Despite a Downturn in Office Rental, Rio is Slowly Improving
RIO DE JANEIRO, BRAZIL – After a decline in vacancy rates in two consecutive quarters, the percentage of empty high-end corporate offices rose again in Rio. In the second quarter, the ratio of available rental space to total stock stood at 37.8 percent, up from 36.5 percent in the first three months of this year. The survey was carried out by the real estate consulting firm Newmark Grubb.
The Newmark study shows that the slight increase in the vacancy rate was due to small net absorption (3,901 square meters), insufficient to offset the volume of deliveries in the quarter (8,379 square meters). Net absorption measures the change in occupied square footage compared to the previous quarter.
The start of the year was marked by the release of investments that had been blocked since 2018, the downward trajectory in the vacancy rate was interrupted in Rio by the deferral of investments, says Ricardo Penna, Newmark Grubb’s executive responsible for the corporate office segment in Brazil: “The market is in a holding pattern.”
According to the expert, the high vacancy is pushing downwards the price asked per square meter for rentals in the city. The average order value dropped 2.4 percent from the previous quarter, closing at R$83.9 (US$21) per square meter. Barra da Tijuca was the region which most contributed to these figures, with 8.2 percent.
However, according to André Toledo, partner-director of Block Imóveis, one of the main real estate agencies that serve the neighborhoods of Recreio and Barra da Tijuca, there was a considerable increase in the number of commercial areas that were built in the region, so the price of these properties fell and reached a level where it is more advantageous to buy rather than rent.
The highest average prices were recorded in the South Zone (R$192 per square meter), Botafogo (R$108 per square meter) and Porto Maravilha (R$97 per square meter), the Port Region of the city of Rio de Janeiro. For analysis, Newmark classifies the neighborhoods of Copacabana, Ipanema, Leblon, Lagoa, and Jardim Botânico as the South Zone.
For Cláudio Castro, Director of Sérgio Castro Imóveis, the city’s largest consulting firm specializing in commercial real estate, the construction and opening of new commercial buildings in the city’s outskirts, together with the economic downturn, have reduced the demand for offices in the city.
“Today, you can only rent these spaces with a lot of effort, and only if they have a premium location,” he explained.
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