America Office Market Overview PDF

End-Year 2017
Latin America | Office Market Overview

Several countries are on the path to economic
recovery, however critical elections in Brazil,
Colombia, and Mexico loom for 2018.
Many markets are at or near peak vacancy and falling
rents have induced record demand in 2017. A slowing
production pipeline in several cities over the next few
years should push vacancy back down to normal
levels.
JLL Research
Bogotá, Colombia
Office Market Overview | Latin America | EY 2017
Contents
Introduction 3
Market Snapshots
Argentina – Buenos Aires 19
Brazil – São Paulo 20
Brazil – Rio de Janeiro 21
Chile - Santiago 22
Colombia - Bogotá 23
Colombia - Medellín 24
Colombia - Cali 25
Colombia - Barranquilla (and Caribbean) 26
Costa Rica – San José 27
Ecuador - Quito 28
Ecuador - Guayaquil 29
Guatemala – Guatemala City 30
Mexico – Mexico City 31
Mexico – Monterrey 32
Mexico – Guadalajara 33
Panamá – Panamá City 34
Peru - Lima 35
Puerto Rico – San Juan 36
Uruguay - Montevideo 37
Venezuela - Caracas 38
Appendix: Tenant Lease Practices 39
Contacts 42
3 Office Market Overview | Latin America | EY 2017
Introduction
Location
Location Map
Map
Monterrey San Juan

Guadalajara Panamá
City Barranquilla
Mexico City
Caracas
Guatemala City
San José Medellín
Cali Bogotá
JLL Brazil
Quito
Guayaquil
JLL Mexico
JLL North Latin America

Lima
JLL South Latin America
São Paulo Rio de

Office Market Clock Janeiro
Santiago
Montevideo
Caracas Buenos
Medellin Rental Aires
Rents
Growth Falling Colombia
Slowing Caribbean
Buenos
Aires
Monterrey Guadalajara
Rental Rents
Growth Accelerating Bottoming Bogotá
Cali Out
Quito, Panama City,
San Juan, Guayaquil
San José Mexico City

Montevideo, Rio de Janeiro
Santiago Guatemala City, Lima
São Paulo
Introduction
Latin America in 2017

Latin America
Location Map in 2017
2017 was a year that highlighted Latin America’s economic potential, but also underscored its weaknesses. On one hand, the
region saw record office absorption, driven by strong performance in fast-growing cities like Bogotá, Santiago, and Lima, as
well as second-tier markets like Quito and San José. These cities are examples of maturing real estate markets driven by
growing domestic companies, multinationals establishing or increasing their presence, and the influx of institutional capital on
the supply side. On the other hand, the massive Odebrecht corruption scandal, a tenuous near-impeachment in Perú, and the
worsening political and economic crisis in Venezuela highlight the need for stronger and more independent institutions.
The past year saw a definitive move to the political center in Argentina and Brazil, where Mauricio Macri and Michel Temer
continue to pass controversial but necessary reforms that could improve the fiscal outlook of their respective countries.
Chileans elected to bring Sebastian Piñera back to power, rejecting the populism of Alejandro Guillier. One of the more
resounding victories for democracy in the region was the political about-face of Lenin Moreno, whose cooperation with
corruption investigations led to him ousting his own vice-president as well as successfully passing a referendum that upholds
presidential term limits, effectively ending any possibility of a return to power for his predecessor and former mentor, Rafael
Correa. In Colombia the FARC registered as a political party for the first time, albeit controversially, choosing to test their merit
politically rather than through violence. 2017 also seems to have marked the nadir of the economic cycle in many countries.
Argentina, Brazil, Chile, Colombia, Ecuador, Guatemala, Panama, Peru, and Uruguay are expected to see an economic recovery
beginning in 2018 as commodity prices and export markets rebound, and household consumption continues its upward
trajectory.
Yet critical tests loom in 2018. The region’s 3 most populous countries – Brazil, Colombia, and Mexico – face important elections
that will set the political tone for the region. Mexico, perhaps the nation facing more uncertainty than any other in the region
amidst the protectionist wave in the US, will choose whether or not to counter with populism and protectionism of its own in the
form of Andres Lopez Obrador. In Brazil, a country that has seen its political class come under heavy scrutiny in the aftermath of
the “Lavo Jato” scandal, the two leading candidates are Luis “Lula” da Silva, the former president who is currently under
investigation, and the far right candidate Jair Bolsonaro, the self-proclaimed ”Donald Trump of Brazil,” who is positioning
himself as a political outsider and the only candidate untainted by scandal. Colombia, meanwhile, faces an election that could
be a referendum on its hard fought peace agreement with the FARC. Voters will most likely choose between far-right candidate
Ivan Duque, who is against the agreement, Gustavo Petro, the far-left former mayor of Bogotá, and center-left candidate Sergio
Fajardo, the former mayor of Medellín and governor of Antioquia.
Whatever happens politically, Latin American countries will continue to prioritize developing infrastructure and achieving
economic diversity. Most are investing record levels in new highways, ports, airports, urban transport, telecommunications,
sanitation, and other infrastructure networks, which will be critical to creating more sustainable and diverse economies that are
less vulnerable to shocks in the global economy. Also critical for the future will be investments in human capital, particularly
education and health care. Yet if 2017 has taught us anything, it may be that much of the significant investments that are
happening in these areas could be squandered in the absence of strong and independent institutions.
JLL Research
Population by Major Country and Markets, 2017
Major Market Population (millions)

San Juan
Puerto Rico Country Population (millions)
Montevideo
Uruguay
San José
Costa Rica
Panama City
Panama
Guatemala City
Guatemala
Guayaquil
Quito
Ecuador
Caracas
Venezuela
Lima
Peru
Santiago
Chile
Barranquilla
Cali
Medellin
Bogota
Colombia
Buenos Aires
Argentina
Guadalajara
Monterrey
Mexico City
Mexico
Rio de Janeiro
São Paulo
Brazil
0 50 100 150 200 250
Source: Oxford Economics (2018)
• Several Latin American countries have one large city that the most widely distributed populations. Each contains
accounts for a significant share of the national population. several cities with over one million inhabitants.
These include Uruguay, Argentina, Peru, and Chile as well
as all Central American and Caribbean nations.
• Brazil, Mexico, and Colombia are the three countries with
GDP by country and major markets, 2017
$3.500 Country Real GDP (Billions of USD – PPP) $30.000
Major Market Real GDP (USD – PPP)
Country Real GDP Per Capita (USD)

$3.000
$25.000
$2.500
$20.000
Real GDP, Billions of USD - PPP
Real GDP per Capita, USD

$2.000
$15.000
$1.500
$10.000
$1.000
$5.000
$500
$- $0
Mexico
Santiago
Lima
Caracas
Quito
Uruguay
Brazil
Venezuela
Ecuador
Guatemala City
Panama
Costa Rica
Mexico City
Argentina
Chile
Guayaquil
San Jose
Montevideo
Puerto Rico
Colombia
Bogota
Peru
Sao Paulo
Monterrey
Buenos Aires
Cali
Barranquilla
Panama City
Medellin
Guatemala
San Juan
Rio de Janeiro
Guadalajara

The World Bank (2018)
• Brazil and Mexico by far have the largest economies in • 2018 is expected to be the beginning of a recovery trend
Latin America. The countries with the highest GDP per for the region. Some countries like Brazil and Argentina
capita are Puerto Rico, Chile, Uruguay, and Panama. have seen a stronger recovery in 2017 while others that are
• Growth in Latin America is expected to be positive for the more commodity-dependent have seen a slower recovery.
first time since 2014, as many countries are emerging from
the aftermath of low commodity prices.
GDP Growth by Country, 2010-2017
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
Avg. Growth, 2010-2015
Avg. Growth, 2016-2017
-10% 2018 Forecast
-12%

