The market of offices in Panama, actually, has a 45% of vacancy. Latin American office market faces a difficult stage because they are being impacted by lower prices for their goods, movement from exports and tight monetary policy by the United States.
“High vacancy rates in the office market are reported, and rental prices are stagnant in many countries in the region.”
The region has added a total of 2.5 million square meters in 2015, and only 1.5 million m2 were absorbed. As a result, the vacancy rate increased by 1.3% over the previous year.
This scenario, placed industry city leaders such as Bogota (Colombia), San José (Costa Rica), Lima (Perú), Santiago (Chile) and Panama (Panama) in the “phase on offer” called watch market real estate cycle.
You may also read: Listed Areas for office rentals in Panama.
Main market indicators for offices in Panama
Regarding availability rate, Panama is the city that leads the indicator throughout Latin America, and even stands as one of the largest in the world, with more than 45%, when the market equilibrium is between 8% and 10 %. The area is characterized by high investment in real estate capital originating in other countries.
“In the niche of offices, Panama is the country with the highest vacancy rate, with 45% unemployment”
Eight cities above the market equilibrium are reported in availability, where owners compete on price, amenities and strategic locations to capture a few tenants.
Panama City, is living the new oversupply as a result of the euphoria of investors in previous years in the office market niche.
Office Market in Panama
Panama is one of the cities with the highest vacancy rate of offices in the region and the world.
Zoning the office market in Panama, you can find that Obarrio has a vacancy of 55%, San Francisco has a 53%, while Costa del Este and the Canal Zone are better, like Bethania, which has the best performance. The buildings delivered in 2015 to June 30 were 70% empty.
Find out about apartments for rent in San Francisco, Panama.
The reason for this recession – that will continue until 2017 at least – is the delivery of more than one million square meters of offices in 5 years, when the absorption of the city ranges in the vicinity of 70,000 m2 to 80,000 m2 per year.
Based on insist promoting more buildings and liberality of the Panamanian town planning, which allows you to build unlimited height, the area of Obarrio or banking area, for example, has dramatically increased its offer, the traffic congestion has been pushing the existing demand to other areas.
Meet the supply of apartments for rent in Obarrio, Panama.
Due to this unemployment prevailing in the office market, rental rates have fallen to 30%. In the case of hotels, which also experience this phenomenon, the unemployment rate has fallen by 50% and turn nightly rates decreased by 28%.
The owners and investors in Panama expect the low occupancy rates of offices and hotel rooms to continue for several years. Many of them, predict that the booming economy of Panama will fill the void, but not for at least two years, or more. Others are waiting to hotels lower their rates and office rentals will put low prices, which would mean lower prices for both travelers and tenants.
The boom in office construction also is being fueled by a practice in which investors buy entire floors in towers to design them to suit your needs. This mitigates the risk for builders and provides capital. However, you can also generate excesses in construction, which eventually affects the returns of investors due to empty housing and the fall of rent.
In conclusion, the excess of offices in Panama is a situation that affects the builders momentarily because it slows the sale process. However, helps companies and small businesses – due to the low price – which has a positive effect on the activity commercial and preference of companies established in the country. For now, we just have to wait to the point of balance between supply and demand.