Renovation is gaining popularity and changing the face of iconic developments in São Paulo.
Those who transit Berrini, JK and the Paulista Avenues in São Paulo may have noticed the design overhaul of a handful of buildings. The renovation and modernizing of buildings is known as retrofit. This trend is gaining popularity in metropolises, as is the case of the São Paulo. Retrofit is not limited to exterior transformations, major internal renewals are also common.
"The modernization of existing projects is a trend that isn't going anywhere. Over time, new techniques are emerging, and assets with prime location are undergoing the renovation process to compete with the new projects that are being delivered", states Giancarlo Nicastro, the CEO of SiiLA Brasil, a multinational with expertise in research and analysis of the real estate market in Latin America.
To better understand what the retrofit process, our team spoke with Karen Moreira, Engineering Director at Barzel Properties, who spoke in great detail about the retrofit process and Barzel’s projects, and four developments that the company retrofitted.
Check the interview below:
1. What kind of buildings can be retrofitted?
The retrofit is a very efficient solution. Its use in Europe and the United States has increased, gaining more and more space in Brazil to renovate and update buildings, mainly corporate. The retrofit is recommended primarily in old buildings that have lost their attractiveness in the real estate market, particularly when they are located in consolidated economic and financial centers, where often there's no land offer for further development. It also becomes attractive when the cost of both the land and labor is exceptionally high. In this case, retrofitting helps to enhance the assets, making them more modern and efficient; revitalising the region.
Before working on the retrofit, however, a very careful evaluation of the property is necessary to identify its deficiencies and which updates can be made to make the most of it, making it more attractive in the market. Barzel has a specialized team of engineers and architects that work with our clients to identify those opportunities.
A very classic example of a building in a good location that needed modernization is Pinheiros Corporate. The building is in a great location, in the Pinheiros neighborhood, close to Avenidas Rebouças, Paulista and Faria Lima. And in its surrounding area, there is little supply of corporate buildings of a similar standard and land with incorporable dimensions available.
As the building was outdated in some aspects, we need to modernize it to make it more functional and in line with market demands. The facade, for example, had infiltration points, and the building had two receptions, which made the flow of visitors confusing. After the retrofit, we executed a new facade in a high-performance glass skin, which made the building more modern. In addition, new landscaping was implemented, with a living area in front of the building, next to the water mirror, contributing to the well-being of our customers. Internally, the flows were generally requalified with the unification of the reception, repositioning of turnstiles, modernization of the lobby and elevator hall, in addition to a complete change in the lighting concept. As Pinheiros is a neighborhood well served by bike paths, and many of our tenants are concerned with a mobility issue and well-being, we implemented the idea of bike-friendly by creating a bicycle rack with changing rooms. In other words, we reposition the building, thinking about all aspects of functionality, aesthetics, urban mobility and well-being of those who visit the building sporadically or daily or of the region's residents in general.
2. What is the type of development that Barzel looks to retrofit?
In technical terms, we have defined some specific criteria for the acquisition of old properties within our business strategy: the property must have at least 7,000 square meters of leasable area, with a minimum slab size of 500 square meters, in addition to having a central air conditioning so that we can make improvements to existing systems.
In general, we look for buildings with the potential for appreciation in an excellent location, surrounded by a good transportation and service structure. After our studies and analysis, we show evidence that the retrofit will add value to the asset.
In these studies, we take into account quantitative and qualitative aspects of the property. We analyze the flows and how they can be rethought to improve the day-to-day life of the project (entrances and exits, visitors, suppliers and tenants, security of access, entrances and exits of garages). We look in detail at all equipment such as storage conditioning, generators, water supply, lighting, etc. These are the most current options in terms of effectiveness, less emission of pollutants, and less energy waste.
In addition, we think about the aesthetic aspects, such as landscaping, new finishing, lighting, keeping in mind both the life of those who enjoy the building and those who live in the surrounding areas and who can, in a way, benefit from these improvements.
The work we did together with the other owners in Cond São Luiz removed the walls around the building and made the famous Burle Marx gardens accessible to everyone.
3. What is the biggest challenge of performing a retrofit?
The biggest challenge is to make the necessary changes to modernize the property without neglecting the tenants who already occupy the asset. The works need to be done in the shortest possible schedule to cause the slightest discomfort, while the hours of operation of the buildings are highly restricted, making the process very challenging.
In addition, some properties do not have documentation (called builts) informing the changes that have been made over the years, which can cause many surprises during the job, forcing the engineering team to make rapid decisions so as not to interrupt the work.
As we also have a team with expertise in retrofit, we already have a very accurate look at what needs to be done, and we have already implemented a well-structured action plan with each of the retrofit stages, making the process a lot easier.
Each building has its particularities, and each retrofit project represents a more specific challenge. Returning to what was said above to carry out the works thinking about who already frequents the building, one of the biggest challenges was the retrofit that we made when transforming a space previously designed to be a theatre with a stadium auditorium, a flat area totally open space. After the theatre went bankrupt, the area was vacant for years until we made the acquisition and started working with demolition and structural reinforcement in a fully occupied corporate building surrounded by a predominantly residential neighborhood. We could not cause disturbances or noise during the day or at night, or on weekends. We brought special equipment that could be used with the lowest possible noise level. After the renovation, this area was rented by a supermarket that serves both the building's regulars and local residents.
4. What are the benefits of occupying a retrofitted property for the tenants?
For the occupants, the main benefit is, without a doubt, to be in a unique location and modern property, with the latest technology and infrastructure to serve you, in addition to occupational costs well below those in new triple-A buildings.
In many of the buildings that we retrofitted, we created living spaces, revitalized the outdoor areas, always seeking the well-being of tenants. We made a bike rack and changing rooms; thinking about mobility, we changed and cleaned the entire air conditioning system, thinking about air quality. However, these characteristics could be found by a tenant in a newer building at a higher price.
5. What is the main benefit of investing in the modernization of a building for the owners?
For homeowners, the main benefit is keeping their property attractive. In general, the cost of a premium location is very high, the option for the renovation to enhance the asset becomes beneficial. In addition, we know that when vacancies in buildings have very high rates, the cost of acquiring properties for retrofits is lower. Even with the investments necessary to modernize the asset, the account is still very attractive to investors. On the other hand, when vacancy decreases, rental prices rise again, as well as for finished properties, then the period of expansion begins. It is part of the real estate market cycle.
Following this strategy, we acquired the Berrini 500, São Luiz, CEA and Pinheiros Corporate in 2017, at a time of low in the market, in order to be able to reposition them in the market through retrofit works. Soon after completing the assignments, the occupation results came, showing that the retrofit was quite successful.
Read more: https://siila.com.br/news/detail/22796840