The World Bank (2018)
• Most Latin American economies thrived between 2010- • 2016 and 2017 brought an economic slowdown to most
2015. During this period, in the aftermath of the 2008 countries, precipitated by falling commodity prices, rising
Financial Crisis, high commodity prices and increasingly debt, and political instability.
stable political systems lifted millions out of poverty and • 2018 will bring a recovery for most Latin American
strengthened the middle class. This attracted an influx of countries, with the exception of Puerto Rico and
investment into Latin America, attracted by high returns Venezuela.
and growing markets.
Policy Interest Rates, 2008-2017
40%
35%
Argentina
30%
25%
Policy Interest Rate, Q4 2017
20%
15%
Brazil
10%
Mexico
5%
Colombia
Peru
Chile
U.S.A.
0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: JLL Research (2018)
• Interest rates were generally low between 2012-2015. most major Latin American Central Banks raised interest
During this time most major Latin American governments rates to combat this.
sought to capitalize on relatively cheap credit to issue • Interest rates were also hiked to stabilize exchange rates
bonds for infrastructure development. and control inflation during this period.
• Beginning in 2015, the threat of U.S. interest rate hikes left • Since 2016, interest rates have mostly fallen with the
Latin American countries with the prospect of massive exception of Mexico, Argentina, and the US.
capital outflows, as more investment would presumably
be rerouted into U.S.-based investments. In response,
Total Stock (m²), EY 2017
Mexico City
São Paulo
Santiago
Bogotá
Rio de Janeiro
Lima
Panama City
Buenos Aires
Monterrey
Caracas
San José
Medellín
Quito
San Juan
Guatemala City
Guayaquil
Guadalajara
Col. Caribbean
Montevideo
Cali
Rentable Area (m2)
• Mexico City and São Paulo remain as the two largest office • It is worth keeping in mind that Latin American office
markets in Latin America. Combined, both of them sum markets are still very young. Only 6 cities would rank
over 11 million m2 of rentable area, more than one third of within the top 40 US cities in terms of office stock. In
the entire region’s stock. several cities a large percentage of the total stock is less
• Bogotá, Lima, Monterrey and Medellín are markets that than 5 years old.
are expanding fast as economic performance in those
countries improve.
Vacancy Rates, EY 2017
Panama City
Rio de Janeiro
Col. Caribbean
São Paulo
San Juan
Lima
Guadalajara
Monterrey
Bogotá
Mexico City
Medellín
San José
Montevideo
Guatemala City
Caracas
Quito
Santiago
Guayaquil
Buenos Aires
Cali
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Vacancy Rate (%)
• Panamá City and Barranquilla continue to have some of the • Cali has the lowest vacancy rate among major Latin American
highest vacancy rates in the region. Both cities have seen office markets, standing at 3.5%, followed by Buenos Aires and
excessive levels of real estate investment based on expectations Guayaquil. Limited new supply in these cities is driving vacancy
of economic growth that have exceeded reality. down.
• Rio de Janeiro saw vacancy shoot to 37%, placing it second- • JLL considers 8-12% vacancy to be within the “market
highest in the region. This is due to Brazil’s recession but also equilibrium” range, meaning neither the tenant nor the landlord
from fallout from the Lavo Jato investigation, which is causing has considerable leverage in negotiations. About half of the 20
many implicated companies to lay off many workers or close cities tracked in this report – including many of Latin America’s
completely. largest cities - show vacancy that is above the equilibrium range.
Change in Vacancy (m2), Y-o-Y
Santiago
San José
Quito
San Juan
Guayaquil
Buenos Aires
Cali
Montevideo
Medellín
Caracas
Guatemala City
Col. Caribbean
Guadalajara
Panama City
Monterrey
Lima
São Paulo
Bogotá
Mexico City
Rio de Janeiro
-100.000 -50.000 0 50.000 100.000 150.000 200.000 250.000 300.000

Rentable Area (m2)
• Rio de Janeiro saw the largest one-year increase in vacant • Santiago and San José saw vacant area fall in the past
area in the region. Significant downsizing combined with year. Limited new supply and very strong demand led to a
over 180,000 m2 of new completions were the culprit. net reduction of vacant area in these cities.
• Bogotá and Mexico City have seen a surge in vacancy, as
new production is added to the market. The Colombian
capital in particular is reaching new all-time highs in terms
of new supply.
Production (m2), Y-o-Y
Mexico City
Bogotá
Lima
Rio de Janeiro
Monterrey
São Paulo
Quito
Panama City
Guadalajara
Santiago
San José
Col. Caribbean
Guatemala City
Buenos Aires
Medellín
Guayaquil
Caracas
Cali
Montevideo
San Juan
0 100.000 200.000 300.000 400.000 500.000 600.000

Rentable Area (m2)
• Mexico City observed the highest production level in the production in the last year. The case of the Puerto Rican
region, with nearly 550,000 m2 of new leasable area in office market is telling, since they are still dealing with a
2017. deep recession and the effects of Hurricane Maria. Cali
• Bogotá, with 311,000 m2 of new production, is riding the and Montevideo have simply not had much demand.
peak of a production boom that is expected to last until • Overall, the region appears to be near the end of a
2019 and will add 550,000 m2 more to the market over the production peak that has pushed up vacancy in most
next two years. cities.
• Cali, Montevideo and San Juan have not registered new
Net Absorption (m2), Y-O-Y
Mexico City
Bogotá
Santiago
Lima
Quito
São Paulo
San José
Panama City
Guadalajara
Monterrey
Medellín
Buenos Aires
Guatemala City
Guayaquil
Caracas
Col. Caribbean
San Juan
Montevideo
Cali
Rio de Janeiro
(100.000) (50.000) - 50.000 100.000 150.000 200.000 250.000 300.000 350.000

Rentable Area (m2)
• Mexico City (327,000 m2), Bogotá (185,000 m2), Santiago • São Paulo office market had negative demand in 2016,
(146,000 m2) and Lima (141,000 m2) had the strongest and in 2017 managed to have positive absorption amidst
levels of demand in the region. one of the worst recessions in Brazil’s history.
• Quito, Ecuador saw its highest annual net absorption in • Rio de Janeiro was the only city that had negative
history. A key factor behind this is the completion of new demand in 2017 due to widespread downsizings. The
Government Platforms, massive buildings meant to difficult economic situation in the country seems to be
consolidate several ministries and associated entities affecting Rio more than other cities in Brazil.
under one roof.
Production Pipeline (2018-2020) vs. Current Stock (m2)
Mexico City 17%
Bogotá 24%
São Paulo 10%
Guadalajara 127%
Santiago 10%
Buenos Aires 22%
Lima 14%
Monterrey 17%
San José 20%
Caracas 16%
Medellín 24%
Guatemala City 30%
Quito 22%
Panama City 8%
Guayaquil 22%
Col. Caribbean 23%

Current Stock
Montevideo 15%
1% Production, 2018-2020
Rio de Janeiro
Cali 9% * Data label indicates percentage

growth of stock by 2020
San Juan 0%
0 1.000.000 2.000.000 3.000.000 4.000.000 5.000.000 6.000.000 7.000.000 8.000.000
Rentable Area (m2)
• The largest production pipeline can be found in Mexico Both are relatively limited markets that are going through
City. Over 1,1 million m2 are expected to be delivered by supply booms.
2020, with an astonishing 818,000 m2 to be delivered in • Panama City, Colombia Caribbean (Barranquilla), and
2018 alone. Many of these are buildings that were Lima are poised for a significant drop-off in office
expected to be completed in 2017 but were delayed. production. Each of these cities has gone through supply
• Guatemala City and Guadalajara will see the largest booms over the past few years that have driven vacancy to
expansion of their markets relative to the current stock. historic levels.
Average Asking Rents, EY 2017
Buenos Aires
* Quoted asking rents in
Caracas * Caracas are mainly
theoretical, as most
São Paulo companies must pay in local
currency.
Montevideo
Rio de Janeiro
Mexico City
Santiago
Bogotá
Panama City
Monterrey
Cali
Medellín
San José
Lima
Average Rent
Class A
San Juan
Guadalajara Average Rent

Class AB
Quito
Col. Caribbean
Guayaquil
Guatemala City
$- $5 $10 $15 $20 $25 $30 $35 $40
Average Asking Rents (USD/m2/Month)

• Latin America’s most expensive city for office rents at this centers and other companies looking to optimize on their
moment is Buenos Aires. Argentina’s economic recovery operating costs.
and new leadership have many companies feeling • Brazil’s two largest cities remain relatively expensive
optimistic about their plans there. This combined with despite historically high vacancy.
limited supply is driving rents up. • Rents in Caracas, when priced in USD, are relatively high.
• Latin America’s cheapest city for leasing an office is However there are very few tenants who are able to pay
Guatemala City. The top buildings here are leasing at rent in dollars, so this comes with a significant caveat.
between USD $11-12/m2/month, which is attracting call
Change in Rents (USD), Y-o-Y
Percent Change: Guadalajara

