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Return of offices falls in São Paulo

Daniel Battistella • 2/1/2024

The high-end corporate office space market in São Paulo ended the fourth quarter with a vacancy rate of 23.5%, growth of 1.85 percentage points over the previous year.

The growth in the share of vacant offices was due to the increase in new areas delivered. In 2023, 157 thousand m² of high-standard corporate slabs were added, the highest volume since 2019.

Daniel Battistella, general director of CRE at Cushman & Wakefield, also considers that the return of offices, of 156 thousand m², fell compared to 2022. There is a difference of almost 30 thousand m² between what was returned in 2022 and last year: ''This is a sign of improving market expectations'', comments Daniel.

The most expensive square meter among offices is in Itam Bibi, where R$280.96 is requested. In the region, vacancy is at 17.9% - the lowest vacancy is on Avenida Juscelino Kubistchek, at just 5.5%, followed by Faria Lima, with 9.8%.

The average hides a large difference depending on the region analyzed. The cheapest at the end of 2023 was Santo Amaro, with a square meter at R$32.43. It is also the region with the highest vacancy rate, at 73.6%. Battistela states that Santo Amaro has a small stock, which does not make its numbers worrying. ''It would be worrying if there was a 70% vacancy rate at Chucri Zaidan or Paulista''.

Chucri Zaidan has the largest inventory in the city and vacancy rate at 36.6%. It was the region that received the most rentals during the year, as it still has a lot of space and the quality of the buildings, which, for Daniel, are compared to those in Faria Lima, but with better prices - the average is R$ 107.57 per m², compared to R$220.70 at Faria Lima.

For 2024, Battistella predicts an improvement in the market in all aspects, with rent appreciation, a drop in vacancy and greater net absorption. It helps that the volume of new buildings to be delivered is lower than in 2023, at 100 thousand m².

Another factor for optimism is the interest of real estate investment funds in offices, a movement that grew in 2023, driven by the fall in interest rates. There were almost R$1.2 billion moved in the year, which should continue in 2024.
These funds not only invest in offices, but also in warehouses and shopping malls. The last two sectors have seemed safer and received investment earlier.

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