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March 16, 2023
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San Pablo or Mexico City? With similar office markets, but with a difference: the rental price

San Pablo or Mexico City?  With similar office markets, but with a difference: the rental price

In recent years, both Mexico and Brazil have positioned themselves as two important nations for Latin America, not only because of their internal economy, but also because of the projection they can give firms from different parts of the world to markets such as the United States or Europe.

In this context, both Mexico City in national territory and São Paulo in Brazil have developed office markets very similar, but with a big difference: the rental price.

According to an analysis by real estate analysis firm SiiLA, this difference can be up to 50%, with Mexico City offering the highest price and San Pablo registering cheaper rates.

According to the information, which is based on SiiLA’s Market Analytics, both markets are very similar in size. For example, in Mexico City there is an inventory of 8.3 million square meters (m2), of offices class A +, A and B, while in São Paulo the inventory amounts to 8.6 million m2.

in matters of office vacancyboth markets also register very similar levels, since in Mexico City the vacancy in the fourth quarter of 2022 was 21.58%, while in São Paulo this percentage was 22.06 percent.

The little big difference

Given these similarities, both markets register a difference: the price. According to SiiLA’s analysis, factors such as supply and availability impact the market valuein addition to aspects such as:

  • Location of the properties.
  • Size and distribution of spaces.
  • Services and amenities.
  • Market demand.

In this scenario, SiiLA reflects in its analysis: “Imagine that you decide to open an office in one of these Latin American metropolises. How much do you think the lease would cost you?”

Data for the fourth quarter of 2022 indicate that in São Paulo, Brazil, the average cost of leasing per square meter amounted to 15.22 dollars, while in Mexico City this value was 22.89 dollars per m2, that is, a difference of 50.39 percent.

“The big difference is in the cost of rent. Some economic factors, such as inflation, interest rates and monetary stability make the Brazilian market a little more challenging,” explains Giancarlo Nicastro, general director of SiiLA in Brazil.

Within the analysis, it is detailed that some of the main factors that affect this price disparity are the following:

  • Composition by type or class of properties: The higher the class, the cost tends to increase.
  • The terms of the contracts: The contractual term determines the flexibility in price negotiations.
  • Quality and type of tenants: This factor affects the payment capacity of each tenant.
  • dollarization: Impact on inflation.
  • economic competition: Key factor that affects speculation.



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