The real estate sector in Panama will undergo important adjustments this 2022, especially in office markets and shopping malls, which will need to reduce their levels of oversupply and vacancy, respectively. Meanwhile, the industrial sector will continue to grow thanks to the expanding needs of the international logistics industry.
Those are some of the projections made by the research department (Market Research) of the commercial real estate consultancy Newmark Central America for the 2022.
The company believes that the changes in the three markets will be aimed at reaching the balance between supply and demand, considering the natural effects of the country’s real estate industry and the conjunctural conditions resulting from the 2020-2021 health crisis.
Currently, about 82,386 square meters (m2) of projects are registered in
construction in Panama, of which 93% belongs to the industrial sector and 7% to commerce, since there are no office centers in development.
“The changes will seek to satisfy the needs of the new demand, which is currently showing signs of increased sophistication. This will cause more competition between the owners and adjustments in the design and delivery of facilities”, explained Danny Quirós,
director de Market Research para Newmark.
Offices: Tenant Market
For this year the office market in Panama has important challenges, after a period of paralysis in the economy and real estate investment. The reactivation proposes adjustments in the most aggressive commercial strategies based on particularly favoring tenants, who seek better conditions in the delivery of the properties and contractual clauses.
“The drop in the income of new developments forecasts a drop in vacancy, a
balance in rental prices and a reactivation in demand”, said Danny
Newmark does not record office projects under construction, even though in 2021 Almost 20,000 m2 of new supply entered. Industrial: continuous expansion The Panamanian industrial market for 2022 will remain in an expansion phase, as a result of a growth in supply and greater activity in demand from the
expansion needs of the multinational logistics industry.
In addition, the sector will benefit from the arrival of multinational companies in some manufacturing activities attracted by the new incentives of the Multinational Companies for Manufacturing (Emma), which offers tax benefits and
immigration for foreign companies.
On the other hand, there are new infrastructure projects proposed for the next 5 years which also guarantee expansion. In fact, the 76,345 m2 that are under construction represent a growth of almost 20% with respect to the new offer registered in 2021. The fact that this is a market that is based on the BTS model (Build to Suit) means that there is little speculative supply and stable growth in the demand.
Commercial: Post Quarantine Recovery
According to Newmark’s research department, by 2022 the market
commercial in Panama will show signs of recovery after the effect of the quarantine.
The main objective of the owners will be to lower the vacancy levels. Likewise, these would improve the mix of tenants in their properties to generate greater stability in the occupation during the next 12 months.
“As for the offer, the income of commercial components is projected within
mixed use facilities and there are no initiatives to develop large centers
until the market finds healthy levels in its performance,” he added.
Newmark reports 6,041 m2 of commercial projects under construction. In general, the commercial market expects to reduce vacancy levels as a result of the drop in income
of new projects, advances in vaccination and the lifting of restrictions
imposed by the health authorities. Risks that remain Despite the fact that 2021 is
considers a positive year regarding the dynamism of the industry in resuming initiatives
pending since 2020, risks related to uncertainty still remain
produced by the actions that governments may take to control the levels of
spread of new strains of the virus and the confidence of citizens in returning to
normality in their work and consumption habits.
Even so, during 2021 new prospects appeared in the demand and motivation of the owners in designing business strategies favorable for users either in the negotiation, adaptation and transformation of real estate spaces.
Newmark points out that current market conditions forecast increased demand for real estate services representation of users, such as those provided by the company, since several markets are in more favorable phases for tenants who require support in negotiating their contracts.
In the same way, there will be a greater demand for consulting services and
project management by owners and developers.
Newmark Tips for Developers and Renters in 2022
● develop products according to the requirements of the new demand in terms
of size, design, specifications and conditions.
● Adjust existing portfolios to new requirements in order to reduce the
migration and maintain the competitiveness of its properties.
● In offices, receive advice on space reduction plans and the
implementation of flexible work models.
● In industry, carry out establishment and expansion plans with more
premeditation to meet delivery times considering that it is a
● In commercial, carry out analyzes that allow establishing their operations in
estate that have the necessary conditions and environments to comply with
your expectations of sales and distribution of your products.