Rio Commercial Real Estate Records High Growth in Vacancies During Pandemic

RIO DE JANEIRO, BRAZIL – A study conducted by the APSA, one of the largest condominium management companies in the country, found that the vacancy rate of commercial properties in Q2 more than doubled compared to Q1 during the social isolation period.

According to the study, downtown was the neighborhood suffering the greatest impact on vacancies because it concentrates a large part of the city’s commercial premises. The second most affected neighborhood was Del Castilho, followed by Vila Isabel and Tijuca, all in the North Zone.

The data shows that out of a total of about 40,000 commercial properties occupied, 2.46 percent lost their tenants in April. The number rose to 2.84 percent in May, and in June, 3.06 percent of these properties were vacant.

The study shows that amid the uncertainty triggered by the pandemic, commercial real estate was vacated by tenants during the period of social isolation and is now closed when flexibilization and reopening are underway.

According to the APSA’s study, the volume of negotiations on commercial real estate rental conditions has increased, in an attempt to preserve the tenants and the existing contracts, thereby preventing the premises from being closed.

In the profile of unoccupied properties in the Rio de Janeiro capital, 70.66 percent of cases are commercial rooms, followed by stores (26.67 percent) and warehouses (2.67 percent). The neighborhoods of Barra da Tijuca and Recreio, which began a commercial lease rebound at the start of the year, are now back to recording the so-called ghost buildings with all rooms vacant.

According to experts, the fourth quarter of 2020 is expected to stabilize in terms of vacancies, but the rebound will still depend on the level of economic upturn, which includes economic recovery and lower unemployment rates.