São Paulo vs. Mexico City: Office Space Rental Prices Compared

Given SiiLA’s expertise in Latin American Commercial Real Estate, we are often asked to provide our take on similarities and differences between certain markets. One of the most frequently asked questions is how the office sector in São Paulo, Brazil and Mexico City, Mexico compares from a market rent perspective. Last week, El Economista, published an article with our insights on this topic.

The supply and demand in the office sector is an important factor in determining average rents in a market. In terms of total inventory, or the total amount of office space available in the two cities, the numbers are actually quite similar. According to SiiLA Market Analytics, the São Paulo market has more than 8.6 million square meters of office properties from classes A+, A, and B. The Mexico City market is a close 2nd, with 8.31 million square meters. With regards to vacancy, SiiLA reports São Paulo and Mexico City ended the year with a similar proportion of empty spaces in relation to the inventory. The São Paulo office vacancy for 4Q22 was 22.06% with Mexico City at 21.58%.

It is important to note that these two factors, supply and demand affect the market rent price of office space along with other variables such as property location, size and layout, services and amenities.

If you're considering opening an operation in one of these important Latin American capitals, it's crucial to understand what your fully loaded occupancy costs will be. In the case of São Paulo, based on the parameters described above, we can estimate an approximate cost of USD$15.22 per square meter, taking into account an exchange rate of R$5.15 to USD$1. The estimated value is based on data collected by SiiLA, which allows us to calculate an average market rent per square meter for the office sector. In Mexico City, the average market rent recorded in Q4 2022 was USD$22.89 per square meter.

Giancarlo Nicastro, CEO of SiiLA, explains that the markets in both cities have similarities in terms of inventory and population. "The big difference lies in the rental price. Some economic factors, such as inflation, interest rates, and monetary stability, make the Brazilian market slightly more challenging," he adds.

Learn more about SiiLA's Latin American commercial real estate coverage by visiting SiiLA.com or contact us at contacto@siila.com.mx.