YEAR 05 - INFORMATIVE Nº 65 - GLOBALBLUE
In the capital of São Paulo, high unemployment rates in decentralized regions become anchor that prevents price recovery in neighborhoods such as Vila Olímpia, Itaim Bibi and Paulista.
* HENRIQUE JULIÃO | SÃO PAULO | September 27, 2018
The high vacancy rate in high-end corporate offices located outside the centralized region of São Paulo is making it difficult to recover the average square meter (m²) of the segment in the city.
"There is an anchor that does not let the region's prices go up so fast," said NAI Brazil's CEO, Marcelo Costa Santos, referring to high vacancy rates for A + / A and B + / B class offices in so-called decentralized regions of the metropolis.
Santo Amaro, Morumbi-Jardim São Luís, Chácara Santo Antônio, Roque Petroni and Berrini would enter this group. "In class A offices, the vacancy rate [average] of the city is 20%. In the centralized regions, it drops to 10%, but in the decentralized regions, it reaches 30% ", analyzed Costa Santos.
According to him, such a "difference between the zones" would be limiting the appreciation of the m² in regions where the vacancy should already "generate price pressure."
"Vila Olímpia, Itaim Bibi and Paulista are regions whose situation has already become favorable to the owner, not to the tenant," said the real estate executive.
In the case of Itaim Bibi, the vacancy rate registered by NAI Brazil at the end of June was only 5% for class A + / A offices, remaining at 14.3% in B + / B. The scenario is similar in Paulista (rates of 9.6% and 12.3% in the order) or Vila Olímpia (11.8% and 14.1%).
Even with the situation controlled, the price of the m² in the three regions did not react in the second quarter - even falling in both classes in Vila Olímpia compared to the first quarter. A slight fall was also seen in A + / A of Paulista and in B + / B of Itaim Bibi.
Already "beyond Bandeirantes Avenue", the vague footage still weighs the balance to the other side. In class A + / A, the vacancy rate in the second quarter fell 78.7% in Chácara Santo Antônio, 71.7% in Santo Amaro and 29% in the case of Morumbi-Jardim São Luís.
In the case of B + / B, average unemployment is also high, reaching 41.9% in Morumbi-Jardim São Luís, 29% in Berrini and Chácara Santo Antônio and 28.1% in the Roque Petroni region.
Despite the conflicting scenario, Marcelo Costa Santos understands that the "aggressive offer" in the high-end office market in São Paulo is coming to an end. "There are few willing to cede in price significantly," he said.
According to the NAI Brazil executive, the city is experiencing "concrete cases of rising prices" and "buildings with a queue." An example cited by the consulting firm is the Jorge Proushan Architect Building, recently launched in the Pinheiros region. With five thousand square meters, the asset "entered pre-leased in the market by a company of the financial sector".
In the second quarter, however, the average price of the high-standard commercial area declined to R $ 75.7, compared to R $ 78.4 in March and R $ 80.5 at the end of 2017. In 2012, the average value in the capital was R $ 128.34.
NAI Brazil is betting on a price recovery until the end of the year, boosted by the A + / A in the centralized regions (whose m² cost R $ 87.1 in June). According to Cushman & Wakefield, which also analyzes the sector, the average price of the A + / A m² closed August at R $ 90.9.
As a whole, NAI Brazil's diagnosis points to "strong signs of resumption" in the capital's office market. In the first half, for example, net absorption in the segment (188 thousand m²) was almost double the annual average for the city in the last six years (109 thousand m²).
São Paulo's high-standard office stock totaled 5.225 million m² in June, of which 20.4% were vacant by the end of the first half. In these six months, 189 thousand m² were launched in the capital. The NAI Brazil estimate is for an additional 124 thousand square meters in the segment by the end of the year.