Almost 25% of Brazil’s São Paulo high-end offices still vacant during pandemic

RIO DE JANEIRO, BRAZIL – In the second quarter this year compared to the same period in 2020, vacancy in these units increased, on average, 7.6 percentage points and reached 24.9%, according to a JLL consultancy research.

Although the office situation has been worse, the rebound is still slow and uneven. Thiago Duarte and André Romano, from the consultancy’s capital markets team, explained the data and discussed projections.

The pace of negative absorption (more property deliveries than occupancy) slowed down compared to previous quarters.

According to the analysts, there was a lower pace of unit returns and more absorptions, as the market delivered new units in the city. In other words, were it not for this, the pace would have been better.

The office market had been steadily taking up more space in the city until the Covid-19 crisis. There are now 4 million m². In 2005, there were only 1 million m² of this type of commercial real estate. Since then, the quality of the units available in the market has been increasing.

The outlook is for a slow recovery in this scenario. According to analysts, there are no forecasts of major impacts on the vacancy rate in the coming quarters, despite the expected deliveries.

The newer the property, the higher the demand. The Faria Lima Avenue region remains at the top of the ranking when it comes to price per square meter, followed by Juscelino Kubistchek Avenue and the Vila Olímpia region.

Prime areas are able to capture more value and register lower vacancy. They already had little availability of units before Covid-19. The pandemic increased vacancy, but values are still in favorable territory for landlords, or at least neutral, explain the JLL analysts.

As a result, the consultants point out that owners of these units have been able to readjust prices against higher inflation. In regions such as Berrini Avenue and Chucri Zaidan there were no price hikes, despite higher inflation.

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