Class A Avg. Rent
Monterrey
Percent Change:
Medellín
Class AB Avg. Rent
Santiago
Buenos Aires
Bogotá
Guatemala City
San José
Montevideo
Lima
San Juan
Caracas
Cali
Mexico City
São Paulo
Panama City
Guayaquil
Quito
Col. Caribbean
Rio de Janeiro
-30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20%
• Rents have begun to rise in most Latin American markets, last year, as exchange rates stabilize in these countries.
reverting a downward trend observed since 2015. This • São Paulo and Rio de Janeiro are among the markets that
shows that demand is beginning to catch up with supply had the sharpest fell in rents in 2017, as the harsh
in the region, despite increased production observed in economic environment has pushed vacancy upwards and
the last few years. landlords have been forced to reduce rents.
• Guadalajara, Monterrey, Medellín, Santiago and Buenos • Rents in Lima and San Juan have remained stable
Aires observed the steepest increase in rents during the between 2016 and 2017.
Cap Rate Ranges, EY 2017
Lima
Mexico City
Bogotá
Medellín
Rio de Janeiro
São Paulo
Buenos Aires
Santiago
Monterrey
Caracas N/A
Guadalajara N/A
San José N/A
Panama City N/A
Quito N/A
Guayaquil N/A
Cali N/A
Col. Caribbean N/A
Guatemala City N/A
Montevideo N/A
San Juan N/A
0% 2% 4% 6% 8% 10% 12% 14%

• Capital markets are very underdeveloped in Latin America • Peru has the widest cap rate range at the moment,
outside of Mexico and Brazil. Therefore cap rate reflecting the fact that capital markets are beginning to
approximations are often made based on a small sample gain more traction here but there is little consensus
size. among investors on this point.
• Cap rates in Latin America are generally between 6-12%. • Several cities are listed as “N/A”, as there is too small a
This is higher than cap rates in more developed real estate sample of asset purchases to determine a reliable cap rate
markets in US or Europe, reflecting added risk premiums range.
in many of these cities.
Regional Production and Absorption, 2012-2017
3.000.000 20%
Production Forecast
Net Absorption
18%
2.500.000 Vacancy Rate

16%
14%
2.000.000
12%
Rentable Area (m2)
Vacancy Rate
1.500.000 10%
8%
1.000.000
6%
4%
500.000
2%
- 0%
2012 2013 2014 2015 2016 2017 2018 2019
• Overall, the region saw a decrease in production in 2017, Bogotá, São Paulo, Guadalajara, Santiago, Buenos Aires
totaling 2.2 million m2 of production. Several markets are in and Lima along will combine for 1,5 million m2 of new area.
the declining side of a production boom that begun a few However this historical high is also due to surprisingly high
years ago. Demand, on the other hand, rose to 1,8 million totals from places like Guatemala City and Quito, which will
m2 across Latin America, an increase of over 20% on 2016. If see record office production next year.
all projects are delivered as forecasted, JLL expects that • Production looks poised to fall significantly in 2019. This
over 4 million m2 will be completed between 2018 and drop-off can be attributed to several cities reaching
2019. adjustments in their real estate cycles like Lima, Panama
• Office production will have its peak in 2018, as Mexico City, City, Rio de Janeiro, São Paulo, and Mexico City.
Argentina – Buenos Aires
Macroeconomic Overview Office Market Statistics

Total stock (m²) 1,415,000
• During the first three quarters of 2017, Argentina’s GDP
grew by 4.2% year-on-year. Despite being an positive Overall vacancy rate 4.5%
figure, public consumption contracted 2.2% q/q, as
credit-fueled household spending slowed down. Production - 2017 (m²) 40,500
• The surge in imports helped the current account deficit
Net absorption – 2017 (m²) 45,000
to reach an all-time high of 5.7% of GDP from just over
2% a year ago. Together with the BCRA policy rate cut Expected production – 2018 (m²) 151,000
of 75bp, Argentinian peso exchange rate to the dollar is
moving towards ARS $20/$1, affecting external Expected net absorption – 2018 (m²) 90,000
accounts.
Class A rental range (USD/m²/mo.) 25 – 36
• Consumer prices in Greater Buenos Aires rose by 3.43%
on the month in December, exceeding market Class AB/B+ rental range (USD/m²/mo.) 20 – 29
expectations. The reading was driven by an 19% rise in
housing and utilities prices. Average purchase price range (USD/m²) 3,500 – 5,000
• President Macri faces a tough 2018 year ahead. After a
successful negotiation with international creditors and
having favorable midterm elections, the government
aims to pass an economic reform package to tackle Historic Production, Absorption, and Vacancy
the fiscal deficit, including ending energy subsidies and
changing ages for retirement. The pension reform was
passed after street protests in Buenos Aires. Although Production Absorption Vacancy
diluted, it paves the way for the rest of reforms to be
approved by the end of the year. 200.000 30%
180.000
Market Trends
25%
160.000
Vacancy Rate (%)
Rentable Area (m2)
• Production during 2017 was 40,500 m², divided into 140.000

two buildings. This figure is lower than forecasted in 20%
2016 because of delayed deliveries of some buildings. 120.000
• Vacancy continues its downward trend observed since 100.000 15%
2016. The indicator stands at 4.5%, the lowest value on
record since 2009. 80.000
• Net absorption amounted to 45,000 m² in 2017, similar 10%
60.000
to the historic trend for this metric. Nonetheless, 35,000
40.000
m² were absorbed in a single building that was 5%
recently completed. 20.000
0 0%
Brazil – São Paulo

• Brazil is on track to double its economic growth in
2018, reaching 2.5% after expanding by 1.1% in 2017. Overall vacancy rate 24.95%
Industrial production, exports and investment are
expected to drive Brazilian GDP. Production - 2017 (m²) 127,000
• Low inflation prompted Brazil’s Central Bank to cut
rates by 25bp to a new all-time low of 6.75%, leaving
the door open for further easing if the risk outlook Expected production – 2018 (m²) 251,000
changes in coming months.
• After Brazil’s sovereign debt was downgraded, Expected net absorption – 2018 (m²) 130,000
President Temer pushed for a comprehensive labor
overhaul that aims to reduce the current fiscal deficit
by changing retirement ages and protection for Class AB/B+ rental range (USD/m²/mo.) 8 – 47
workers. The government also aims to push a minor
tax reform before elections. Average purchase price range (USD/m²) N/A
• The largest Latin American economy is facing a pivotal
election this year. Former president Lula da Silva is the
frontrunner, followed by Jair Bolsonaro, Marina Silva
and Geraldo Alckmin. However given Lula’s indictment Historic Production, Absorption, and Vacancy
in the Lavo Jato case, his candidacy is extremely
polarizing.
Production Absorption Vacancy
Market Trends
500.000 30%
• Production reached 127,000 m² for the year.
Developers are delaying deliveries amidst the current 450.000
climate of economic uncertainty and high vacancy 400.000 25%
Rentable Area (m2)
rates.
Vacancy Rate
350.000
• Net absorption totaled 111,000 m², which is good 20%
considering the circumstances; however absorption 300.000
fell short of the 5 year average of 138,000 m2. 250.000
• Vacancy closed at 24.95% for 2017, and it is expected 15%
200.000
to grow throughout 2018, as approximately 250,000 m²
150.000
will be added to the market next year. 10%
• Rental prices remained stable along the year. Prime 100.000
areas are observing faster recovery than other 50.000 5%
segments of the market.
0
-50.000 0%
Brazil – Rio de Janeiro

• Brazil is on track to double its economic growth in
2018, reaching 2.5% after expanding by 1.1% in 2017. Overall vacancy rate 37%
Industrial production, exports and investment are
expected to drive Brazilian GDP. Production - 2017 (m²) 184,000
• Low inflation prompted Brazil’s Central Bank to cut
Net absorption – 2017 (m²) -73,500
rates by 25bp to a new all-time low of 6.75%, leaving
the door open for further easing if the risk outlook Expected production – 2018 (m²) 26,000
changes in coming months.
• After Brazil’s sovereign debt was downgraded, Expected net absorption – 2018 (m²) 30,000
President Temer pushed for a comprehensive labor
overhaul that aims to reduce the current fiscal deficit
by changing retirement ages and protection for Class AB/B+ rental range (USD/m²/mo.) 14 – 70
workers. The government also aims to push a minor
tax reform before elections. Average purchase price range (USD/m²) N/A
• The largest Latin American economy is facing a pivotal
election this year. Former president Lula da Silva is the
frontrunner, followed by Jair Bolsonaro, Marina Silva
and Geraldo Alckmin. However given Lula’s indictment Historic Production, Absorption, and Vacancy
in the Lavo Jato case, his candidacy is extremely
polarizing.
Market Trends
250.000 40%
• Production reached 183,000 m² in 2017. With some
35%
projects being postponed or canceled in an adverse 200.000
context, production for 2018 is expected to fall to only 30%
Rentable Area (m2)
28,000 m², its lowest point in over a decade.

