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The market of corporate real estate continue surfing the wave. Although developers who are specialized in this type of real estate products They continue betting on premium proposals and position themselves in key locationsconvey caution for the coming months.
Although the occupation of A+ offices are going through a recovery process and operations are closed, these are still moderate. In addition to the pandemic effect, as this business is strongly linked to the evolution of the Argentine economy, the situation still does not help.
However, the last year closed with some encouraging data: The vacancy rate fell during the last quarter of 2023closing at 14.8 percent, although it practically doubles that registered in 2020. Meanwhile, between October and December of that year, there was 11,055 m2 of net absorption (difference between 22,193 m2 rented and 11,138 m2 unoccupied), data derived from the Office Market Beat report prepared by Cushman & Wakefield, a global real estate services company. corporate.
In this context, The Catalinas-Plaza Roma submarket is the one that showed the most movement, with 3,241 m2 occupied and 3,026 m2 unoccupied. While the largest number of empty properties is still located in Microcentro.
As detailed, the premium office segment shows “favorable signs” in contrast to the previous quarter in which uncertainty regarding the electoral process predominated. Hernn Castro, senior broker of this consultancy, analyzes: “We are still living in a post-pandemic transition market. On the one hand, there is a reactivation of demand for offices and, at the same time, There are companies that are just now making pending adjustments and reducing the surfaces they occupy, so it is difficult for vacancy to go down.“.
Alejandro Reyser, commercial director of the Toribio Achval real estate company, also reports on the behavior of the market: “The situation is very difficult in general. There are very few operations, especially in the Class A corporate segmentwhich is a segment of large transactions.
In the last 12 months, There were practically no significant operations exceeding 3,000 m2 of rental in Class A buildings. “Only some companies in the technology and foreign services sector have shown activity” in that period, indicates the executive.
According to the interviewee, this is explained by “the current contraction of the economy, a process that began in May 2018. It has been a combination of recession and stagflation that has not been experienced in Argentina for a long time. Even the crisis of 2001- “2002 was much shorter than the current one and the recovery was faster. 2024 will be difficult, without major changes until the economic course is defined and this will not happen, at least, until the third quarter of the year,” he foresees.
Long term business
Mariano Vega, general manager of Raghsa, leading developer in the corporate sector, minimizes the impact of the situation on the business in the long term. “He A+ office market in Buenos Aires, has experienced fluctuations in recent years influenced by changes in market demand, due to economic, social and technological factors. However, In general, it continues to be one of the most solid and attractive sectors within the real estate market. In our case, anticipating the needs and requirements of the tenants allows us to obtain a vacancy much lower than the market average.”
Regarding the future outlook, he foresees that “it will be determined by the political and economic context of the country given that, If clear rules are seen, more companies will want to invest, which will generate demand for office meters.“.
Alejandro Gawianski, president of HIT Group, agrees on the importance of broadening the perspective of the analysis. “The projects take cycles lasting four to ten years. We don’t think about them with the electrocardiogram of the day. We have 150,000 m2 in development and we continue to move forward with our real estate as a service models.
Within the ecosystem of this group is HIT Cowork, which operates 35,000 m2 of offices in which They offer comprehensive solutions for companies and individuals with flexible contracting models. According to them, the market trend is increasingly valuing this type of proposals: They have an average occupancy rate of 90 percent in their nine AMBA locations. and among their next developments is an opening in Vicente López (in April) where they already have 70 percent of the space reserved and are moving forward with another within Paseo Gigena, located on Libertador and Dorrego avenues, CABA.
“Currently, flexible work spaces represent 5 percent of the total triple A spaces. The horizon is that between now and 2030 that participation will rise to 30 percent, so we plan to continue growing,” adds Uri Iskin, CEO and co-founder. by HIT
As for prices, those of the class A offices They experienced few variations throughout 2023, especially during the last quarter. Cushman’s report details that The average monthly rental value requested per square meter reached US$ 24.35. “Prices are recovering, but in areas with high vacancies there is greater breadth and opportunities. In the post-pandemic market, opportunities present themselves, but you have to know them. It is advisable to get advice,” advises Castro.
