Study by JLL shows brisk movement in the market for high-end offices in Rio de Janeiro and São PauloLeitura de 1,5min
JLL releases the results of the High-end Offices First Look study for the 2nd quarter.
The market for high-end offices remains hot. The 2017 2Q Offices First Look study, conducted by JLL, found that in São Paulo between April and June, 66,000 m2 were occupied, and the prediction is that another 200,000 m2 is to be absorbed in the coming quarters, half of this volume being in the region of Berrini and Chucri Zaidan, currently the most sought-after areas of the city.
In Rio de Janeiro, the performance is also positive, with 30,000 m2 of gross absorption in the second quarter. The highest occupancy was in Barra da Tijuca, with 4,700 m2 being absorbed by a single company. The coworking segment represented a significant share of this total, with 8,000 m2.
For Rio de Janeiro, where the demand is lower than in São Paulo, this movement of 30,000 m2 in one quarter is quite significant. The most important thing to emphasize is that the market has not shrunk and we also had a gross absorption of 5,000 m2, mainly on the Beachfront and Downtown. Returns were much lower in relation to the previous quarter,” says Thais Martins, from the Transactions department at JLL in Rio de Janeiro.
Both markets also recorded a large volume of deliveries in the second quarter of 2017. In São Paulo, the inventory of high-end buildings grew by 32,000 m2, resulting in a total of 97,000 m2 delivered in 2017. In Rio, the volume incorporated was a record for the quarter: 113,000 m2. And by 2018, another 410,000 m2 are expected in São Paulo, with another 100,000 m2 in Rio.
The market has a lot of offer, and new deliveries are expected. That naturally generates many opportunities for the companies to move to spaces with better quality at lower costs and very attractive commercial terms. The occupancy figures show that tenants are taking advantage of the favorable time,” says Fábio Magina, from the Transactions department at JLL in São Paulo.
In Sao Paulo, no sharp fall in prices for high-end buildings is expected. Some shrinking is still possible in secondary and alternative regions, but not in affluent and more sought-after areas. Due to the lower inventory and greater demand, in affluent areas, such as in the region of Faria Lima, the vacancy is 20% lower than the average for the city, which is 25.3%.
In addition to a clear trend of flight to quality/price, the movements, according to Magina, also include a reduction in areas occupied by some companies and readjustments in the space planning strategies. Another repercussion of these movements impacts the owners of old or lower-end buildings. “They are losing occupants and now they are facing the challenging of reinventing themselves through retrofitting or price adjustments,” Magina notes. According to Thais, to retain occupants, owners remain quite flexible in commercial negotiations.
To access the studies, click here:
First Look São Paulo
First Look Rio de Janeiro