REPORT Office Q3 2017

Transcription

1 REPORT Office Q3 2017

2 Q OFFICE RESEARCH & FORECAST REPORT LIMA CURRENT OUTLOOK PRIME MARKET INDEXES (A+ & A) VACANCY RATE NET ABSORPTION NEW SUPPLY RENTAL PRICE Key Highlights 2T T-2017 During the third quarter of 2017, the prime office vancacy rate reached 29.6% of the total inventory, showing an increase compared to the previous quarter, which closed at 27.7%. The net absorption in this period reached 42,000 sqm. The buildings that make up the new supply in the third quarter have an average office occupancy rate of 15%. Five new projects entered the prime market, adding almost 90 thousand sqm. to inventory. Rent prices, list prices, maintain on average a trend of downward adjustment. Up to the third quarter of 2017, the Peruvian economy has presented a performance below the expected. According to the National Institute of Statistics and Informatics (INEI), as of July 2017, the Peruvian economy advanced 1.55%. Driven, mainly, by the advance of the sectors of Agriculture (+9.00%), Telecommunications (+6.88%) and Construction (+3.8%). However, other economic sectors present discouraging results, showing a negative advance. Among the main sectors of this group as of July 2017, were Fishing (-49.43%) and Manufacturing (-6.28%). On the other hand, according to the latest Inflation Report published by the Central Reserve Bank of Peru (BCRP), the projection of the country s Gross Domestic Product will stand at 2.8% by the end of the year. This is due to the fact that the country s economic activity suffered a slowdown from the fourth quarter of 2016 through the second of this year because of the corruption cases associated with the Brazilian construction companies and the Niño Costero phenomenon, mainly. Despite the scenario described above, there has been a recovery in domestic demand since May of this year, in line with the recovery of business confidence, as well as a lower contraction in public spending, which together will allow reaching the goal of 2.8%. P. 2 COLLIERS INTERNATIONAL

3 Regarding the prime office market in Lima, at the end of the third quarter, 89,923 sqm of usable offices entered the market, in line with the start of operations of 5 new prime buildings: EC Ichma, TC Prado and Torre Panamá (in the Sanhattan submarket), CE Miraflores IV (Miraflores submarket) and EC Bloom Tower (Magdalena submarket), with which to date the prime office inventory reaches a total of 1,148,747 sqm, distributed in 87 buildings. The vacancy rate is standing at 29.6% equivalent to 340,153 sqm, showing an increase with respect to the last quarter, because only 12% of the new square meters added to inventory have been absorbed. Net absorption for the third quarter amounted to 42,440 sqm. The submarkets with the highest activity in placements were Sanhattan, Miraflores and Nuevo Este. With respect to rental prices -list prices- these have continued the downward trend, showing an average price of US$17.14 per square meter, with the average for A+ offices being US$17.41 and US$16.87 for class A offices. Finally, in the remainder of the year, it is expected that 4 new buildings will enter the market adding more than 34,000 sqm to the prime office supply in Lima.

4 OFFICES SUBMARKETS (CORRIDORS) - LIMA EXISTING PRIME OFFICES Prime Office Market in Lima 3 rd Quarter 2017 / Existing buildings Zone Stock or inventory (sqm) Number of buildings Vacancy Rate(%) Vacancy Rate (sqm) Net Absorption (sqm) Rental Price (US$ / sqm / month) A+ A Total A+ A A+ A Total A+ A Total Total A+ A Total Sanhattan 211, , , % 17.3% 31.6% 96,190 35, ,783 8, San Isidro Golf 45,286 80, , % 15.6% 10.2% ,586 12,783 1, Miraflores 47,364 87, , % 32.1% 25.9% 6,738 28,242 34,981 8, San Borja 41,445 19,059 60, % 2.2% 1.3% , Magdalena - 132, , % 60.1% - 79,359 79,359 2, Nuevo Este 150, , , % 10.3% 26.8% 58,173 11,181 69,354 16, Surquillo - 19,051 19, % 58.4% 11,133 11, Subtotal 496, , % 27.4% 161, , , Total 1,148, % 340,153 42, The prices are list prices in existing offices available for rent. The prices apply to unfurnished offices pending implementation. The rent prices do not include parking spaces. The values shown are the average prices in each area. The respective tax must be added. TERMI NO LOGY Prime Market: The market consisting of A and A+ class office buildings.. Subprime Market Composed of office buildings of classes B+ and B. Stock or Inventory: Amount of square meters that are finished, delivered and operating in the market. Future Supply: Amount of square meters being built, or in the project stage, yet to be delivered to the market. Gross Absorption: Amount of square meters of office space that are occupied during a defined period of time (month, quarter, year), considers the rotation of occupants. P. 4 COLLIERS INTERNATIONAL

