This is the Casa de los derechos humanos, situated on Avenida Colón 636, Punta Arenas. The plaque next to the door states that it was a detention and torture centre during the dictatorship.
As far as the history of the site is concerned, memoriacolectiva.com informs us that the building was the principal site of interrogation and torture in the province of Magallanes and that "hundreds" of prisoners passed through there. It was known as "Palacio de las Sonrisas" (Palace of Smiles) and had previously functioned as a naval hospital. The building is three storeys high and, according to memoriaviva.com, contained both offices and rooms used for torture, including electric shocks.
It's worth noting that this building in right in the centre of Punta Arenas, just off the main shopping street. It's not hidden or in an isolated position at all.
This place was closed up when I went past, but it is apparently used for human rights-related activities such as this one and these. I did a little research and it seems that last year there was talk of the Chilean ministry of national assets taking back the building and changing its use. This was met with protests and as far as I can tell, it was resolved that the building would continue to be used for community activites and even become the site of a memory museum. At the end of 2012, Patagonian paper El Pinguino described the building's future as "uncertain", but this June it reported in brief on the approval of a museum project. Good news, if accurate.
EL PALACIO DE LAS SONRISAS (memoriacolectiva.com)
Antiguo Hospital Naval, Punta Arenas (memoriaviva.com)