Chile's Recession Creates 64-Story White Elephant
Vivid sunset over the Andes Mountains and Atacama Desert, Chile.

Horst Paulmann, one of Chile’s wealthiest men, has spent his life building one of South America’s largest retail empires. His company, Cencosud, operates over 1,000 supermarkets and department stores throughout the continent’s largest countries. Nine years ago, Paulmann revealed plans for his crowning achievement – a US$ 400 million commercial complex named Costanera Center in Santiago which included an office tower called the Grand Torre, that would become South America’s tallest building.

One decade later, Paulmann’s dream threatens to become his eternal nightmare. After several alterations – to include an observation tower – and a construction halt amidst the 2009 Chilean recession – the 64-story Grand Torre’s bill has ballooned to over US$ 1 billion. And while the retail park on the lower levels of the commercial complex is now Santiago’s hottest shopping destination, its office tower remains empty – since the local council has thus far refused to grant an occupancy permit. Officials claim that Cencosud has yet to make necessary upgrades to roads that were promised in the planning phase. And when the tower does open, it will do so amidst one of Chile’s worst downturns in recent memory. The global price of copper, on which the country’s economy is almost totally dependent, has fallen 50% in the past four years. The recession has propelled Santiago office vacancy rates above 10% — compared to less than 2% just three years ago.

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