Real Estate Rentals: Outlook for 2021

Because the supply of office and commercial buildings has increased, and at the same time unemployment has also risen, in Costa Rica the directors of these properties foresee that next year the parties will have to renegotiate the contracts.

Wednesday, September 16, 2020

Data collected by Colliers International indicate that between June 2019 and the same month in 2020 the total inventory of commercial buildings increased by 1.5% from 1.16 million m2 to 1.18 million m2.

You may be interested in "Real Estate Supply: How do Prices Behave?"

In this context of change in consumption habits that arose from the outbreak of covid-19, there has been a rise in the levels of unemployment of these properties, from 8.93% in June 2019, to 11.74% at the end of the first half of this year.

Given the rise in supply and the fall in demand, the prices of rents for commercial premises have been pressed down. Colliers' analysis points out that between June 2019 and the same period in 2020, the average cost per square meter decreased from $18.5 to $17.9.

See "Central America: Is the Real Estate Market Moving?"

Julieta Bonilla, spokesperson for Grupo Ceco, a company that concentrates the main shopping centers in the Metropolitan Area of the country, told that "... considerable discounts have been made to support the tenants, so that they do not leave the premises. The rental fees have been negotiated."

According to Bonilla, it is most likely that next year, both the owner of the property and the tenant will have to sit down to renegotiate the costs.

Check out the "Feasibility studies of real estate projects" that we carry out at CentralAmericaData.

In the case of the office market, the inventory increased from 1.11 million m2 to 1.14 million m2, between June 2019 and the same month in 2020. For the periods analyzed, unemployment levels also increased, rising from 8.4% to 9.14%.

Diego Simon, administrative director of Inhaus Bienes Raices, explained that this behavior in the office market is explained "... by the increase in telecommuting, which as a result of the pandemic, drove the departure of tenants from some buildings."

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More on this topic

Shopping Centers: Unemployment Rate Concerns

September 2020

As a result of the crisis, in Costa Rica in June of this year the rate of availability of premises in shopping centers climbed to 11.8%, a proportion of concern because a healthy level should not exceed 10%.

The phenomenon, which is not new in the country, has worsened in the context of the covid-19 outbreak, since in mid 2019 it was reported that in the last year the unemployment of commercial premises in Costa Rica was on the rise, a behavior that was explained in part by the country's economic situation and by changes in consumer preferences.

Offices: Changes in Market Conditions

August 2020

Since office construction is still active and could enter a phase of over-supply, combined with the strong increase in telecommuting, the market could face a contraction in the coming months.

Because of the spread of covid-19, governments in Central America have decreed strict home quarantines.

Rentals: Lower Occupancy, Lower Prices

May 2020

As a result of the crisis, the unemployment rate of commercial premises in Costa Rica rose from 8.81% to 9.86%, and the average price per square meter fell by 3%.

It is estimated that 20% of the stores located in the country's malls will not be able to open after the most critical phases of the covid-19 outbreak are overcome, according to Colliers' figures.

Panama: Office Market - June 2016

September 2016

Predictions are of greater stability in rental prices and a transition from the "high levels of oversupply and uncertainty, towards a more conservative outlook."

From a report by Colliers Panama entitled "General Offices Overview up to June 2016":

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