Companies reduce remote work and expand offices again – 08/25/2023 – Market

The office market registered positive results in the second quarter of this year, driven mainly by negotiations for high-end corporate floors.

The reduction in remote work, with the addition of days in face-to-face mode, is one of the reasons given by industry consultants for the positive balance of rentals, especially in São Paulo, where this market is concentrated.

Net absorption —that is, the balance between returns and hiring—was 43,700 square meters in São Paulo, according to Newmark consultancy. In the regions where standard A and AA offices are concentrated, the positive balance was 14,000 m² in the last quarter, according to JLL.

Companies have also started to see an increase in location footage. This data indicates the size of who is looking.

Yara Matsuyama, director of office leasing at JLL, says that deals closed with footage above 1,000 m² have grown, an indication of the recovery of the high-end market.

Between the beginning of 2022 and the first quarter of 2023, around 85% of the deals closed by JLL were for slabs under 1,000 m². This index dropped to 70% in the second quarter.

Nessim Daniel Sarfati, founder of Barzel Properties, says that large companies still maintain their more flexible working models. Therefore, recent leases are for slabs of up to 2,000 m², which serve medium-sized companies.

He reports having noticed, however, a probing movement of those who, one day, were occupants of larger films.

Bernard Kawakama, director of corporate ventures at Fibra Experts, which manages Passeio Paulista (a recently opened multipurpose complex on Rua da Consolação), has received visits from people interested in footage above 5,000 m².

The motivations for the interest in leasing are diverse. There are new companies, expansion or even the search for better locations. The real estate group CBRE claims to have identified large occupations in the Paulista Avenue region in the quarter, especially of slabs above 1,000 m².

Yara, from JLL, says that, with the more intense return to face-to-face activities from 2022, interest in renting already furnished spaces has also grown.

At Barzel, the offer of made-to-measure slabs, ready to be occupied, was created in 2022 as an investment, says the company’s portfolio director, Bruno Turaça. Now, it has become a product offered by the company.

It costs more for those who rent, but Barzel assumes responsibility for the works, adaptations and furniture. “The guy comes in with just his jacket on,” says Nessim.

A CBRE report shows an increase, already in the first quarter of 2023, in the rate of return to offices in São Paulo, a movement concentrated in the Paulista, Jardins and Marginal Pinheiros regions.

A survey carried out in 500 buildings indicates that 80% of the offices have a rate of return above 70%. At 45%, it goes from 90%. In the last quarter of 2022, 59% had a rate of return above 70%.

Nessim, from Barzel, says that around 18,000 people have passed through the buildings managed by the company every day. In March 2020, the daily average was 20,000.

“Undoubtedly, in recent months, the hybrid model has been consolidated, but now we have seen many companies asking for their employees to return. As a result, the office sector has performed better”, says Fernando Didziakas, managing partner of Buildings, a specialized company in corporate real estate research.

According to data from Buildings, total net absorption in São Paulo, considering all office standards (and not just the so-called triple A), jumped from 15,000 m² in the first three months of this year to 100,000 m² in the second quarter.

In the second quarter of this year, the price per square meter rose, after eight quarters of stability. According to the Newmark consultancy, this happened because there was vacancy in valued buildings. From a monthly range of R$87 to R$89, the average price per square meter was R$91.77.

Faria Lima occupancy is high and spreads to other regions

While the vacancy rate –indicator of square meters free for lease– is generally between 24.7% (according to Newmark) and 25.6% (according to JLL), the indicator in the Faria Lima region is between 6.5% and 7%. The dispute for space in the region ends up spreading to neighboring neighborhoods.

Data from Newmark indicate that the regions of Itaim, Faria Lima and Vila Olímpia had the highest average values ​​per square meter: R$ 227, R$ 203 and R$ 166, respectively, in the second quarter of 2023.

“With the rise in prices in the Faria Lima region, a movement to reposition some tenants is starting to emerge, who are looking for modern buildings and more attractive lease values”, says Matsuyama, from JLL.

The office leasing director at the consultancy also mentions the Rebouças region, which in recent years has seen the development of corporate and mixed-use projects.

In Vila Leopoldina, old factories have been converted into mixed warehouses for commercial use, such as the one leased by Nubank at the end of 2022 for holding events and training. The region was also chosen by paiN Gaming, of electronic sports.

Opened in 2022, the arena cost BRL 10 million and took three years to complete. The complex receives fans on weekends for parties and championships. “There are 150 seats, and the fans even have a tour of the entire structure. This is only possible by developing a physical location for the organization, her home”, says Sharis Endres, marketing director.