2012 Global Market report - NAI Global

Rio de Janeiro, Brazil
Sao Paulo, Brazil
Contact
NAI Brazil Dworking
+1 55 11 3755 8894
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
3,287,612
4.1%
$2,192.96
$11,249.82
4.6%
7.5%
12.0%
194.933
Rio de Janeiro, globally considered Brazil’s main tourist and
resort destination, is also the second largest and second
most important city with the country’s second highest GDP
following Sao Paulo. Given its tremendous growth over the
last few years, the real estate sector is notorious for its high
prices, ranking among the most expensive cities in the
world.
In the office sector, although lease and sale values are rising,
demand remains strong for Class A+, Class A and Class B
buildings. The vacancy rate at mid-year 2011 reached
2.79%, remaining at a level below the historical market
average of about 10%. In order to meet this demand,
660,000 SM of new inventory will be delivered by year-end
2014. The Barra da Tijuca submarket will be the largest
recipient of that activity, but the downtown area will also
receive its fair share of new buildings, resulting from the
renovation of many older buildings that had fallen into
disrepair given that they were functionally obsolete for 21st
Century office needs. This retrofitting is currently a common
activity in Rio de Janeiro as an alternative to new development
due to the scarcity of available land.
The retail sector, as well as in Sao Paulo, is directly linked
to high consumer demand, but Rio de Janeiro’s is largely
due to its status as host of the Olympics and World Cup in
2014 and 2016 respectively. This has caused the expansion
of supermarket chains and drugstores that serve city
residents, but also the expansion and opening of new stores
that offer typical Brazilian products catering to tourists.
Development activity in the industrial sector, growing
apprehensively until 2008, has shown significant growth in
recent years. Important industrial parks along President
Dutra Highway, one of the main roads in the state, and also
in regions such as Pavuna, Belford Roxo and Duque de
Caxias, have and are being constructed. Similar to the office
sector, asking lease rates for industrial space are also
among the most expensive in the country. This general
scenario of high prices in Rio de Janeiro reflects the low
vacancy rates and its high international exposure. Given the
likelihood of continued high economic activity for at least
the mid-term, pricing will probably not decrease for several
years.
Contact
NAI Brazil Dworking
+1 55 11 3755 8894
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
3,287,612
4.1%
$2,192.96
$11,249.82
4.6%
7.5%
12.0%
194.933
Sao Paulo is the main corporate, financial and commercial
city in Brazil, home to numerous multinational firms that are
located in high-rise buildings along famous avenues such
as Faria Lima, Paulista and Berrini. In 2010 it became the
city with the highest GDP in current prices in Brazil. The GDP
per capita is among the ten largest in the world. Enjoying a
moment in history, the city grows in pace with the rhythm
of the Brazilian economy.
The Office Market is experiencing the lowest vacancy rate
it has ever had over the last few years at just 0.8%. The
lack of product combined with the strong economy and
subsequent demand, has pushed prices to the highest levels
ever. They are, however, a clear sign that prices have
recovered from the deficit experienced in the early 2000s
due to the macroeconomic crises. The construction activity
remains strong, driven by equally strong absorption. The
next four years should witness a 47% increase in new Class
A buildings, that may relieve the upward pressure on lease
rates causing them to stabilize or at least reduce the rate of
increase.
The Retail Sector, growing along with the strong consumer
demand, is also enjoying a period of great expansion. With
an unemployment rate around 6%, the increase in
consumer goods and leisure sales has motivated the
expansion of large retailers, such as supermarkets and well
known restaurant chains, that upon opening in Sao Paulo,
were received with open arms and strong sales. Shopping
centers have also experienced high retail activity. Smaller
neighborhood ones have done well due to the location of
various services available at one site. Shopping malls
continue to thrive due to their offering of a broad variety of
several major brands at one location that is secure, clean,
modern and climate controlled.
