São Paulo office market has worst occupancy rate in 13 years in Q1 2021

RIO DE JANEIRO, BRAZIL – With more companies being forced to postpone the return of work to corporate spaces, due to social isolation measures imposed by the worsening of the pandemic, the office market in São Paulo continues to show an increase in returned leases and, consequently, in the vacancy rate.

According to data from consultancy SiiLA, the high-standard office industry (A+ and A) in the city of São Paulo registered a negative net absorption of 31,000 square meters in the first quarter of this year.

The net absorption corresponds to the volume of square meters that are over occupied (or under occupied, when negative) in relation to the previous quarter, and acts as an indicator of market growth or retraction in square footage occupied.

The result recorded between January and March this year represents the fourth consecutive quarter of falling occupancies and is the worst in the SiiLA’s historical series, which began in 2008.

In the first quarter of 2020, before the exposure to Covid-19 impacts, the São Paulo office market had registered positive net absorption of 19,651 square meters. The picture changed from the period ending in June, when the data was negative by 12,565 square meters.

In the first three months of 2021, more than 100,000 square meters in the high-end office market in the capital were returned. Highlight goes for the movement of companies from the financial sector, with names like Itaú, XP, Caixa Econômica Federal and the means of payment company Edenred, owner of Ticket.

Itaú leads the list of cancellations, with 31,709 square meters, in two buildings in the Pinheiros neighborhood, in São Paulo. In sequence come Embraer, with 4,213 square meters returned, and XP Investimentos, with 3,304 square meters, on Juscelino Kubitschek and Faria Lima avenues, also in the São Paulo capital.

Since the beginning of the pandemic, the net absorption in the high-standard office market is negative by 97,546 square meters, with 202,800 square meters absorbed and devolutions totaling 300,300 square meters.

Given this scenario, the vacancy rate of the sector had an increase of two percentage points in relation to December, to 21.21% at the end of March. Before the crisis, in early 2020, the rate was 14.84%.

“The perspective is that exits will continue to happen in the coming months, in line with the trend of telecommuting and hybrid system adoption,” writes Giancarlo Nicastro, CEO of SiiLA, in a statement.

For him, this movement is not more intense now because many tenants need to wait for the end of contracts in order not to face heavy fines.
New leases

Among the new leases, Enel leads with 14,174 square meters leased at Avenida Chucri Zaidan, followed by the pharmaceutical group Roche, with 11,710 square meters, at Chácara Santo Antônio, and by Novonor (former Odebrecht), with a lease of 5.9 thousand square meters at Chucri Zaidan.

Stock

Despite the property returns, between January and March this year, 45,678 square meters were delivered, the highest volume of new building square footage since the third quarter of 2020, according to SiiLA.

With this, the stock of high standard offices in São Paulo corresponds to 3,255,744 square meters and, by the end of the year, a growth of another 230,000 square meters is expected in the city.

Source: Infomoney