In São Paulo’s heated market, old buildings give way to new, fancier ones
In a three-block stretch of 9 de Julho Avenue, in the posh Itaim Bibi neighborhood of São Paulo, four commercial buildings have been or are about to be demolished to make way for residential buildings.The offices were in use, but the area’s appreciation is so great that it is worth it for developers to buy the buildings and pay for the demolition to create new high-end products."Land is so scarce that the developer has to be creative," said Fabiana Tomaz, a partner and head of business development and acquisitions at Paladin. "Before, they went to neighborhoods with land, then to those with houses, and the consequence is they go to neighborhoods with buildings."Developer Idea!Zarvos has two launches in Itaim that occupy land where three office buildings previously stood. For founding partner Otavio Zarvos, tearing down buildings to build new ones is a symptom of the city’s high income concentration, which creates an "urban trap." The mobility of this super upper class "is minimal, so they go to just a few neighborhoods," he said. Therefore, there is pressure to create new projects in already dense areas, such as Itaim and Pinheiros.Tellus manager participates in a project that will be built where an office building is currently being demolished on 9 de Julho. "It is a highly valued region, in which this type of investment pays off," said Daniel Takase, head of offices and mixed-use properties at the company, who highlights that it is not a standard operation for the company. The area will receive a residential building.For Mr. Zarvos, it would be necessary to "force the market to go to other neighborhoods," but urban policies act opposite to bring more density to regions with infrastructure.Lucas Ferh, Mackenzie’s Faculty of Architecture and Urbanism professor, has the opposite view. "There is a lack of housing programs to ensure that the population that lives far away comes closer [to urban infrastructure]," he said. He noted that replacing buildings can lead to gentrification, making housing more expensive in the area.However, in the case of changing use from offices to residential, there is a benefit for the area because the population is fixed. On the other hand, the exclusive destination for high standards takes away part of the advantage. According to Professor Ferh, the ideal would be investments that guarantee a popular housing market in these new areas.Demolishing a building is a complex decision. In São Paulo, an office tower...
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