Colombia saw strong 4.6% GDP growth in 2014 driven by construction, financial services, and consumer demand. However, falling commodity prices negatively impacted mining, manufacturing, and petroleum. Imports grew faster than declining exports, pushing the current account deficit to 5% of GDP. The Central Bank has kept interest rates at 4.5% to support the economy as inflation remains at 3%. Significant new infrastructure projects and continued foreign investment are expected to fuel further economic growth.

1. Office Outlook
Bogotá, Colombia End-year 2014
Macroeconomic Overview
Colombia is coming off a strong 2014 that saw it outperform its
neighbors. Strong consumer demand, low unemployment, and
improving access to credit were the main factors in achieving a 4.6%
growth rate at a time when several of Latin America’s largest
economies are either slowing down or even contracting. The best
performing sectors of the economy were construction, financial
services, and the services sector. Mining, manufacturing, and
petroleum saw a sharp decline due to slumping commodity and oil
prices.
Like many emerging markets, Colombia has been hit hard by the fall
in commodity prices and general risk aversion among international
investors. With less dollars flowing into the economy, the currency
has bottomed out, falling over 30% in value over a 6-month period.
Imports have been rising steadily as consumer confidence remains
high and access to credit is supporting demand. However a decline
in value of exports resulting from the fall in commodity prices has
pushed the current account deficit to 5% of GDP. This shortfall is
likely to be financed by foreign direct investment as well as ample
foreign reserves that the government wisely stockpiled throughout
the boom of the past decade. Yet the growing divergence between
imports and exports has generated concern.
The Central Bank remains bullish in the face of these circumstances.
With inflation continuing to hover around 3% - soundly within the
target range – the policy interest rate has stayed at 4.5% since mid-
year. This rate is likely to stay put until later in 2015 when there is
more clarity on external demand, inflation, and monetary policy in the
United States. The most likely scenario is that the interest rate
remains unchanged, however an unexpected slowing of the
economy could provoke a rate cut. Either way, these relatively low
rates should continue to support consumer spending and private
sector investment.
2014 saw the re-election of Juan Manuel Santos, who defeated
Oscar Ivan Zuluaga in a 2nd round run-off. With both candidates
aligned for the most part economically, the election was essentially a
referendum on Santos’ ongoing peace negotiations with the FARC
guerilla movement. Zuluaga, who is the political protégé of the
polarizing former president Alvaro Uribe, favored a suspension of the
negotiations and a continued offensive. Santos’ re-election
guarantees that negotiations will resume, yet the agreement remains
hung up on the thorny issues of victim reparations and the political
participation of FARC members in a post-conflict Colombia. The
agreement could have far-reaching implications with the prospect of
pacifying wide swaths of the country that were previously deemed
overly insecure and isolated.
In all the outlook remains very positive for Colombia. Prudent fiscal
policy over the past decade has put the government in position to
raise spending in the face of the types of shocks currently seen in
the commodities market. Surging foreign direct investment will
continue to fuel the economy, as it is expected to add at least USD
$15 billion in inflows annually over the next few years. Finally, the
4G infrastructure projects are in development, which will provide a
boost to the economy in the short-term while enhancing productivity
in the long term. These projects encompass large-scale
improvements in highways throughout the country, in addition to
updating Colombia’s rail, port, and airport infrastructure. The 4G
program is a good demonstration that political leaders are committed
to addressing one of the country’s main impediments to achieving
higher productivity.
Source: Oxford Economics (2015)
$-
$10
$20
$30
$40
$50
$60
$70
2006 2007 2008 2009 2010 2011 2012 2013 2014
BillionsofUSD
Colombia Export Mix, 2006-2014
Others
Agriculture
Manufactures
Oil & gas, extractive

