Flexible workspaces in Latin America are no longer a monopoly of the so-called “agile and innovative” startups. A variety of corporate houses are buying space into these co-working facilities. However, rents at these modern workplaces are falling rapidly, largely due to oversupply, according to a study by real estate solutions vendor Instant Group.
Over the last decade, Latin America has had a 230% growth in supply, compared to 196% in the United States.
With the COVID-19 pandemic drying up demand, some office space operators are cutting rent up to 70%, the report added. However the demand for office space is likely to increase once the pandemic recedes.
“Those entering the market today have their pick of location, space and build-out as vacancies are up, though we are also seeing pent-up demand as people have held back making decisions up until now in the pandemic,” says Luis Perez, VP at Instant Group.
“We also see suburban locales becoming more popular as companies take on a hub-and-spoke strategy in areas where transportation infrastructure is suffering and commute times are exceedingly long.”
In Mexico City, demand for office space is high, yet rent prices are down by about 20% this year. That is largely because of oversupply. Today, an average monthly workstation rate stands at US$336.
In Bogota, a similar work station can be rented for around US$300. Buenos Aires and Sao Paulo are expensive. In the Argentine capital, you may have to spend US$570 for hiring a workstation.
Flexible workspaces are quite popular in secondary cities as they enable businesses to test a new market without long-term commitments.
As in the US, the LatAm flexible office market is dominated by IWG and WeWork. Instant group says the remote-working trend will not reduce demand for office space, saying businesses will permanently shift to flexible workstations in the future.