The Industrial Market also enjoyed strong growth and
demand. However, it occurred increasingly further from the
city’s core; along the main state highways in the Sao Paulo
metropolitan area and satellite cities within a radius of 200
km. Such locations facilitate distribution and production
logistics due to the access to major highways and the soon
to be completed Ring Road. Additionally, there are now many
more existing and under construction industrial flex projects.
These are highly divisible and accommodate small, medium
and large companies needing a strategic location with layout
flexibility, security and visibility.
Rio de Janeiro At A Glance
conversion 1.80 brl = 1 us$ RENT/M2/MO US$ NET RENT/SF/YR
low High low High Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
BRL 90.00
BRL 80.00
BRL 55.00
BRL 80.00
BRL 60.00
BRL 55.00
BRL 170.00
BRL 270.00
BRL 110.00
BRL 130.00
BRL 130.00
BRL 110.00
$
$
$
$
$
$
55.74
49.55
34.06
49.55
37.16
34.06
$ 105.29
$ 167.22
$ 68.13
$ 80.52
$ 80.52
$ 68.13
N/A
7.30%
1.00%
N/A
23.00%
0.20%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
BRL 14.50
BRL 14.50
BRL 17.00
BRL
BRL
BRL
25.00
25.00
32.00
$
$
$
8.98
8.98
10.53
$ 15.48
$ 15.48
$ 19.82
4.30%
3.80%
3.50%
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
Solus Food Stores
deVeloPment land
BRL 90.00
N/A
N/A
BRL 90.00
N/A
low/m 2 BRL 260.00
N/A
N/A
BRL 180.00
N/A
High/m 2 $
$
55.74
N/A
N/A
55.74
N/A
low/acre
$ 161.03
N/A
N/A
$ 111.48
N/A
High/acre
N/A
N/A
N/A
N/A
N/A
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
BRL 3,000.00 BRL 35,000.00 $ 6,744,771.12 $ 78,688,996.36
N/A N/A N/A N/A
BRL 250.00 BRL 400.00 $ 562,064.26 $ 899,302.82
N/A N/A N/A N/A
BRL 400.00 BRL 1,500.00 $ 899,302.82 $ 3,372,385.56
BRL 2,000.00 BRL 12,000.00 $ 4,496,514.08 $26,979,084.46
Sao Paulo At A Glance
conversion 1.80 brl = 1 us$ RENT//M 2 /MO US$ NET RENT/SF/YR
low High low High Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
Solus Food Stores
BRL 90.00 BRL 170.00 $ 55.74 $ 105.29 N/A
BRL 90.00 BRL 200.00 $ 55.74 $ 123.87 0.80%
BRL 55.00 BRL 120.00 $ 34.06 $ 74.32 3.00%
BRL 60.00 BRL 80.00 $ 37.16 $ 49.55 N/A
BRL 60.00 BRL 90.00 $ 37.16 $ 55.74 2.80%
BRL 48.00 BRL 70.00 $ 29.73 $ 43.35 4.50%
BRL 14.00 BRL 25.00 $ 8.67 $ 15.48 5.00%
BRL 14.00 BRL 25.00 $ 8.67 $ 15.48 6.20%
BRL 16.00 BRL 30.00 $ 9.91 $ 18.58 4.70%
BRL 90.00 BRL 260.00 $ 55.74 $ 161.03 N/A
N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A
BRL 80.00 BRL 150.00 $ 49.55 $ 92.90 N/A
N/A N/A N/A N/A N/A
deVeloPment land low/m 2 High/m 2 low/acre High/acre
Office in CBD
BRL 3,000.00 BRL 12,000.00 $ 6,744,771.12 $ 26,979,084.46
Land in Office Parks
N/A N/A N/A N/A
Land in Industrial Parks
BRL 250.00 BRL 400.00 $ 562,064.26 $ 899,302.82
Office/Industrial Land - Non-park
N/A N/A N/A N/A
Retail/Commercial Land BRL 400.00 BRL 1,500.00 $ 899,302.82 $ 3,372,385.56
Residential
BRL 1,500.00 BRL 9,000.00 $ 3,372,385.56 $20,234,313.35
2012 Global Market Report n www.naiglobal.com 68