MIAMI, Dec. 7, 2020 /PRNewswire/ — Opportunities for buyers and the need for owners to be innovative and flexible are the key characteristics of the premium office market in 2021, a year that will be much more stable than the volatile and difficult 2020. This is the conclusion of the first World Trade Center (WTC) Prime Office Index Latam, created by business publication Latin Trade for 17 large, medium and small cities in Latin America.
The WTC Prime Office Index Latam is built around an opinion survey of experts with ties to the World Trade Centers Association. They operate in the construction and brokerage of Class A offices, in cities ranging in size from São Paulo and Mexico City to Colonia del Sacramento and Punta del Este.
The expectations index of the WTC Prime Office Index Latam for 2021 was 0.23%, a figure that shows a slight improvement from 2020. Progress will be especially visible for sales, rather than for office rentals.
The WTC Prime Office Index Latam also showed that no increases in sale and rental prices are expected in 2021. There will be no increases in vacancy rates, nor in the time to sell or rent a prime office. This is an important conclusion: properties will not lose value as in previous economic crises.
However, owners will have to offer flexible and innovative schemes to close new deals. For instance, they should be open to implement short-term leases or to give tenants temporary benefits.
The WTC Prime Office Index Latam also shows that prices of unit rentals and sales will be very similar in December 2020 to those of September.
Carlos Uribe, chief operations officer at the World Trade Center Querétaro and Cancun, gave examples of innovations that allowed them to maintain a reasonably strong level of activity, even amid the challenges imposed by COVID-19. WTC Querétaro converted part of its office space to coworking areas, which saw occupancy rates mostly unaffected during the pandemic, he said. It also mixed office with living spaces under the modality of coliving. On the other hand, it modified its financing strategies so that investors could buy with minimal down payments that they could pay with no interests over a longer term. This WTC is also ready to offer large companies furnished offices, designed with the newly required distancing norms. Firms, Uribe pointed out, don’t want to burn cash on chairs and desks that depreciate rapidly: they are an immediate accounting loss.
In terms of innovation, the World Trade Center in Montevideo placed two new towers under the Free Zone regime, specialized in service-exporting companies, and created a coworking area and an incubator for startups.
Opportunities. The office will not disappear
The opportunity for investors in premium offices is very clear in 2021, considering that the experts surveyed expect the market to fully recover in 2022. There are some additional, very favorable conditions for buyers. Interest rates will be historically low; countries will maintain extraordinary public spending policies in 2021; and starting now, larger areas per worker will be required. Opportunity is also reinforced by the opinion of WTC experts. “They said that the office will not disappear in the post-pandemic world. It will be part of a new business ecosystem in which it will coexist with telecommuting and other modalities such as coworking,” said David Ramírez, editor of the publication. “Telework, possibly, is here to stay, but, towards the medium and long term, it is very likely that it will tend to decrease in relevance, and in no case will it replace the office,” he concluded.
David Buchanan, Deputy Editor, Latin Trade
SOURCE Latin Trade