Vacancy Rate
150.000 25%
• Net absorption was negative for 2017, reaching -73,500
m². This is due to the current recession as well as 100.000
20%
company downsizings and closings in the aftermath of 15%
the Lavo Jato scandal. 50.000
• Vacancy during last year reached 37%. A discreet 10%
recovery is expected in 2018, but the market will take 5%
0
time to balance itself.
• Rental prices kept falling in the city, influenced by the 0%
-50.000
high availability of vacant stock. Class A asking rents -5%
have fallen to USD $28/m²/month on average.
-100.000 -10%
Chile - Santiago

• Economic activity had a better-than-expected
performance during the last quarter of 2017, leaving Overall vacancy rate 6%
economic growth at 1.7% for the year. Forecasts
indicate that GDP growth for 2018 will be around 3.4%. Production - 2017 (m²) 64,000
Non-mining industries are leading the way of growth
for the Chilean economy. They grew by 3.3% m/m in
Q4 2017, offsetting the mining sector, which contracted Expected production – 2018 (m²) 178,000
by 2.1% m/m in the same period.
• Sebastian Piñera was elected as Chile’s next president Expected net absorption – 2018 (m²) 150,000
after beating government candidate Alejandro Güillier
by a wider-than-expected margin in the election runoff.
Piñera plans to introduce different measures in Class AB/B+ rental range (USD/m²/mo.) 15 – 24
education, healthcare and retirement. The new
government program incorporates austerity measures, Average purchase price range (USD/m²) 3,000 – 4,000
budgetary redistribution of social programs, and new
financing options for college students. It also hopes to
reduce the size of parliament and introduce
presidential reelection. Historic Production, Absorption, and Vacancy
Market Trends
• Production in 2017 totaled 64,000 m², the lowest figure
since 2009 and 62% less than forecasted at the 400.000 30%
beginning of the year. This can be explained by the
delay in delivery of five buildings, representing about 350.000
25%
126,000 m² of new supply. It is expected that these
become operational in 2018. 300.000
Rentable Area (m2)
Vacancy Rate
• Absorption during 2017 summed 146,000 m², in line 20%

250.000
with the five-year market average of 150,000 m².
• Vacancy decreased since 2016, registering 6% for the
200.000 15%
year, the lowest observed since 2013 when it was at
5.2%. During Q4 2017 Providencia, Huechuraba and 150.000
Vitacura submarkets observed a reduction in available 10%
spaces. 100.000
5%
50.000
0 0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Colombia - Bogotá

• GDP grew by 1.7% in 2017, however a recovery is
widely expected for 2018 thanks to stabilized Overall vacancy rate 15.86%
commodity prices and expected political clarity.
• Inflation continues to slip back towards the target Production - 2017 (m²) 311,000
range. As prices cooled off to 4% Y-O-Y last year, the
BanRep has switched monetary policy from neutral to
expansionary, slashing rates to 4.5%. Expected production – 2018 (m²) 246,000
• Standard & Poor’s downgraded Colombian sovereign
debt from BBB to BBB- as the tax reform of 2017 has Expected net absorption – 2018 (m²) 203,000
proven an insufficient remedy to Colombia’s tenuous
fiscal deficit.
• 2018 will see an election that can have lasting Class AB/B+ rental range (USD/m²/mo.) 10 – 32
implications on a political and economic level. Polls
show a very fragmented political landscape, with Average purchase price range (USD/m²) 1,700 – 3,500
Gustavo Petro, Sergio Fajardo and Ivan Duque as top
contenders. Many private sector actors have shelved
their plans for the moment, preferring to wait until the
election to move ahead. Historic Production, Absorption, and Vacancy
Market Trends
• Production in 2017 reached 311,000 m², the highest
amount on record for the Bogotá office market. The 350.000 30%
current production peak should last through 2019 and Forecast
the market will come to an adjustment thereafter. 300.000
• Net absorption for the year reached 185,000 m², 25%
despite economic headwinds. Demand has been 250.000

Rentable Area (m2)
sparked by low rents and several public sector

Vacancy Rate
20%
movements, which we estimate to account for over 200.000
70,000 m2 of net absorption in 2017.
15%
• Given that production outpaced demand for the 4th
150.000
straight year, vacancy climbed to almost 16%. Vacancy
should continue to climb through 2019 and revert back 10%
100.000
to normal levels by 2020.
• WeWork alone was responsible for about 20,000 m² of 5%
50.000
absorption in 2017, equal to over 10% of total market
demand. This highlights the growing importance of co-
- 0%
working spaces in the market.
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Colombia - Medellín

Total stock (m²) 759,000
fiscal deficit.
Market Trends Production Absorption Vacancy
• Production fell to 42,000 m² in 2017 in comparison to 200.000 30%
2016. Production is expected to stay in this range 180.000

through 2019, which is in line with the historical 25%
average for Medellín. 160.000
• Demand totaled 46,000 m², below levels observed in
Rentable Area (m2)
140.000
Vacancy Rate
2016. However this absorption is historically in line for Forecast 20%

Medellín. 120.000
• Vacancy fell from 12% in 2016 to less than 10% today, 100.000 15%
and it should keep falling. Strong leasing in new
buildings like One Plaza, Milla de Oro, and Bio 26 have 80.000
pushed vacancy down. 60.000
10%
• Medellín is currently the story of 2 cities. Core
submarkets El Poblado and North Poblado have 40.000
5%
demonstrated strong absorption and low vacancy, 20.000
while newer submarkets like Sabaneta are struggling
with vacancy around 25%. - 0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Colombia - Cali

• Inflation continues to slip back towards the target Production - 2017 (m²) -
fiscal deficit.
Market Trends
• After the delivery of 2 Class A properties in 2016, there 100.000 30%

were no new office developments in the Cali office
market. In 2018 the first buildings will become 90.000
operational in Zonamerica, the services Free Trade 80.000
25%
Rentable Area (m2)
Zone that is a replication of the highly successful

development by the same name in Montevideo, 70.000
20%
Vacancy Rate
Forecast
Uruguay. 60.000
• Demand fell throughout 2017, reaching 7,500 m².
Leasing has been fairly strong in Jardin Plaza and 50.000 15%
World Trade Center, two bellweather projects in the
40.000
tiny Cali market, which could signal that there is a
10%
pent-up demand waiting for quality product. 30.000
• As a result of slow supply, vacancy fell across the
20.000
market, reaching an all-time low of 3,49%. Cali is 5%
currently the city with the lowest vacancy in Latin 10.000
America.
- 0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Colombia – Barranquilla (and Caribbean)

widely expected for 2018 thanks to stabilized Overall vacancy rate 34%
fiscal deficit.
Market Trends
• This region saw a production boom from 2015-2017, Forecast

mainly in Barranquilla. Investors have expected 100.000 40%
significant spillover effects into this port city both from 90.000
35%
Colombia’s economic emergence and the widening of
80.000
the Panama Canal.
Rentable Area (m2)
30%
• Production reached 56,000 m², an all-time high in the
Vacancy Rate
70.000
Colombia Caribbean submarket. The majority of this 60.000
25%
came in the Buenavista submarket in the city of
Barranquilla. 50.000 20%
• 2017 marks the end of the production boom observed 40.000
15%
since 2015, as the market now enters its rebalancing
30.000
phase. Most of the production over the next two years 10%
will happen in Cartagena, as Barranquilla’s pipeline 20.000
will slow to a trickle. 10.000
5%
• Demand so far has not kept up with production,
absorbing 28,000 m² in 2017. As a result, vacancy - 0%
reached an historic high of 34%. ‘ 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Costa Rica – San José

