Premises and offices: the market recovers but the microcentro comes very slowly

Despite the economic crisis and the uncertainty of election years, the market for premises and offices is recovering after the pandemic. The vacancy was reduced in almost all the commercial corridors of the Capital, except in the wide area of the microcentro, whose main and most visible axis is the pedestrian Florida. Experts maintain that there the activity returned half due to the return of tourism, but there are no longer as many employees as before.

According to the latest measurement of the Buenos Aires government, in the district there are 32 commercial corridors with more than 15,000 premises. In the top 10 areas, the vacancy rate averages 2.7 percent, according to a study by consulting firm Colliers. But in the Florida area (between pedestrian, parallel and transversal streets) the percentage climbs to 9.42%. And one step below is the exclusive Puerto Madero (9.09%).

It happens that the return to face-to-face work in all its graduations (home office, hybrid or complementary face-to-face) modified the basis of demand. "Companies are looking for smaller surfaces, offices with open spaces and plants as armed as possible," he lists.

Stange points out that from Palermo to the north are the most demanded areas and that "the high vacancy in the center does not allow the values to be recomposed". The expert exemplifies that "the rent of a category A office in Palermo and Núñez is offered in the range of US $ 18 to US $ 22 per square meter, plus VAT and expenses; an equivalent in the center ranges from 12 to US $ 15". These values reflect deeper structural problems.

It is, explains Martín Potito, executive of LJRamos, a market of old buildings in terms of design and "companies escape that". This lower occupancy means less public for the premises in the area. With a detail: "Florida feeds more on tourism, instead the parallel and transversal streets point to the population of the offices, and this segment is more hit," says Potito.

The Florida pedestrian corridor is 12 blocks long and concentrates a total of 308 stores. It is an unmistakable symbol of Buenos Aires identity. But the downtown area is a wider area, and includes Corrientes Street from Tribunales to Leandro N. Alem, and from Córdoba to Diagonal Norte. Sales values, says real estate developer Rafael Baigún, "fell up to 50% compared to the pre-pandemic." However, he clarifies that "the owners of premises in good locations (Florida or Santa Fe) are reluctant to sell."

Both markets, offices and premises, are closely linked. According to a report by LJRamos, the ranking of brokers with empty offices (class A, that is, those with the best rating) is led by the microcenter (28.3%). It is followed by 9 de Julio Avenue (21.4%) and Plaza Roma (19.6%). The framework on the Pan-American is also high (20.5%). The counterparts are Catalinas (12.2%), Retiro (12.3%), PuertoMadero (12.1%), Libertador GBA and CABA (10.1% and 7.5%, respectively) and Polo Saavedra (9.9%).

"Companies no longer want to be in microcentro," introduces José Viñas, commercial director of the consultancy Cushman & Wakefield. The specialist argues that rents fell more than assumed. "Although the prices requested in the microcenter are among the lowest in the market, this is not at all consistent with the closing prices, which are extremely lower in cases where an owner is lucky enough to be able to close a transaction," he says.

Like others, Viñas maintains that "the preferred submarkets are the Libertador corridor of the Federal Capital, the areas of Palermo, Catalinas and the Polo Dot Baires, in Saavedra." The big question is about the future of the building infrastructure concentrated in downtown Buenos Aires, which for decades concentrated the headquarters of multinationals, administrative headquarters of companies and local and international financial entities.

"The microcentro today is a neglected area, there are many empty premises and the occupied ones are mainly gastronomic premises that are rented very cheaply," explains Armando Pepe, owner of the real estate that bears his name. Pepe agrees that the pedestrian street was the street that recovered the most due to the return of foreign tourism. "60% of the offices were emptied in the pandemic and when it was reactivated, companies shrank meters because people do not want to return," says the businessman.

With regard to the office market, Potito points out that the problem is broader. The expert compares that there are currently 230,000 square meters available for rent, "although in 2020 they were 120,000," he graphs. On the other hand, in 2022 20,000 square meters of offices were occupied against a historical average of 60,000. Potito adds that, despite everything, the market showed a recovery until the first quarter of the year. The crisis interrupted the trend.

The difficulty in occupying spaces intended for corporate uses is a worldwide phenomenon. "The same thing, but on a larger scale, is happening in other big cities around the world. In New York, Chicago, Los Angeles and São Paulo, the vacancy is much higher than in Buenos Aires," the specialist surprises.

For his part, Stange believes that the macroeconomic context (high inflation plus uncertainty) is a complicated combination. However, he argues that despite everything "the market will continue with its recovery, because SMEs, the great engine of the economy, always find a way to move forward." In any case, the expert warns about "the lack of investments in the sector", which prevents it from being more fluid.

Viñas suggests that "the owners evaluate the Residential Reconversion Plan that the GCBA has, where they can also reimburse up to 70% of the investment through payment on account of Gross Income". It alludes to the stimulus plan that the Buenos Aires government launched to encourage the conversion of offices into homes, with the aim of revitalizing one of the areas most valued by porteños and tourists from abroad.

The vacancy in commercial premises in the downtown area has a much higher incidence than it seems. It happens that in the pedestrian area is concentrated almost half of all available square meters, according to data from the consulting firm Colliers.In second place appears the Callao and Santa Fe corridor, with 10.34%.

See also

The Buenos Aires microcenter has the largest number of empty commercial premises

See also

Keys to transforming office buildings into homes