Santiago will reportedly add approximately 658,000 square meters of Class A and AB office space to the commercial market over the next 18 months, the second largest planned office stock addition in Latin America, due to demand fuelled by Chile's continued economic growth and high levels of Foreign Direct Investment.
The region near the Parque Araucano is one part of Santiago that is experiencing substantial office sector growth due to building density and limited available land in the heart of the "Sanhattan" commercial center. Over the next 16 months, approximately 200,000 square meters of office space is expected to open in this city. Avenida Las Condes is another area where office buildings are being built at a rapid pace. Sale in Qatar | For Sale in Qatar
The Costanera Center in Providencia, which consists of four office buildings, is one of Santiago's most prominent commercial projects under construction. With a height of 300 meters, one of these buildings, the Gran Torre Costanera, is now the tallest building in South America. The Parque Titanium, a mixed-use project with three towers next to the Rio Mapocho, is another noteworthy project. On a six-hectare park, the project would have more than 55,000 square meters of office space.
According to Jones Lang LaSalle records, Santiago will have a total of 3,328,000 square meters of office space following the delivery of this new stock, making it the third largest in Latin America. Although this figure falls short of the commercial hubs of Mexico City (4,600,872 square meters) and Sao Paulo (3,784,349 square meters), it is worth noting that Santiago's population is slightly lower than Mexico City's and roughly half that of Sao Paulo.
To ease vacancy rates and reduce current upward pressure on office rents, new office space is needed in Santiago. Santiago's office vacancy rate is currently around 3%, making it one of the lowest in Latin America. The low unemployment rate in Santiago, which fell to 6.6 percent in September and is expected to fall below 6 percent by December, is another key factor driving up demand for office space. In Chile, company and customer sentiment are both increasing, prompting companies to pursue larger amounts of office space in anticipation of increased hiring. Vacancy rates will rise as new offices come online, but they are expected to stay substantially lower than Latin America averages in the medium term.
Growing construction costs is one factor that could slow the speed of construction. The Construct Cost Index prepared by the Chilean Construction Chamber increased by about 400 points, or about 9%, between September 2011 and August 2012.