• Costa Rica GDP continued to perform very well in
2017. The economy grew by nearly 4%, aided by an Overall vacancy rate 10%
improving global economic context. Exports should
lead the way, particularly agricultural and Production - 2017 (m²) 59,000
biomedical add-ons.
• Inflation increased to about 1.4% after observing
very low variation in prices during 2016. In order to Expected production – 2018 (m²) 77,000
prevent a larger depreciation of the local currency,
the Central Bank has raised rates from 1.75% to Expected net absorption – 2018 (m²) 61,000
4.5%.
• The growing fiscal deficit remains a key political
issue in the country. Currently, the budget deficit Class AB/B+ rental range (USD/m²/mo.) 8 – 23
now stands at 5.5% of GDP. Lack of action prompted
Moody’s to downgrade Costa Rican sovereign debt Average purchase price range (USD/m²) 1,500 - 2,250
from Ba1 to Ba2.
• Costa Rica will elect a new president in 2018. After
the first round, neither candidate passed the 40%
threshold required to win the presidency. April 1st will Historic Production, Absorption, and Vacancy
see a runoff between the conservative Fabricio
Alvarado and former minister Carlos Alvarado.
Market Trends
200.000 30%
• In 2017, 59,000 m² of corporate spaces were added
180.000
to the market. Over the next few years, supply is 25%
expected to remain within the normal range of 160.000
50,000 – 80,000 m². 140.000
Forecast
• Absorption totaled 88,000 m², driven by large foreign 20%
Vacancy Rate
Rentable Area (m2)
companies taking advantage of low rents and a 120.000
skilled workforce. Amazon, Align, and McKinsey 100.000 15%

alone leased over 70,000 m2 in 2017 for shared 80.000
service centers. 10%
• Vacancy stands at 10% in the San José market. JLL 60.000
expects vacancy to fall back towards 8% over the 40.000
5%
medium term, as demand has been very strong and
20.000
new supply is fairly limited.
- 0%
Ecuador - Quito

• The Ecuadorean economy contracted by 1.5% in
2017, hampered by a stagnant economy and the Overall vacancy rate 6,9%
ongoing reconstruction of the city of Manga, which
was devastated in an earthquake in 2016. Production - 2017 (m²) 110,000
• New president Lenin Moreno has taken a surprising
about-face this year. The successor of Rafael Correa
has moved towards the US and distanced himself Expected production – 2018 (m²) 122,000
from leftist leaders in Latin America. In late 2017 he
held a successful vote to revoke presidential re- Expected net absorption – 2018 (m²) 72,000
election that essentially ends the presidential
Class A rental range (USD/m²/mo.) 15 - 21
aspirations of Correa, who was counting on making a
comeback in a few years after Moreno’s term. Class AB/B+ rental range (USD/m²/mo.) 9 - 16
• In 2016, the fiscal deficit was 7.3% of GDP. For 2017,
the gap is expected to fall to 5.1%, due to modestly Average purchase price range (USD/m²) 1,300 – 2,100
higher oil prices. Additional financing for the
government will come from debt and bilateral
assistance from China, who is aggressively
purchasing Ecuadorian assets such as oil reserves, Historic Production, Absorption, and Vacancy
electricity generation plants, and real estate.
Market Trends
• About 110,000 m² of new office spaces were added 200.000 30%

to the market in 2017, distributed in 9 buildings. The Forecast
most notable of these are Ekopark and T6. 180.000
25%
• Quito saw record office absorption in 2017, as new 160.000
quality projects showed strong leasing. However the
140.000
main contributor was the opening of the first of a 20%
Rentable Area (m2)
handful of Government Platforms, massive buildings 120.000

Vacancy Rate
that will consolidate several government offices and 100.000 15%

associated entities under one roof to enhance
80.000
productivity.
10%
• As a result of high demand, vacancy reduced sharply 60.000
in 2017, reaching 6.9%. 40.000
5%
20.000
- 0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ecuador - Guayaquil

• The Ecuadorean economy contracted by 1.5% in
2017, hampered by a stagnant economy and the Overall vacancy rate 5,2%
ongoing reconstruction of the city of Manga, which
was devastated in an earthquake in 2016. Production - 2017 (m²) 31,000
• New president Lenin Moreno has taken a surprising
about-face this year. The successor of Rafael Correa
has moved towards the US and distanced himself Expected production – 2018 (m²) 30,000
from leftist leaders in Latin America. In late 2017 he
held a successful vote to revoke presidential re- Expected net absorption – 2018 (m²) 33,000
election that essentially ends the presidential
aspirations of Correa, who was counting on making a
comeback in a few years after Moreno’s term. Class AB/B+ rental range (USD/m²/mo.) 9 – 13
• In 2016, the fiscal deficit was 7.3% of GDP. For 2017,
the gap is expected to fall to 5.1%, due to modestly Average purchase price range (USD/m²) 1,200 – 2,000
higher oil prices. Additional financing for the
government will come from debt and bilateral
assistance from China, who is aggressively
purchasing Ecuadorian assets such as oil reserves, Historic Production, Absorption, and Vacancy
electricity generation plants, and real estate.
Market Trends
• Production observed a slight reduction in 2017 when 200.000 30%

compared to 2016, totaling 31,000 m². Another 180.000
30,000 m2 are expected to be added to the market in 25%
2018. 160.000
• Demand had a strong year, summing up 36,000 m²,
Rentable Area (m2)
140.000
20%
one of the highest totals in the city’s history. JLL
Vacancy Rate
120.000
expects absorption to remain strong in 2018.
• The current pace of supply is allowing demand to 100.000 15%
absorb new developments, pushing vacancy down 80.000
across the market. Guayaquil’s vacancy rate is 10%
60.000
currently at 5.2%, one of the lowest in Latin America.
40.000
5%
20.000
- 0%
2012 2013 2014 2015 2016 2017
Guatemala – Guatemala City

• GDP is expected to grow by 3,4% in 2017, buoyed by
a solid increase in remittances (3% Y-O-Y), an Overall vacancy rate 6.5%
important component of consumer demand that has
helped offset decreases in fixed investment and Production - 2017 (m²) 55,000
export volumes.
• The hardline immigration policies of Donald Trump
will hit Guatemala harder than any other country, as Expected production – 2018 (m²) 92,000
its economy is more dependent on US remittances
than any other. Expected net absorption – 2018 (m²) 44,000
• After going through a political crisis that saw Otto
Perez renouncing the presidency under charges of
corruption, the country is undertaking steps to Class AB/B+ rental range (USD/m²/mo.) 8 – 12
provide greater transparency and restore public
confidence in its institutions. However it has recently Average purchase price range (USD/m²) 850 – 1,200
been revealed that current president Jimmy Morales
has issues of his own.
Market Trends Stock and Vacancy by Submarket
• Guatemala City saw its highest year of office

production since 2012, with 55.240 m2 delivered to
Stock - Class A Stock - Class AB Vacancy
the market. The largest projects were Work
Technology Center (Phase III) and Built-to-Suit 140.000 30%
developments for Telus and Tigo.
• Rents climbed steadily, around 3.7% from 2016 120.000 25%
levels. However rents in Guatemala City remain the
lowest in the region by far. Class A buildings are 100.000
Rentable Area (m2)
20%
leasing for between USD $10-12/m2/month. These
Vacancy Rate
80.000
prices have attracted many call centers who are
15%
looking to optimize their operational costs.
60.000
• The most dynamic suburbs are Proceres and the
newly consolidated Vista Hermosa; over 70% of the 10%
40.000
production pipeline is concentrated in these two
submarkets. 20.000 5%
- 0%
Mexico – Mexico City

• Mexican GDP is expected to grow by 2.2% in 2017,
nearly the same expansion observed last year. Overall vacancy rate 15%
Economic output will be driven by consumption –
which grew by 3.3% Y-O-Y in 2017. Investment is Production - 2017 (m²) 549,000
expected to expand 1.6% in 2018, while high oil prices
will have fiscal benefits for the government in the short Net absorption – 2017 (m²) 327,000
term. Expected production – 2018 (m²) 818,000
• Inflation grew by 6.8% Y-O-Y in 2017, the highest level in
16 years, prompting Banxico to raise its policy rate in Expected net absorption – 2018 (m²) 330,000
early 2018 by 75bp to 7.5%. Monetary policy is widely
expected to remain unchanged, unless negative risks Class A rental range (USD/m²/mo.) 15 - 39
materialize, for example a US withdrawal from NAFTA.
Class AB/B+ rental range (USD/m²/mo.) 14 – 25
• 2018 will also see a new president elected in the
second-largest economy in Latin America. Currently, Average purchase price range (USD/m²) 3,000 - 6,000
there is a three-way race to the top job in the country,
which is being led by Andrés López Obrador, followed
by PAN’s Ricardo Amaya and PRI’s José Antonio
Meade. All present fairly consistent policy proposals Historic Production, Absorption, and Vacancy
with the exception of Obrador, whose proposals skew
to the left.
Market Trends Production Absorption Vacancy

800.000 30%
• Production reached almost 500,000 m² during 2017,
delivered in 27 new office buildings. Insurgentes and 700.000
25%
Polanco concentrated 223,000 m² of the new supply.
600.000
Rentable Area (m2)
• More than 800,000 m2 of corporate office spaces are

