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2021 is the year of the return of corporate properties in São Paulo

By: SiiLA Brasil

Without having a clear perspective on when regular activity in corporate spaces may return, due to the new coronavirus pandemic’s prolongation, more companies are still working from home to reduce their operating costs. The decision directly impacted the corporate real estate market in São Paulo. Between October and December, data from the real estate research platform SiiLA Brasil show, the balance between new entries and returns (net absorption) of high-end offices (A + and A) in the central commercial regions of the City was negative at 24,680 square metres.

The performance represents the exits of companies that chose to work from home, reducing their offices or even the closure of activities due to the pandemic’s crisis. Unlike the previous quarter, which saw the departure of large areas, the returns took place in smaller spaces and more significant numbers in this period.

Many decided to break their leases. The most expressive departure was from Latam, which handed over the property to the last 5,598.16 square metres that it still rented at the United Nations Business Space. Oracle returned 4,238.34 square metres at Morumbi Corporate, with half of the towers’ area.

The rest of the returns were all under 4,000 square metres, mainly from companies that occupied 4 or 5 floors and returned part of them, reducing office space to save while their employees work from home. Itaú returned 3,829.75 square metres at the Faria Lima Financial Center, GetNet left 2,743.80 square metres from Birmann 12 and Prodam (state data processing company) from Centro Empresarial Água Branca (minus 3,600 square metres). Coca-Cola left 3,498.20 square metres in the GT Plaza (Santo Amaro region) and, until further notice, will only maintain one floor at EZ Towers in addition to offices within its industrial areas.

According to SiiLA’s assessment, this behaviour should continue in the next quarters of 2021. “This whole pandemic time ended up allowing companies to understand better how it would be possible to reduce costs. For some, the choice at that time was to return rented spaces”, says Giancarlo Nicastro, CEO of SiiLA Brasil.

Three of the major departures took place at Chácara Santo Antônio, which closed the year with a high standard vacancy rate of 45%. In the region, net absorption in the period was negative by 11 thousand square metres (with gross absorption of only 1,449 square metres). The index of properties available in this area is not worse than in Santo Amaro, which reached a 47% vacancy rate in December, after the entry of 5,275 square metres in the market - the only delivery of new high-end inventory in the CBDs regions of City.

In addition to dropouts, there were also some changes to address. Machado Meyer Sendacz Opice Advogados, for example, moved almost entirely from Seculum to Seculum 2, around Faria Lima.

Vacancy on the rise

In the general market of São Paulo, considering properties A +, A and B and in all commercial regions mapped, the fourth quarter of 2020 ended with one of the worst results in terms of net absorption of recent times: -70.3 thousand square metres. Gross absorptions in the 20 regions monitored by SiiLA totalled 74,223 m², and new developments added 19,823 square metres to the total inventory.The market suffered from the excess of vacant properties, which tends to remain in the coming months. The SiiLA survey indicates that, in December, the vacancy rate spiked 17.96%.

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