5 > PRIME MARKET OUTLOOK OFFICE SPACE Q PRIME OFFICE INVENTORY DISTRIBUTION 36 NUEVA OFERTA m 2 PRIME OFFICE AVAILABILITY DISTRIBUTION 38.7% % 23.3% % 3.8% 3.3% Prime and Subprime projects for sale - 3 rd Quarter 2017 Asking prices for buildings under construction Zone CLASS A+ SALE (USD) CLASS A SALE (USD) CLASS B+ SALE (USD) Sanhattan 2,183-2,182 San Isidro Golf - - 2,300 Miraflores - - 2,156 San Borja - - 2,200 Chacarilla - - 2,054 Magdalena - 1,975 2,112 Lince - - 1,500 Nuevo Este 2,090 2,201 - San Miguel La Victoria Average 2,113 2,067 2,112 $ ABOUT THE PRICES The prices are asking prices in case of building or draw-boards and/or construction phase that are currently marketed. These prices apply to unfrunished offices pending implementation. Prices do not include parking spaces. The values shown are an average askig prices in each submarket. These prices do not include taxes. Net Absorption: Referring to the occupation and vacancy of offices available within the same period, and does not consider the changes of location. It is part of gross absorption and is never greater than this. Vacancy: Amount of square meters that is available for lease or sale. Vacancy rate: Percentage of square meters of the Stock available for lease or sale. Asking Price: Price at which an office is offered in the market and is open for negotiation. Closing Price: Price at which a lease or sale transaction of an office is settled.

6 > PRIME MARKET SUPPLY AND DEMAND In the third quarter of 2017, five new buildings were added to the prime office market: EC Ichma, TC Prado and Torre Panamá in Sanhattan, CE Miraflores IV in Miraflores and EC Bloom Tower in Magdalena, adding 89,923 sqm of new useful offices to inventory, which to date already has 1,148,747 sqm in 87 buildings. During the present year, this is the largest addition of new square meters to the prime market, surpassing the new supply entered through the first semester. To date, the new square meters that entered the market amount to 152,440, with an estimated entry during the fourth quarter of approximately 34,000 sqm, to the extent that some projects contemplated to start operations during this year, would be doing so in In the buildings that have just made market entry, the trend is maintained in terms of average occupancy, which is below 20%; however, absorption in already operational buildings has shown a good performance in concrete terms, especially in rental operations and to a lesser extent in sales transactions, and as a result, in the third quarter, the net absorption surpasses 42,000 sqm In regard to cumulative absorption through the third quarter of this year, the submarkets with the highest participation are Sanhattan and Nuevo Este, which account for over 60% of placements through the month of September Vacancy increased by 2 percentage points, with this variable remaining at high levels -oversupply-, and at the end of Q it reached 29.6% of total inventory (27.7% in the previous quarter). With a view to the closing of the year, this indicator would surpass 30% by a little. The areas or submarkets where the available spaces are concentrated are Sanhattan, Nuevo Este and Magdalena. These three areas gather 82% of the available prime offices. PRIME OFFICE Q STOCK, VACANCY AND RENT sqm office / thousands 1,200 1, ,026 1,064 1, , $ / sq m / month 0 4T T T T-2017 Stock Vacancia Renta (asking) Stock Vacancy Rental (Asking) 16.0 P. 6 COLLIERS INTERNATIONAL

7 > PRIME MARKET PRICES In the third quarter of 2017, the prime office market continues to be in the oversupply phase. At the end of this period, the average rental price (asking price) shows a negative variation of 0.76% with respect to the previous quarter, and is now standing at US$17.14 per square meter of office space, plus taxes. In turn, closing prices are showing a greater adjustment with respect to list prices, according to the conditions of the products and the sub-market, in addition to other variables. By building category, the average rental price (list price) for the A+ offices is US$17.41/sqm plus taxes (US$17.33 in the last quarter), an increase driven by the price expectations for new buildings, which are above average. For offices in category A buildings, the average rental price (list price) is -at the end of 3Q US$16.87/sqm plus taxes (US$17.20 in the last quarter). At the area or submarket level, the average rental price (list price) shows stability and some downward adjustments, with the exception of Sanhattan, where the price expectation rose by 1.1% on average compared to last quarter. The supply of prime offices for sale in operational buildings amounts to more than 60,000 sqm, distributed in the Magdalena, Nuevo Este, Sanhattan and Miraflores submarkets. The average list price for these spaces is US$1,994/sqm plus taxes (US$2,037 in the last quarter), with the average price in class A+ offices standing at US$2,194/sqm (US$2,274 in the last quarter), while for class A offices the average price observed is US$1,884/sqm (US$1,946 in the last quarter). PRIME OFFICE - PRICE RANGE BY SUBMARKET PRIME OFFICES - AVAILABILITY OF OFFICES FOR SALE BY SUBMARKET US$ / sqm / month