20%
Vacancy Rate
expected be added in 2018 to the market, a 26% 500.000

increase Y-O-Y.
• Net absorption rose to 327,000 m2, up from 296,000 m2 400.000 15%
in 2016. Insurgentes submarket registered the highest
300.000
level of demand in the Mexican capital. 10%
• Vacancy rose to over 1 million m² in 2017, roughly 200.000
equivalent to 15% of existing office spaces. Norte and
5%
Polanco are the submarkets with the highest level of 100.000
available spaces.
- 0%
2012 2013 2014 2015 2016 2017
Mexico - Monterrey

nearly the same expansion observed last year. Overall vacancy rate 18.51%
expected to remain unchanged, unless negative risks Class A rental range (USD/m²/mo.) 13 – 31
second-largest economy in Latin America. Currently, Average purchase price range (USD/m²) 2,150 – 3,800
Meade. All present fairly consistent policy proposals Stock, Absorption, and Vacancy by Submarket
to the left.
Stock Net Absorption Vacancy (%)
Market Trends
500.000 30%
• The Monterrey office market grew by 14% in 2017. 450.000
About 198,000 m2 of new office spaces are to be 25%
delivered between 2018 and 2019. 400.000
• Absorption reached 53,000 m² in 2017, falling 17%
Rentable Area (m2)
350.000
20%
compared with the previous year, which has helped to
Vacancy Rate
300.000
prop up vacancy. The vacancy level advanced to 19%
in 2017, corresponding to 247,000 m². Valle Oriente 250.000 15%
and Valle submarkets contain most availability. 200.000
• Due to Monterrey’s location near the US border and 10%
150.000
industrial base that is highly integrated with cross-
border trade, a renegotiation of NAFTA will likely have 100.000
5%
a stronger effect on Monterrey than any other major 50.000
city in Mexico.
- 0%
Country Centro/ Santa Valle Valle
Obispado Maria/ Oriente
San
Jeronimo
Mexico - Guadalajara

nearly the same expansion observed last year. Overall vacancy rate 21%
expected to remain unchanged, unless negative risks Class A rental range (USD/m²/mo.) 17-26
Class AB/B+ rental range (USD/m²/mo.) 12-14
second-largest economy in Latin America. Currently, Average purchase price range (USD/m²) 1,000 – 2,000
Meade. All present fairly consistent policy proposals Stock, Absorption, and Vacancy by Submarket
to the left.
Stock Under Construction Planned Vacancy Rate
Market Trends
180.000 70%
• Total office stock grew by 29% last year, reaching
326,000 m² of corporate spaces. 160.000
60%
• Americas and Puerta de Hierro submarkets are the 140.000
fastest growing submarkets, with stock growing 21%
Rentable Area (m2)
50%
Vacancy Rate
and 45%, respectively, over last year. 120.000

• The vacancy rate stood at 21% in 2017. The highest 40%
level of available spaces in the market can be found in 100.000
Puerta de Hierro, with 37,000 m². Overall, rents have 80.000 30%
kept steady during 2017. However, as new buildings
become operational, this could put pressure on prices 60.000
20%
for the next two years.
40.000
10%
20.000
- 0%
Americas Lopez Mateos Puerta de Vallarta
Hierro
Panamá – Panama City

• Panama’s GDP is set to exceed 5% annual growth in
2017. Key infrastructure investments – the widened Overall vacancy rate 40%
Canal, expanded Tocumen Airport, and the Panama
city metro are bearing fruit, enhancing the country’s Production - 2017 (m²) 105,000
competitiveness.
• Added fiscal revenue generation from the canal has
helped to close the budget deficit to 1.4% of GDP in Expected production – 2018 (m²) 72,000
2017. In its first full year in operation after the
expansion, the canal saw a 22% growth in cargo Expected net absorption – 2018 (m²) 70,000
volume, equivalent to 400 million tonnes passing
through, an all-time high. Leading shipping segments
include dry-bulk, containers, chemical tankers and Class AB/B+ rental range (USD/m²/mo.) 9 – 24
LNG.
• After historic levels of infrastructure investment, Average purchase price range (USD/m²) 2,200 – 3,000
Panama saw a significant rise in fiscal and current
account deficits, which rose to 4% of GDP and 5.7% of
GDP respectively, in 2016.
• Politically, Panama continues to deal with the fallout Historic Production, Absorption, and Vacancy
of the Panama Papers, and is facing increased
international pressure for more transparency in the
country’s banking system.
Market Trends 300.000 50%

Forecast
• Production in 2017 was 105,000 m², a fraction of what 45%
this market has delivered in the past few years. High 250.000
40%
vacancy and declining yields have frustrated
Rentable Area (m2)
developers, who are postponing new projects. 35%

200.000
Vacancy Rate
Between 2018 and 2019, only 130,000 m² of new 30%

production will be completed.
• Demand reached 89,000 m² in 2017. It has not been 150.000 25%
able to absorb all the new supply delivered to the 20%

market in the last few years. After reaching a peak of 100.000
15%
110,000 m² in 2015, net absorption has observed a
steady reduction. 10%
50.000
• Slow absorption illustrates how greater traffic through
5%
the canal is perhaps not translating into demand for
real estate, as many real estate investors had - 0%
expected.
Perú - Lima

• 2017 saw a slight deceleration in economic output
from 2016 levels. The economy grew by 2.6%, and it is Overall vacancy rate 20.8%
expected to expand in 2018, taking advantage of
strong commodity prices and good performance from Production - 2017 (m²) 241,000
key trade partners.
• The Odebrecht scandal has brought an increased Net absorption – 2017 (m²) 148,000
public scrutiny of government contracts. As a result, Expected production – 2018 (m²) 191,000
several projects have experienced delays and this has
fueled a crisis of confidence in the highest echelons of Expected net absorption – 2018 (m²) 109,000
private and public sectors.
• President Kuczynski has faced a contentious congress Class A rental range (USD/m²/mo.) 15 – 24
throughout the first year of his term. With an
opposition-led congress, the government has
struggled to pass significant reforms. The president Average purchase price range (USD/m²) 1,200 – 2,300
was on the brink of impeachment after it was
discovered that his consulting firm received money
from Odebrecht years ago. In the end, he was
acquitted as it was determined that the payment was Historic Production, Absorption, and Vacancy
legitimate.
Market Trends
• Production in 2017 reached 241.000 m² distributed in 350.000 30%

26 new projects. New office production will diminish
over the next three years, with 345,000 m² to be 300.000
25%
completed. This represents a significant adjustment Forecast
that will be accompanied by a sharp fall in vacancy. 250.000
Rentable Area (m2)
• Net absorption in 2017 was 142,000 m², down from the 20%
Vacancy Rate
total observed in 2016, however it was still one of the 200.000

highest years on record for Lima and one of the
15%
highest absorption totals in Latin America this year. An
150.000
economic recovery and rising commodity prices will
help sustain demand in the range of 150,000 m² for the 10%
next few years. 100.000
• Vacancy jumped to an all-time high of 21% in 2017. 5%

With production forecasted to dry up in upcoming 50.000
years, vacancy should fall, which is welcome news for
investors and landlords. - 0%
Puerto Rico – San Juan

• For over a decade Puerto Rico’s economy has been
in a steady descent, contracting by 1.3% in 2016 and Overall vacancy rate 23%
likely to contract again in 2017.
• The expiration of tax benefits for US exporting Production - 2017 (m²) -
companies has eliminated a key incentive of doing
business in Puerto Rico. Over time, the island has Net absorption – 2017 (m²) -12,000
lost 20% of its population and has experienced a Expected production – 2018 (m²) -
brain drain equal to roughly 10% of the population.
• In 2016, the US Congress passed the PROMESA Act to Expected net absorption – 2018 (m²) -10,000
address the complex credit situation of the island.
Under the act, Puerto Rico filed for USD $74 billion Class A rental range (USD/m²/mo.) 14 – 18
debt restructuring.
• Hurricane Maria had a devastating effect on Puerto
Rico. Utilities, health services and small businesses Average purchase price range (USD/m²) N/A
were deeply affected by the natural disaster, and
*Rents in San Juan are typically quoted in ft2, but are stated in m2 in this
many remain without electricity still today. This has report for consistency and comparative purposes.
shined a light on the tenuous financial condition of
the utility company, PREPA, and inciting calls for Stock by Submarket and Class
privatization of public sector assets.
Market Trends
Class A Class AB
• During 2017, the San Juan office market continued 300.000
its trend of general inactivity, aside from some
closings and reductions. Some companies are taking
250.000
advantage of the current market and leaving behind
Rentable Area (m2)
older buildings and renting newer spaces at a low

price. 200.000
• Vacancy remains very high at 23%, rising 2% over the
past year. Class A buildings are showing a relatively
150.000
good performance, in particular in the Hato Rey
submarket. The market has seen a negative net
absorption of around 12,000 m² in the past year. 100.000
50.000
0
Caparra Guaynabo Hato Rey Other
Uruguay - Montevideo

