Latin America office market overview, H1 2020
In the first half of 2020, the corporate office market of Latin America - just like in the most of the world- was heavily impacted by the COVID-19 pandemic. The majority of the countries in the region saw how their markets had to quickly adapt to an unforeseen and unprecedented new reality, particularly during March and April. The response was similar to that observed throughout the rest of the globe: employees working from home, landlords and tenants renegotiating lease agreements, and governments implementing intiatives to assist indivudals and businesses.
In this framework, the analysis of the main commercial real estate indicators is also a source to gain a better understanding of the present situation, since it reveals insights on the reaction of a significant part of societies such as companies and the labor market. Although there have been no great variations in vacancy rate and prices -which continue within their hisotrical averages-, there was a worsening of expectations for the short term, mainly due to the signifcant decrease in the absorption of new space. Most of the expansion processes have been suspended or cancelled, and some companies have started to downsize their portfolios (a phenomenon that can be distinguished at a global level). That is why it is conceivable to expect an uptrend in availability and a more favorable scenario for tenants, in which they will be able to better leverage their position in order to negotiate improved terms.
The long-term outlook, nonetheless, is encouraging. In a very complex year, markets have showed resiliency, and most of them seem to have the necessary tools to adapt to the next normal.