8 > SUBPRIME MARKET CLASSES B+ AND B SUBPRIME MARKET INDEXES (B+ y B) 2T T-2017 AVAILABILITY RATE NET ABSORPTION RENTAL PRICE Subprime Office Market in Lima - 3 rd Quarter 2017 / Existing buildings Zone Rental Price Stock or Inventory (sqm) Number of buildings Vacancy Rate (%) (US$ / sqm / month) B+ B Total B+ B B+ B Total B+ B Total Sanhattan 172, , , % 8.4% 12.3% San Isidro Golf 99,944 57, , % 8.3% 14.4% Miraflores 163,817 81, , % 5.3% 15.3% San Borja 32,204 16,764 48, % 0.4% 15.1% Chacarilla 34,504 73, , % 4.7% 11.1% Magdalena 17,660 4,500 22, % 24.1% 41.7% San Miguel 8,525 16,227 24, % 3.5% 13.9% Nuevo Este 90,547 38, , % 7.5% 23.5% Centro - 67,144 67, % 0.6% Lince 17,359-17, % % La Victoria 18,674 17,544 36, % 15.6% 47.1% Surquillo 16,688 3,555 20, % % Subtotal 672, , % 6.1% Total 1,175, % The prices are list prices in existing offices available for rent. The prices apply to unfurnished offices pending implementation. The rent prices do not include parking spaces. The values shown are the average prices in each area. The respective tax must be added. P. 8 COLLIERS INTERNATIONAL

9 > SUBPRIME MARKET OUTLOOK During the third quarter of 2017, 03 new buildings were added to this segment, adding 11,355 sqm to the inventory. These buildings are part of the B+ category and are EE Cavenecia 250 (San Isidro Golf), CE Miraflores III (Miraflores) and EC Dots 765 (San Borja). To date, the total inventory of subprime offices (buildings in classes B+ and B) is 1,175,539 sqm, distributed in 234 buildings and 12 submarkets or areas, where the participation of B+ spaces reaches 57%, while class B offices make up 43% of the total inventory Availability in this segment has shown a slight increase compared to the previous quarter, and the vacancy indicator is now 16.43% of the total inventory, which is equivalent to 191,472 sqm of usable offices. Based on the total availability, the submarkets with the highest concentration of available offices are Sanhattan (19%), Miraflores (19%) and Nuevo Este (16%). The distribution of available spaces by building class shows that 84% is located in buildings of class B+ and 16% in buildings of class B. According to the monitoring of the segment and in the absence of postponements, the start of operations of 11 new buildings has been projected during the last period of the year (Q4 2017). These projects are located in Sanhattan (02), Miraflores (08) and Chacarilla (01), which would increase the inventory of subprime offices by approximately 43,000 sqm. > SUBPRIME MARKET PRICES At the end of the third quarter, the average rental price (list price) for offices in the subprime segment, shows a negative variation of 3.14% compared to the previous period, standing at US$15.69/sqm plus taxes (US$16.18 in the previous quarter, and US$18.41 in Q3 2016). For office spaces in B+ buildings, the supply prices range from US$13.75 per square meter (La Victoria submarket) to US$16.74 per sqm (San Isidro Golf area), with an average list price of US$15.74/sqm. On the other hand, for offices in class B buildings, the observed price range is between US$7.14/sqm (Centro submarket) and US$16.23/sqm (Sanhattan submarket), with an average list price of US$15.46/sqm plus taxes. With respect to the supply of subprime offices for sale, with immediate availability, the average list price is US$1,860 per sqm plus taxes, while for class B+ offices the average price is US$1,863 per sqm plus taxes and for class B offices the average price is US$1,834 per sqm plus taxes SUBPRIME OFFICE INVENTORY. DISTRIBUTION BY SUBMARKET SUBPRIME OFFICE AVAILABILITY. DISTRIBUTION BY SUBMARKET

