Jan 21, 2004
Real Estate Profile
Office Market 2004 Caracas, Venezuela
Centro Letonia Golden Mile Economic Indicators
Torre 3M El Rosal
Torre Country Club El Rosal
C.C. San Ignacio Golden Mile
Country Population (World Bank Group 2002) Caracas Greater Metropolitan Area Population Inflation (2003) Exchange Rate (Bolivar per U$S, BCV Feb 9, 2004) GDP (2002) In Billions of Dollars GDP Per Capita (U$S per person) Unemployment August 2003 Interest Rate
25,100,000 4,000,000 25% 1,920 U$S 94.3 U$S 3,757 17.8% 31%
Political / Economic Overview
2004 began in instable and potentially explosive fashion, similar to what became accepted as the norm in the country in 2003. The country is caught in the midst of political and economic unrest, which has the makings of a disastrous social uprising at any moment. In August of this year, president Hugo Chavez, who had been recalled by the Venezuelan public, was re-elected with 58% of the vote. The elections were deemed "corruption free" by international monitoring organizations, however opposition groups claim otherwise. The country remains widely divided on the issue. Chavez's term will now last through 2006. In February of 2003 the Venezuelan government fixed the exchange rate at B$ 1,600 per U$S Dollar, a rate which existed on the official exchange market until February of 2004 when the local currency was officially devalued to B$ 1,920 per U$S Dollar. This is the rate enforced on all official transactions. There exists an accepted parallel market which oscillates in the range of B$ 2800 to B$ 3,200 per U$S Dollar, which is openly accepted throughout the country. Currently, the only way to expatriate money, or buy United States Dollars, is through a Preferential Exchange Permit. This permit is only granted to companies with the necessity to purchase primary goods on the international market, and particulars that petition through the Venezuelan government for reasons such as family needs abroad. Venezuela is the Western Hemisphere's largest oil exporter, and if the political and social problems could be resolved, the country's economic potential would be impressive.
Real Estate Profile Jones Lang LaSalle
Caracas 2004
Office Market Information Caracas
Stock per Sub-M arket
Caracas CBD Class A/AB (000)
ft2 6,500
m2 650
200,000 150,000 m² 100,000 50,000 0
The Class A and AB office market is comprised of approximately 650,000 m2, located in 52 buildings, 29 of which are considered A and 23 of which are considered AB.
G. Mile
EL Rosal S. Grande La Merc.
General Overview
Rental rate ranges for class A and AB space are approximately U$S 18 to 24 and U$S 13 to 17 per m² respectively. Current overall market vacancy (Class A and AB) is approximately 16 %. The many political and economic problems affecting business in Venezuela, which normally negatively affect vacancy, have been offset by a lack of production in recent years. With vacancy gradually decreasing, it is currently difficult, if not impossible, to find more than 4,000 m² of contiguous space in the market. Class A production has been virtually nonexistent for the past three years, with the most recent class A property having been introduced into the market in 2002. The present office market fundamentals (characterized by high vacancy and falling rents) coupled with current political and economic turmoil have stagnated speculative office developments. There are two-to-three projects which have been started, but are either stopped completely or to be introduced at an unknown future date. Demand for office space is also minimal, due to the effects the political and economic problems are having on the local business atmosphere. Very few transactions are taking place in the market, and the amount of annual transactions, both sale and lease, have been declining steadily for the past three years. 372 transactions took place in 2003, while 2002 and 2001 registered 511 and 783 transactions respectively. In 2003 gross absorption for the entire office market totaled almost 45,000 m², in comparison to approximately 75,000 m² in 2002, representing a 40.25% decrease in m² absorbed.
Historic Stock vs. Vacancy
700,000 650,000 600,000 550,000 500,000 450,000 400,000 1997 1998 1998 1999 2000 2001 2002 2003 2004 m² % Vac. 30% 25% 20% 15% 10% 5% 0%
Historic Class A & AB Rental Rates
30 25 20 U$S / m² 15 10 5 0 2001 2002 2003 Class A Class AB
Production Class A & AB Office Space
70,000 60,000 50,000 40,000
m²
30,000 20,000 10,000 0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004*
Real Estate Profile Jones Lang LaSalle
Caracas 2004
Principal Sub-Markets
Stock Location
El Rosal: The El Rosal sub-market, together with the Golden mile, is considered Caracas' most exclusive office location. With 19 of the 52 total class A and AB office buildings in the market and over 230,000 m² of total space, this area represents the densest concentration of class A and AB space in Caracas. Sabana Grande: The Sabana Grande sub-market is a product of the movement of corporate office space west from the traditional downtown, to the San Bernardino area, through the Sabana Grande sub-market, to the current CBD. The area is known for its commercial and retail characteristics, but is also home to some of the city's important office properties. 6 of the total class A and AB buildings are located in this sub-market, comprising over 100,000 m² of space, or 16% of the total market stock. The Golden Mile: Concentrated along the Av. Francisco Miranda, but also north into the La Castellana and Altimara areas, this is Caracas' other distinguished office sub-market. Containing 15 of the total class A and AB office buildings, this area is not as dense as El Rosal, but contains nearly 260,000 m² of space, or 41% of Caracas' total stock. La Mercedes: The La Mercedes office sub-market is located just to the south of the current CBD, El Rosal and the Golden Mile, and is characteristic of retail and restaurant components with smaller, high quality office buildings dispersed throughout the area. 12 of the class A and AB buildings are located in this sub-market, comprising over 40,000 m²of space, or 7% of the total market stock.
Stock Quality
Class A: Class A buildings are those considered to comply with: (1) preferred location; (2) large floor plates; (3) high quality specifications (technology, finishings, curtain-wall, amenities, raised floor, highvelocity elevators, etc.) and corporate image. Class AB: Defined by buildings characteristic of less desirable locations, floor plate size or age, among other aspects, and are not considered class A, but do compete for local and international corporate space occupiers. This category includes not only new buildings but also recycled ones.
+54 11 4893 2600 ext. 2614 +54 11 4893 2600 ext. 2610 +54 11 4893 2600 ext. 2618 shannon.robertson@am.jll.com leo.zaietz@am.jll.com zach.cheney@am.jll.com
Shannon Robertson Leo Zaietz Zach Cheney
Director Latin America Regional Operations VP Latin America Regional Operations Consultant Latin America Regional Operations
2004 Jones Lang LaSalle IP, Inc. All Rights Reserved. All information included in this document comes from sources considered reliable, however, Jones Lang LaSalle is not responsible for the accuracy of said information.
