Buenos Aires commercial property market faces headwinds despite strong office absorption

Buenos Aires' commercial property market absorbed a net 81,000 m² of Class A office space in the first half of 2025, pushing vacancy down to 18% even as new buildings came online, according to a report from Cushman & Wakefield [1][2]. The figure signals a measured recovery in corporate leasing, but the headline number masks challenges that industry players say will persist through this year.

Vacancy and supply constraints

The drop in vacancy-down from higher levels in 2024-was achieved partly because of robust demand in Catalinas, the city's leading corporate hub. That district alone added 5,199 m² via net takeup in the six-month period and accounts for 27% of total corporate space stock, per the report [5]. Yet the overall absorption has not kept pace with all new completions. A 35-story office tower originally slated for completion by 2025 in the Catalinas area [10] is one of several projects that will test whether demand can soak up fresh inventory without stalling the vacancy gains.

An 18% vacancy rate remains elevated by historical standards. While landlords in prime towers in Puerto Madero and Microcentro are quoting firmer rents, secondary buildings are still offering concessions to fill space. The imbalance is most acute in older stock outside the premium corridors, where deferred maintenance and shifting tenant preferences for newer, energy-efficient floors are pushing owners to either invest or reposition.

IRSA’s big bets and shifting capital flows

Real estate group IRSA is proceeding with two major projects that will add significant supply. The company is investing USD 150 million to build the new 'Zetta' shopping mall, which will include two office buildings totaling 41,600 m² and is expected to create 10,000 jobs [6]. Separately, IRSA acquired the 'Los Gallegos' shopping mall and signed a barter agreement for a 2,617 sqm lot in the 'Ramblas del Plata' project for USD 4.98 million [3].

These moves come as capital repatriation measures and multinational expansion are anchoring demand in Microcentro and Puerto Madero [4]. But the concentration of activity in those two districts means other commercial zones-particularly in the northern and western corridors-are not seeing the same leasing velocity. Developers there face a slower pre-lease pace and tougher financing terms as local banks remain cautious on construction lending.

IRSA's USD 150 million Zetta investment is a long-term bet that consumer spending and office occupancy will both strengthen. Yet the project's 41,600 m² of office space will come to market when some companies are still downsizing or adopting hybrid schedules, which could push vacancy higher in the short term before stabilising.

Outlook and headwinds

The main headwind this year is the tension between new supply and still-modest pre-commitment rates. While the Cushman & Wakefield data shows absorption is trending positively, it is not yet broad across all submarkets. Catalinas, Microcentro and Puerto Madero are drawing the majority of leasing interest; elsewhere, landlords are letting space at lower effective rents or offering fit-out allowances to close deals.

Another challenge is the cost of debt. Argentine real estate financing remains expensive in real terms, and dollar-denominated leases-preferred by many institutional landlords-are less common than a year ago. Developers who secured land before the current cycle must now build within tighter budgets, while new entrants face a more selective lending environment.

For tenants, the market remains favourable: choices are wide, vacancy is still above 15% in certain pockets, and landlords are willing to negotiate on term length and upfront incentives. But the window for tenant-friendly deals could narrow if absorption continues at the first-half 2025 pace and if the macroeconomic easing that helped drive capital repatriation proves durable.

The coming months will show whether the 81,000 m² absorption was the start of a sustained upswing or a temporary catch-up from deferred deals. For now, the fundamentals are improving, but the headwinds-supply growth, uneven demand distribution, and financing costs-remain real and present.

This article is general information only and is not personal financial or investment advice. Consider your own circumstances and seek licensed professional advice before making financial decisions.