• The Uruguayan economy is forecasted to grow by
3.6% this year, the fastest pace since 2013, driven by Overall vacancy rate 9%
strong private consumption. Real wages are also
aiding private demand expansion. Production - 2017 (m²) -
• Economic recoveries in Argentina and Brazil,
Uruguay’s main trade partners, are stimulating the Net absorption – 2017 (m²) 8,000
country’s export sector that has suffered since the Expected production – 2018 (m²) 9,200
beginning of Brazil’s recession in 2015.
• Inflation is expected to reach 6.2%, within the target Expected net absorption – 2018 (m²) -
range of 3%-7% set by the central bank.
• Moody’s Investors Services has maintained its Baa2 Class A rental range (USD/m²/mo.) 25 – 29
rating with a stable outlook, reflecting the
government’s commitment to fiscal responsibility.
Average purchase price range (USD/m²) 3,400 – 4,100
Market Trends
• The Montevideo office market is relatively stable,

compared to its peers in Buenos Aires or São Paulo Evolution of Rents
that are afflicted with boom and bust cycles at the
moment. During 2017, there was no new production
added to the market, although there are a few new
buildings scheduled for delivery in 2018. Class A Avg Class B+ Avg
• Prime rents have remained steady in the last twelve 35
months, given the lack of new developments in the
market. Vacancy was flat between 2016 and 2017, 30
reaching 10%.
Asking Rent (USD/m2/Mo.)
• The developers of Montevideo’s highly successful 25

Free Trade Zone, Zonamerica, have partnered with
the Colombian conglomerate Carvajal to replicate
20
this park in Cali, Colombia.
15
10
0
2016
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2017
Venezuela - Caracas

• 2017 marked the 4th straight year that Venezuela’s
economy contracted. As oil exports account for over Overall vacancy rate 7
90% of all exports, Venezuela was vastly overexposed
when oil prices began to fall in 2014. However Production - 2017 (m²) 24,500
economic mismanagement has exacerbated the
crisis. Net absorption – 2017 (m²) 15,000
• The ruling United Socialist Party has announced Expected production – 2018 (m²) 40,000
elections for April 2018, making the campaign
timeline extremely rushed. This is not an accident: Expected net absorption – 2018 (m²) N/A
they are giving insufficient time so that the
opposition cannot organize. The ruling party and Class A rental range (USD/m²/mo.) 25 – 35 *
opposition were recently engaged in talks to
Class AB/B+ rental range (USD/m²/mo.) 20 – 30 *
establish election guidelines, however no agreement
was reached and the opposition is boycotting. Average purchase price range (USD/m²) N/A
Independent candidate Henri Falcon broke the
*These rents are mostly theoretical, as most companies must pay in local
boycott and will challenge Maduro, proposing to currency. But rents would be equivalent to these ranges.
dollarize the economy.
• Oil embargos are one area where the international Annual GDP Growth
community can pressure Maduro: he cannot afford
to have oil reserves confiscated by creditors because 25,0
it would eliminate the only source of foreign
reserves. Recently the US placed sanctions on
20,0
trading Venezuelan debt which has affected bonds
issued by the state-run oil company, PDVSA. By the
end of 2017 the country was declared on selective 15,0
default, however the government is protesting this in
order to maintain its oil assets. 10,0
• According to Oxford Economics, nearly 4 million
Venezuelans – about 10% of the current population – 5,0
are now living abroad and nearly 60% hope to
emigrate amidst the crisis.
0,0
Market Trends
-5,0
• Due to the chaotic situation in Caracas, private
sector activity is crawling to a halt. However many -10,0
companies are holding onto offices as a long-term
asset. -15,0
Appendix: Comparison of tenant leasing practices

Argentina Brazil Chile Colombia
Unit Of Square meters Square meters Square meters Square meters

Measurement
Rent Units USD/m²/month R$/m²/month (Brazilian Unidades de Fomento (UF), a COP/m²/month (Colombian Pesos)
Real) quasi-currency adjusted daily
according to the local CPI. For
more information visit
www.bcentral.cl
Typical Lease Term 3-5 Years 5 Years 3-5 Years 5 years
Frequency of Rent Monthly Monthly Monthly Monthly

Payment
Deposit/Guarantee Case-by-case (typically Bank guarantee / guarantor Case-by-case (typically 1-3 Insurance policy typically requested
2-3 months depending / secure bail months’ rent)
on tenant)
Statutory Right to No (unless an option After 5 years per Brazilian No (unless an option to renew is Yes; length of renewal term typically
Renew to renew is agreed at law. agreed at the outset and specified in lease
outset and specified in specified in the lease)
lease)
Basis of Rent Case-by-case, explicit Annual increase of CPI. In UF, indexed daily Annual increases of CPI + (0% - 3%)
Increases or Rent indexation by CPI is After 3 years or upon
Review prohibited by law. renewal, the parties gain
the right of rent review, to
bring it back to market
rates
Rent Free Period 1-3 Months Case-by-case, often 1-3 Case-by-case, often 1-3 months 1-3 Months
months
Car Parking City: 1 per 100 m² A & AB Buildings - 1:35 m² UF 3-4.5/unit/month (US $140- 1 per 50 m²
Province: 1 per 60 m² 210)
Service Charges- Additional to rental Additional to the rental Additional to the rental charge Additional to rental charge, payable
Mgmt. Fees charge and payable charge and payable and payable monthly in monthly
monthly in advance monthly in advance advance
Service Charges- Payable by landlord Additional to the rental Payable by landlord (via tenant Payable by landlord (via tenant
Common Areas (via tenant service charge and payable service charge) service charge)
charge) monthly in advance
Service Charges- Payable by landlord Payable by landlord (via Payable by landlord (via tenant Payable by landlord
Building Insurance tenant service charge) service charge)
Sub-letting & Normally yes (subject Case by case Normally yes (subject to Normally yes (subject to LL
Assignment to landlord approval) landlord approval) approval)
Early Termination After 6 months, 1.5 Normally tenant pays 3 Non typically in this market Tenant is responsible for entirety of
months of rent month of rent penalty, however they can negotiated. contract unless otherwise
penalty; After 1 year, 1 reduced in proportion to Termination after year 3 of the stipulated in contract. Termination
months of rent penalty the elapsed time of the term with a penalty of 6 or 12 after year 3 with a 6 month rent
contract. months´ rent is not uncommon. penalty is typical.
Tenant Original condition, Original condition or case Original condition Original condition, allowing for
Reinstatement allowing for normal by case normal wear and tear
Responsibilities wear and tear

Costa Rica Ecuador Mexico Panamá
Unit Of Square meters Square meters Square meters Square meters

Measurement
Rent Units USD/m²/month USD/m²/month USD/m²/month USD/m²/month
Typical Lease Term 3-5 Years 3-5 years 3-5 Years 3-5 Years

Payment
Deposit/Guarantee Case-by-case, insurance Case-by-case (typically Typical deposit is two months Case-by-case, insurance policy
policy covering the 2-3 months) rent covering the contract is typical
contract is typical Not customary to have
insurance covering contract.
Statutory Right to No (unless an option to No (unless option to No No (unless an option to renew is

Renew renew is agreed at the renew is agreed at agreed at the outset and specified
outset and specified in the outset and specified in in the lease)
lease) lease)
Basis of Rent Case-by-case, though CPI + (0% - 3%) US Consumer Price Index, Case-by-case, though typically
Increases or Rent typically some indexed unless rent quoted in Pesos, some indexed percentage of CPI
Review percentage of CPI then Mexican Consumer Price
Index
Rent Free Period Usually only the time for 1-3 Months Case-by-case Case-by-case, typically 1-3 months
the build out (about 2
months)
Car Parking 1 per 25-50m², depending 1 per 50 m² 1 per 30 m² 1 per 55 m², though newer
on submarket buildings offer more parking
Service Charges- Additional to the rental Additional to rental Tenant responsible, additional Additional to the rental charge and
Mgmt. Fees charge and payable charge, payable to the rental charge and payable monthly in advance
monthly in advance monthly payable monthly in advance
Fixed rate base on pro-rata
share Reconciled annually
Service Charges- Payable by landlord (via Payable by landlord (via Payable by landlord (via tenant Payable by landlord (via tenant
Common Areas tenant service charge) tenant service charge) service charge) service charge)
Service Charges- Payable by landlord Payable by landlord Payable by landlord (via tenant Payable by landlord
Building Insurance service charge)
Sub-letting & Normally yes (subject to Normally yes (subject to Not customary and always Normally yes (subject to landlord
Assignment landlord approval) LL approval) subject to Landlord approval for approval)
both subleasing and
assignment
Early Termination Legally tenants can exit Tenant is responsible Negotiable (with termination Unless otherwise stipulated in the
after the first year without for entirety of contract fees) rental contract, tenant is
penalty. To avoid this LL unless otherwise responsible for paying entirety of
can demand fully stipulated in contract contractual obligation.
bondable lease
agreements.
Tenant Original condition, Original condition, Original condition, allowing for Original condition, allowing for
Reinstatement allowing for normal wear allowing for normal normal wear and tear normal wear and tear
Responsibilities and tear wear and tear