Nez, star neighborhood
“Companies are returning to presence in the offices and 2024 will be very important in that sense,” predicts Castro. In this framework, those looking for new quality spaces will find several notable projects that are in progress, advanced or close to being built.
The real estate brokerage that is particularly attractive – and increasingly so – is Libertador, both in CABA and GBA.. Especially in the area of Nez. Although this neighborhood has been on the radar of residential and corporate developers for decades, the landing of real estate investments in the Innovation Park (on former land of the Federal Tire) will multiply the activity in its surroundings, consolidating the area as a hub of great attraction Several of these works will begin during 2024.
HIT Group is one of the players that is betting heavily on this initiative of urban development promoted by the portage government. On land purchased by public auction They are moving forward with three projects: one of corporate offices that consists of 15,000 buildable m2to be built between May 2024 and July 2026 for US$ 20 million; another building to start in July of this year and will end in December 2026, will involve US$ 40 million in investment, will include 25,000 m2 for offices and coworking, and will be “the first designed from scratch for the collaborative work experience,” according to Gawianski; and, finally, they will build a project aimed at the coliving business “with student residences with amenities“.
Asked about the magnitude of the impact that the development of the Innovation Park will have in the future, this businessman asserts that “to be the corporate barycenter of AMBAat the same time as an interesting educational ecosystem with innovation companies.
At the same time, also in Nez, Raghsa strengthens its presence in the area with new projects and acquisitions: in the middle of the year they complete the construction of the Nez Business Center50,000 m2which is located in front of its last inaugurated complex, the Libertador Business Center, 100,000 m2. “It will be an office tower with 25,000 profitable m2, with more than 2,000 m2 of amenities and views of the river,” details Castro.
In addition, at the beginning of the year that developer acquired a 2,800 m2 land a few meters away, at Av. Del Libertador 7172. The plan is to build another A+ office tower and thus consolidate its own premium corporate node.
“In general, the trends that are expected to be in the buildings of the future include sustainability, integrated technology, flexibility and adaptation. There is a growing trend towards flexible and efficient office spaces, which can be adapted to different business needs. This includes coworking areas, shared meeting rooms and open-plan layouts that encourage collaboration and creativity,” argues Vega.
In relation to this, Reyser adds: “It is clear that heThe new work formats will not be face-to-face or full virtual. We are definitely going to a hybrid world with work spaces that are very different from those we knew until five years ago. The demands for flexibility of the new generations are forcing companies to implement strategies for retaining talent that not only involve less presence, but also different, collaborative and relaxed work spaces. “It’s a global trend.”
For the neighborhood of Nez the arrival of a new office development It is positive because it defines its physiognomy, which contributes to its exponential growth. In recent years, banks, restaurants, gyms, universities, supermarkets and cinema complexes have been installed.providing more necessary services and easy access to meet the needs of the demand that continues to increase.
Another area where the office supply is expected to grow is in Palermo. Cushman’s broker highlights: “In the coming months, Paseo Gigena will be inaugurated, in front of the Hippodrome. The design is by the ODA studio in New York and will have a proposal for offices, retail and green spaces open to the public that will be very interesting.”
Stock and projections
The corporate real estate sector is going through a phase of stability in terms of inventory, characterized by the lack of completion of works during the last quarter of 2023. Under construction, there are 336,886 m2and several works still lack a completion date, say Cushman & Wakefield.
Despite this, with the completion of multiple works, “a significant change is expected for the first months of 2024, especially in the Libertador CABA and Palermo submarketswhich are already in the commercialization stage,” details Rafael Valera, director of Brokerage at Cushman & Wakefield.
Despite a projection of 290,765 m2, “the introduction of new projects is hindered by the continuation of numerous ongoing constructions and the economic uncertainty after the elections, which generates a waiting period in several aspects of the corporate real estate market” , the consultant adds in its report.
For his part, Vega, from Raghsa, considers that “If the market sees clear rules of the game, it can be a year of growth and recovery since many who postdated the completion of operations in recent years could complete them in 2024. Political stability is crucial for the investment climate and business confidence given that unexpected changes or uncertainty can lead to a decrease in investment and caution. of companies to commit to long-term leases on high-end offices.
The original version of this note was published in number 364 of Apertura magazine.
