The office market is showing a steady recovery although the overall vacancy rate is 10.6%. It rose that high due largely to blocks of space becoming available in the highest prestige complexes. Given that it is highly desirable space, it should be absorbed in a short period of time – within 6 to 9 months. Approximately 75,000 m2 of 2010 and 2011 inventory are under construction and should finish within the next 10 months. Prices should continue stable for at least two more quarters; no softening of lease rates is foreseen when buildings currently under construction come on line. Demand should keep pace.
The industrial market experienced a strong recovery; its crisis gradually dissipating and free zones, warehouses and office warehouses have vacancy rates below 5%. Investment projects under construction or about to start are more active. At least 5 new office/warehouse projects entered the market since January. This further good news shows the banks renewed interest to provide credit for new projects with more accessible terms and conditions.
The retail market still experiences strong, steady demand. Multiplaza Escazú’s latest stage generated enormous pre-leasing and demand has remained strong. In malls, occupancy and pricing have remained stable. In strip and neighborhood centers occupancy has decreased slightly. Their tenants were more susceptible to the slowed economy; different retailers have closed or changed for less expensive sites. Prices therein are gradually increasing to previous levels. New projects continue, especially within the eastern portion of San Jose.
The industrial and office property market could expect a significant recovery by the end of 2010, returning to normal behavior where the completion of inventory goes hand in hand with economic growth.
Predictions are that the office vacancy rate in Panama City, currently 33%, could reach 45% in 2016.
Following that under usage prevailing in the office market rental rates have dropped by up to 30%. In the case of hotels, they are also experiencing this phenomenon, the vacancy rate has fallen by 50% and in turn nightly rates have decreased by 28%.
The fever for building construction has not affected, for now, rental prices for office properties in Panama City.
Although there is in the country an inventory of office space which is enough for over six years, the construction of large buildings for this type of business has not stopped and both vacancy rates and prices are stable and have not impacted the market, reported Capital.com.pa.
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