10 FORECAST The second and third quarters of this year are showing better figures in terms of placements in the prime office sector in Lima. Even in an oversupply environment, this year could record a placement (net absorption) close to 100,000 sqm, -surpassing the measure of recent years set at 80,000 sqm, unexpected in light of the analyses carried out at the beginning of the year and interesting because of the structure and variables that make up the observed commercialization process. With a new supply or production (new prime office spaces) estimated for 2017 at 187,000 sqm, after adjustments according to the progress of works and deliveries, the office development activity remains in line with the production of the last two years: 2016 with sqm and 2015 with sqm. For 2018 delivery, 122,000 sqm of prime offices are under construction, which means that the trend towards lower production should begin, because the vacancy continues to increase and should be kept in mind, and given that it would close 2017 exceeding 30% (19.8 % in 2015 and 26.4% in 2016). This review is relevant, to which it must be added that in the placements made so far in 2017, a greater component of the dimensions of the spaces, than that of the number of operations, can be seen. That is to say, placements of important dimensions have been carried out -placements of more than 1,000 sqm- that add up to a significant part of this year s absorption in fewer operations.. But are these results sustainable? Or do they mark the beginning of recovery? The marketing dynamics this year are closely linked to the management of prices, specifically in negotiations on the part of demand in search of better conditions, in a context of much competition due to the high extant level of supply. Thus, the submarkets Nuevo Este and Sanhattan stand out because of the levels of placement obtained with respect to other areas of the city. It should also be noted that migration of occupation of the subprime segment to the prime segment is taking place, especially in the corporate sector, with which important prime spaces are taken, consequently increasing the vacancy in the subprime segment. P. 10 COLLIERS INTERNATIONAL

11 The development of the coworking format, whose supply is growing in our midst, also deserves comment. This contributes with the taking of spaces (absorption), but the dimensions of its demand here are not proven. Could these spaces revert to the available condition (vacancy), in less time than the traditional occupation? The question is valid. According to projections and work advances, in the remainder of 2017 more than 34,000 m2 of office space will be entering the prime market, of which close to 50% will be located in the Magdalena submarket, while the rest will be located in Sanhattan and San Isidro Golf. The projection approaching 2019, regarding what is currently under construction, indicates a decline in production, a very important factor in the search for equilibrium that would allow better results in placements and in the reduction of vacancy PRIME OFFICE EVOLUTION OF INVENTORY, NEW SUPPLY AND VACANCY 1,400, % 30% sqm offices 1,200,000 1,000, , , , , % 1,026, % 844, , , % 5.2% 226, , , ,143 1,148, ,441 25% 20% 15% 10% 5% Vacancy T 0% Inventory New Supply Vacancy

12 502 offices in 67 countries US$ 2.3 billon annual income 160 millon of square meters under management 16,300 professionals US$ 97 billon in more than 84,000 transactions PERÚ: Lima Eric Rey de Castro Director Gerente Av. San Borja Norte 793 San Borja, Lima 41 TEL FAX RESEARCHER: Lima Sandro Vidal Gerente de Investigación Av. Manuel Olguín 501 Oficina 502 Surco, Lima COLLIERS INTERNATIONAL PERÚ Advisory and Corporate Solutions Av. Manuel Olguín Oficina 502 Lima 33 Perú T colliers.com/peru Este documento ha sido elaborado por Colliers International y es de carácter informativo. La información contenida ha sido proporcionada por fuentes confiables y se presenta en la forma exacta en que fue recibida. Entre las fuentes se incluyen asociaciones y consejos inmobiliarios, así como dependencias de gobierno, entre otras. Colliers International no garantiza ni se hace responsable por la veracidad de la información presentada; cualquier parte interesada deberá hacerse responsable de su propia investigación sobre la precisión de la información. Colliers International excluye cualquier término deducido o implícito, condiciones y garantías que pudieran presentarse con motivo de este documento y excluye cualquier responsabilidad por daños y perjuicios que pudiera surgir. Este reporte y otros documentos de investigación pueden ser encontrados en nuestra página web Colliers International ofrece servicios inmobiliarios a nivel mundial, a través de 16,300 profesionales especializados en 502 oficinas distribuidas en 67 países. Colliers tiene ingresos de US$ 2.3 billones, un volumen anual en valor de transacciones de más de US$ 97 billones y maneja más de 160 millones de metros cuadrados en administración. Accelerating success.