Office Space Demand Grows in Colombia

Vacancy rates in Colombia office space are falling, with demand hitting record levels in some cities.

Colombia's three main cities posted vacancy rates under 10 percent in 2012, all improvements from the previous year, according to a just-released report from Jones Lang LaSalle.

The vacancy rate in Bogotá fell to 5.1 percent, the lowest since 2009. The city reported its best absorption rate on record, 190,000 square meters for the year. Landlords of top-tier properties in the area are asking for 14 percent more per month than a year ago, about $45 per square meter.

From the report:

No new buildings were delivered in [in Cali] in 2012, however 2013 and 2014 point to a growing trend in office production. Over 40,000 m2 will enter the market in the next two years, including some interesting projects     such as World Trade Center (8,000 m2), Holguines Torre Mayor (7,700 m2), and Edificio Avenida Colombia (12,000 m2), which will be the new Banco de Bogotá headquarters. These projects are pre-selling at between USD $1,900-$3,100/m2.

Colombia's other major cities posted similar results, as Colombia's economy grew 3.9 percent from 2011.

The city of Medellín posted a vacancy rate of 3.7 percent in 2012, down from 7 percent a year earlier, according to the report. With office space in the city scarce, JLL expects office rental rates to rise over the next two years. However, prices will still be less than comparable properties in Bogotá, the firm said.

Medellín is experiencing demand from businesses in Bogotá looking to open up secondary or smaller offices outside the capital, JLL said.

In Cali, a smaller market compared to Bogotá and Medellín, demand is also growing. The vacancy rate for the city declined in 2012, from 14 to 8 percent. Tenants are experiencing less competitive options as prices are rising, according to the report. Cali has 154,000 square meters of office space, one-third of Medellín's supply.

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