2. Market Overview
With fresh streams of investment coming in – both on the demand side
as well as the supply side - Bogotá is one of Latin America’s hottest
markets. The Colombian capital is one of the region’s most important
financial hubs, and is growing as a logistical hub as well. It is
increasingly catching the eye of international investors who are looking
for a growing market that can promise steady returns.
The metropolitan area contains approximately 1,800,000 m2 of Class A
or Class AB space. Over 70% of this is in the El Norte sector, the most
consolidated and traditional business district that contains the Avenida
Chile, Andino/Nogal, Chicó, Calle 100, and Santa Barbara submarkets.
18% of the stock is in Salitre, the corridor that connects the airport with
downtown. 4% lies in the old historic downtown and another 7% is in
other isolated areas, mainly the northwest and far north of the city.
Over the past few years, the Bogotá market has been characterized by
pent-up demand, falling vacancy, and rising rents. With many
companies looking to either set up shop in Colombia or grow an
existing operation, demand has been high but in many cases – such as
in 2013 – stifled by a limited supply. This situation generated a very
low vacancy rate that fell to 3% a year ago. However a spike in
production (170,000 m2) and rather disappointing net absorption
(108,000 m2) in 2014 forced the vacancy rate up to 6.1%.
The growing interest in office development by both domestic and foreign
investors has put an ample amount of space in the production pipeline.
Between 2015 – 2017 nearly 800,000 m2 will be delivered. This will likely
change the complexion of the market, giving tenants more options and
creating a more competitive environment for landlords and developers.
JLL estimates that there remains a significant pent-up demand in Bogotá
that is capable of absorbing about 200,000 m2 per year. The result will be
a much-needed excess of space on the market that will slow the sharp
rise in rents that has been witnessed over the last 5 years.
The most active submarkets continue to be Chicó, Salitre, and Santa
Barbara. In Chicó, developers remain constrained by zoning restrictions
and small lots that limit the constructive potential of projects; however
given the attractiveness of the location it continues to be the hottest
submarket in the city. Salitre continues to see more consolidation, and
with the delivery of buildings such as Buro 26, Optimus, Paralelo 26, and
more development in the Connecta complex, this corridor is attracting
large users who are looking for more affordable and efficient spaces.
Santa Barbara, meanwhile, saw the completion of the 24,000 m2 Tierra
Firme, though it has been slow to lease up. This submarket will see
significant growth in the coming years as several projects have broken
ground in the Usaquen neighborhood.
While El Norte will remain the most highly desired business district,
escalating rents and the lack of large lots (and therefore efficiently spaced
buildings) are pushing both supply and demand to other parts of the city.
Consequently, the Salitre and “Other” submarkets are seeing significant
.
Supply and Demand
Bogotá, Colombia: End-Year 2014
Forec
ast
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
-
50.000
100.000
150.000
200.000
250.000
300.000
VacancyRate
RentableArea(m2)
Historical Production, Absorption, and Vacancy
Production (m2)
Absorption (m2)
Vacancy Rate
Market Equilibrium
Vacancy Rate
Forecast
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
(10.000)
-
10.000
20.000
30.000
40.000
50.000
60.000
Andino
Nogal
Ave.
Chile
Calle
100
Centro
Intl
Chico Salitre Santa
Barbara
Other
VacancyRate(%)
RentableArea(m2)
Production and Absorption by Submarket, Q4 2014
Net Production, 2014
Net Absorption, 2014
Vacancy
-
5
10
15
20
25
30
35
-
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
Andino/
Nogal
Av.
Chile
Calle
100
Chico Santa
Barbara
Salitre Centro
Intl
Other
NumberofProjects
RentableArea(m2)
Average Project Size by Submarket, Q4 2014
Average Rentable Area
Number of Buildings
under Construction

3. contrast, Salitre and “Other” are seeing Class A rents as low as COP
45,000-55,000/m2/month. Sale prices are between COP $8mil –
14mil/m2 for Class A space and between COP $5.5mil –9mil/m2 for
Class AB space. Cap rates are typically between 8-10% depending
on the characteristics of the transaction (asset class, tenant, lease
term, etc.).
Office Market Statistics
Office Market Clock: Latin America
JLL continues to view the Bogotá market as entering a state of
deceleration in rents despite the fact that some properties are
charging up to COP $100,000/m2/month. This is mainly due to the
unprecedented amount of production that will enter the market in the
next few years. While demand should remain high given the sound
macroeconomic fundamentals in Colombia, it is unlikely to
immediately absorb all the space coming online. This will create a
more stable dynamic, since the growth in rents seen over the past few
years is unsustainable.
growth – mainly for the following reasons: 1) developers can find more
affordable and larger lots here, which allows them to charge lower rents
and build out larger floorplates; 2) tenants who are looking to optimize
their operating costs are attracted to these parts because they can find
efficient spaces and pay lower rents; and 3) buildings in the Salitre and
the ‘’Other” sectors are typically developed by larger groups that
finance the development and lease it. This is in contrast to El Norte,
where the vast majority of projects are developed in the pre-sale
model. Large tenants are showing more inclination to the for-lease
model because they can establish a long-term relationship with their
landlord which allows for better commercial conditions, and the building
will likely be better maintained.
Prices and Rents
Due to the dynamics of the local market – low vacancy and high
demand – rents have grown very rapidly in Colombian Pesos. Average
Class A rents have grown nearly 6% Y-o-Y and over 10% in two years.
However, given the dramatic slide in the exchange rate over the past
six months, rents have fallen when stated in USD. Whereas a typical
Class A building in USD at mid-year 2014 would have charged between
$35-40/m2/month, rents in USD at the current exchange rate would be
within the range of $25-30/m2/month.
Rents in the El Norte submarkets are typically 10-25% higher than in
the decentralized areas. Some new projects in Santa Barbara are now
asking in excess of COP 100,000/m2/month, and even many second
generation spaces in El Norte are asking at least COP 70,000. In
2013
End-Year
2014
End-Year
Trend
(next 12
months)
Class A Rent (COP$/m²/mo.) 60k – 90k 65k – 95k 
Class AB Rent (COP$/m²/mo.) 50k – 72k 50k – 75k 
Service Charges (COP$/m²/mo.) 6k – 10k 6k – 10k 
Total Costs Class A (COP$/m²/mo.) 66k – 100k 71k – 98k 
Total Costs Class AB (COP$/m²/mo.) 56k – 82k 56k – 82k 
Production (m²) 90,000 170,000 
Absorption (m²) 116,000 108,000 
Vacancy Rate 3.0% 6.1% 
Vacancy (m2) 49,000 110,000 
Future Supply (EY 2017) 2,600,000 m2 340 Buildings
Source: JLL Research (2015)
Bogotá, Colombia: End-Year 2014
-
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
1.600.000
1.800.000
Centro
Intl:
Q414
Centro
Intl:
Q417
El Norte:
Q414
El Norte:
Q417
Salitre:
Q414
Salitre:
Q417
Other:
Q414
Other:
Q417
RentableArea(m2)
Change in Ownership Structure by Sector, 2014-2017
Single Operator
Simplified
Strata Title

