Medellin's Commercial Real Estate: Defying the Pandemic
Medellin slashed office vacancy by 5.2% during the pandemic as other LatAm cities saw 6% increases.
The Results are in, Medellin Wins!
A massive question during the pandemic was “Will offices reopen once this thing ends?” Remote working turned tradition on its head. The market for office spaces was mostly uncertain, and, in many cases, pessimistic. Office workers wondered if they were even necessary anymore. Most companies that rented office space in the biggest cities of Latin America relied on Zoom, Teams, and Google Meets to manage their business. Some did so successfully, others not so much. Regardless, the ball was up in the air for most metropolitan cities in our region.
Medellin has been the great standout regarding office space utilization over the past 4 years. Against all odds and in contrast to other major Latam cities, this Colombian city’s results are mesmerizing. As the world was working from home, Medellin reduced its vacancy rate from 9.5 to 4.3 percent, a 5.2% decrease. Bogota, Mexico City, Monterrey, Sao Paulo, and Rio averaged a 6.17% increase in their vacancy ratios. As Medellin enjoyed an end-of-2022 vacancy rate of 4.3%, the other five cities endured 13.5, 21.6, 22.7, 22.1, and a whopping 35.6%, respectively. Incredibly, the city also increased its office space inventory in meters squared by 32% during this period. The second highest increase of our sample was Monterrey, with a 13% increase.
It’s not surprising that Medellin is doing this well at getting people to go to work. It’s not called the City of the Eternal Spring for nothing! All jokes aside, Medellin appears to enjoy a very particular economic privilege. The data shows that Medellin’s four-year rental price per squared meter in Colombian Pesos rose by 21% while its price in USD decreased by 18%. This points to a potential dual interest. Both the locals that develop and lease office spaces and international players that acquire these leases would perceive that they are getting a good deal.
Medellin is the city that is defying the odds. Coming out of the pandemic, their office real estate appears to be thriving. We can only hope that the same will happen to the rest of the Latam market in the coming years.
Special thanks to Alejandro Delgado, Mexico Country Manager at SiiLA, for providing the data that made this story possible. SiiLA is a suite of cloud-based solutions for data, analytics, and intelligence for Latin America’s commercial real estate market. We encourage you to look them up!