Peru Puerto Rico Uruguay Venezuela
Unit Of Square meter Square feet Square meters Square meter
Measurement
Rent Units USD/m²/month USD/ft2/month USD/m²/month VEF/m²/month (Venezuelan

Bolivares)
Typical Lease Term 3-5 Years 5-15 Years 5 Years Variable

Payment
Deposit/Guarantee Case-by-case, usually 2 Case-by-case, though it is Case-by-case, typically 6 Case-by-case, insurance policy
months rent are required typical to 12 months backed by covering the contract is typical
bank guarantee or cash
deposit (depending on
tenant)
Statutory Right to No (unless an option to No (unless an option to renew is No (unless an option to Yes, renewal term depends on
Renew renew is agreed at the agreed at the outset and renew is agreed at outset previous tenure
outset and specified in the specified in the lease) and specified in lease)
lease)
Basis of Rent Case-by-case, though Case-by-case, though typically Case-by-case, generally Case-by-case, though often
Increases or Rent typically some indexed some indexed percentage of CPI adjusted using Consumer indexed as some percentage of
Review percentage of CPI Price Index CPI
Rent Free Period Case-by-case, typically 1-3 Case-by-case, typically 1-6 Case-by-case Typically 1-3 months for the
months. While this often months. While this often occurs, build-out; 2 months is most
occurs, it is not it is not standardized in Lima common
standardized in Lima and is and is usually dependent on
usually dependent on tenant improvement allowances
tenant improvement provided.
allowances provided.
Car Parking US $150-200/space/month Paid separately; typically Included in rent if 1 space per 20-35 m²
depending on submarket $80/month for surface lots and building has parking
$100/month for covered space spaces, additional
contract is necessary
otherwise
Service Charges- Additional to the rental Additional to the rental charge Additional to the rental Additional to the rental charge
Mgmt. Fees charge and payable and payable monthly in charge and payable and payable monthly in advance
monthly in advance advance monthly in advance
Service Charges- Payable by landlord (via Payable by landlord (via tenant Payable by landlord (via Payable by landlord (via tenant
Common Areas tenant service charge) service charge) tenant service charge) service charge)
Service Charges- Payable by landlord Payable by landlord (via tenant Payable by landlord (via Payable by landlord
Building Insurance service charge) tenant service charge)
Sub-letting & Normally yes (subject to Normally yes (subject to Normally yes (subject to Normally yes (subject to landlord
Assignment landlord approval) landlord approval) landlord approval) approval)
Early Termination Case-by-case charming Unless otherwise stipulated in Case-by-case Legally tenants can exit after the
the rental contract, tenant is first year without penalty. To
responsible for paying entirety avoid this, LL can demand fully
of contractual obligation. bondable lease agreements.
Tenant Original condition, allowing Original condition, allowing for Original condition, Original condition, allowing for
Reinstatement for normal wear and tear normal wear and tear allowing for normal wear normal wear and tear
Responsibilities and tear
42 Office Market Overview| Latin America | EY 2017
Want more information?
Contacts:
Latin America: Latin America:

Northern Cone, Central America, Caribbean Southern Cone
Scott Figler Martin Potito
Associate Director Associate Director, Latin America
Scott.Figler@am.jll.com Martin.Potito@am.jll.com
http://latinamerica.am.joneslanglasalle.com http://latinamerica.am.joneslanglasalle.com
Brazil Chile
Eduardo Miyamoto Alison Ewert
Head of Research, Brazil Consultant, Chile
Eduardo.Miyamoto@am.jll.com Alison.Ewert@am.jll.com
http://joneslanglasalle.com.br http://latinamerica.am.joneslanglasalle.com
Mexico Latin America:

Gabriela Morales Fernandez Northern Cone, Central America, Caribbean
Market Research Manager, Mexico Santiago Quintana
Gabriela.Morales@am.jll.com Research Analyst
http://www.joneslanglasalle.com.mx Santiago.Quintana@am.jll.com
http://latinamerica.am.joneslanglasalle.com
About JLL About JLL Research
JLL (NYSE: JLL) is a leading professional services firm that JLL’s research team delivers intelligence, analysis and
specializes in real estate and investment management. A insight through market-leading reports and services that
Fortune 500 company, JLL helps real estate owners,
illuminate today’s commercial real estate dynamics and
occupiers and investors achieve their business ambitions.
In 2016, JLL had revenue of $6.8 billion and fee revenue of identify tomorrow’s challenges and opportunities. Our
$5.8 billion and, on behalf of clients, managed 4.4 billion more than 400 global research professionals track and
square feet, or 409 million square meters, and completed analyze economic and property trends and forecast
sales acquisitions and finance transactions of future conditions in over 60 countries, producing
approximately $136 billion. At year-end 2016, JLL had unrivalled local and global perspectives. Our research
nearly 300 corporate offices, operations in over 80 and expertise,
countries and a global workforce of more than 77,000. As fueled by real-time information and innovative thinking
of December 31, 2016, LaSalle Investment Management around the world, creates a competitive advantage for
has $60.1 billion of real estate under asset management. our clients and drives successful strategies and optimal
JLL is the brand name, and a registered trademark, of
real estate decisions.
Jones Lang LaSalle Incorporated. For further information,
visit www.jll.com.
© 2018 Jones Lang LaSalle IP, Inc.

All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy
thereof.

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End-Year 2017

Latin America | Office Market Overview

Monterrey San Juan

JLL North Latin America

JLL South Latin America

São Paulo Rio de

San José Mexico City

Latin America in 2017

Population by Major Country and Markets, 2017

Major Market Population (millions)

Source: Oxford Economics (2018)

GDP by country and major markets, 2017

$3.500 Country Real GDP (Billions of USD – PPP) $30.000

Major Market Real GDP (USD – PPP)

Country Real GDP Per Capita (USD)

Real GDP per Capita, USD

Source: Oxford Economics (2018)

GDP Growth by Country, 2010-2017

Source: Oxford Economics (2018)

Policy Interest Rates, 2008-2017

Source: JLL Research (2018)

Total Stock (m²), EY 2017

Rentable Area (m2)

Source: JLL Research (2018)

Vacancy Rates, EY 2017

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Vacancy Rate (%)

Source: JLL Research (2018)

Change in Vacancy (m2), Y-o-Y

-100.000 -50.000 0 50.000 100.000 150.000 200.000 250.000 300.000

Source: JLL Research (2018)

Production (m2), Y-o-Y

0 100.000 200.000 300.000 400.000 500.000 600.000

Source: JLL Research (2018)

Net Absorption (m2), Y-O-Y

(100.000) (50.000) - 50.000 100.000 150.000 200.000 250.000 300.000 350.000

Source: JLL Research (2018)

Production Pipeline (2018-2020) vs. Current Stock (m2)

Mexico City 17%

São Paulo 10%

Buenos Aires 22%

San José 20%

Guatemala City 30%

Col. Caribbean 23%

Cali 9% * Data label indicates percentage

0 1.000.000 2.000.000 3.000.000 4.000.000 5.000.000 6.000.000 7.000.000 8.000.000

Rentable Area (m2)

Source: JLL Research (2018)

Average Asking Rents, EY 2017

Guadalajara Average Rent

$- $5 $10 $15 $20 $25 $30 $35 $40

Average Asking Rents (USD/m2/Month)

Change in Rents (USD), Y-o-Y

Percent Change: Guadalajara

-30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20%

Source: JLL Research (2018)

Cap Rate Ranges, EY 2017

San José N/A

Panama City N/A

Col. Caribbean N/A

Guatemala City N/A

San Juan N/A

0% 2% 4% 6% 8% 10% 12% 14%