4. Barranquilla
Cartagena
Bogotá
Santa Marta
Bucaramanga
Stock: 80,000 m2
Vacancy: 8%
2014 Absorption: 12,000 m2
2014 Production: 8,000 m2
Class A Rents: COP 35k – 45k/m2/mo.
Class AB Rents: COP 30k – 35k/m2/mo.
Production through 2017: 50,000 m2
Cali
Stock: 175,000 m2
Vacancy: 7%
2014 Absorption: 15,000 m2
2014 Production: 17,000 m2
Class A Rents: COP 40k – 45k/m2/mo.
Class AB Rents: COP 15k – 35k/m2/mo
Production through 2017: 50,000 m2
Caribbean
Stock: 136,000 m2
Vacancy: 7.6%
2014 Absorption: 18,000 m2
2014 Production: 19,000 m2
Class A Rents: COP 45k – 60k/m2/mo.
Class AB Rents: COP 35k – 55k/m2/mo.
Production through 2017: 130,000 m2
Medellin
Stock: 570,000 m2
Vacancy: 3.9%
2014 Absorption: 38,000 m2
2014 Production: 49,000 m2
Class A Rents: COP 35k – 60k/m2/mo.
Class AB Rents: COP 25k – 45k/m2/mo.
Production through 2017: 205,000 m2
Colombia at a Glance
Exchange Rate (Feb 2015): 1 USD = 2,300 COP
Bogotá
Stock: 1,801,000 m2
Vacancy: 6.1%
2014 Absorption: 108,000 m2
2014 Production: 169,000 m2
Class A Rents: COP 65k – 100k/m2/mo.
Class AB Rents: COP 45k – 68k/m2/mo.
Production through 2017: 780,000 m2

5. Latin America: Northern Cone
Jean Wettling – Vice President, Transactions
Jean.Wettling@am.jll.com
http://www.latinamerica.jll.com/
Scott Figler – Consultant
Scott.Figler@am.jll.com
http://www.latinamerica.jll.com/
Standard Unit of Measurement
Unit of Measurement Square Meters (m2)
Typical Market Practices
Lease Contracts
Rent Quoted in COP /m² /month
Typical Lease Term 5 years
Frequency of Rent Payment Monthly
Deposit / Lease Guarantee Typically an insurance policy is
requested in case of failed payment.
Security of Tenure Only for the duration of the tenancy.
No guarantee beyond the original
lease term, unless negotiated.
Statutory Right to Renew Yes (unless an option to renew is
agreed at the outset and specified in
the lease)
Basis of Rent Increases or Rent
Review
CPI + 1 - 3%
Frequency of Rent Increases or
Rent Review
Annual
Transaction Fees
Agency Fees 2 month’s rent for 5 year contract.
Agency Fees
(payable by Landlord / Tenant)
Landlord
Legal Fees
(payable by Landlord / Tenant)
Each part responsible for its own
legal costs
Incentives
Rent Free Period 1-3 months
The rent free period is not standardized in the local market, however typically
occurs. The length of this period is negotiated between the parties.
Service Charges, Repairs and Insurance
Service Charges/Managements
Fees
Additional to the rental charge and
payable monthly in advance
Utilities (Sometimes separately
metered, sometimes paid as a
percentage of occupation)
Electricity, telephone, AC, etc. paid
by tenant according to consumption
Car Parking 1 space per 50 m2 included in the
lease contract.
Internal (Tenant Space) Tenant
Common Areas
(reception, lift, stairs, etc.)
Tenant
External / Structural Landlord
Building Insurance Landlord
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IP, INC. 2015. All rights reserved.
Taxes
Local Property Taxes Landlord, annually
VAT on Rent & Service Charge
(Payable by Tenant)
16%
Disposal of Leases
Sub-Letting & Assignment Normally yes (subject to landlord
approval)
Early Termination Unless otherwise stipulated in the
rental contract, tenant is responsible
for paying the entirety of the
contractual obligation
Tenant's Building Reinstatement
Responsibilities at Lease End
Original condition, allowing for
normal wear and tear.
Purchasing Properties
Foreign Ownership No restrictions
Strata Title (Partial ownership of
the building)
Strata title ownership is typical
Security Deposit Case-by-case
Agency Fees 3% paid by the Seller.
Legal Fees Each part responsible for its own
legal costs
Other Transaction Costs Typically paid by Buyer