit https://latintrade.com/2022/11/29/wtca-prime-office-index-latam-december-2022/.
