High-end corporate office leases reach pre-pandemic levels
The advance of vaccination against Covid-19 and the growth of GDP above expected made the segment of high-end corporate offices reach, in the second quarter, its turning point in the São Paulo market. It was the first time since the beginning of the pandemic in which the difference between the total areas contracted and returned — what is called net absorption in the industry jargon — was positive in the main regions of the city of São Paulo, according to consulting firm SiiLA, reaching 10,168 square meters."We always thought that vaccination would be the key to change, as it has been happening in the rest of the world," says SiiLA CEO Giancarlo Nicastro. Many tenants have evaluated the best time to resume office occupancy. "The expectation of vaccination has already brought a positive feeling to companies. With the process taking place, effectively, we noticed even more intense movement," says JLL office leasing manager Yara Matsuyama.In Newmark’s calculations, gross absorption — total office leases — reached 70,833 square meters, the highest since the fourth quarter of 2019. In practice, the pre-pandemic level has been reached. "There was recovery in the new leases. There is a certain optimism in the market. In 2020, rental activity was not paralyzed, but occurred slowly," says Mariana Hanania, director of research and market intelligence at Newmark in Brazil.In the quarter, the main market movements were the occupation of 9,900 square meters in the WT Torre Nações Unidas building by Dasa, a medicine laboratories chain. Retailer Via (ex-Via Varejo) signed a contract of 7,000 square meters in Eldorado Business Park. "The trend is that occupations continue to occur, unless there is something off the radar, such as some variant that makes it necessary to return to lockdown," says Mr. Nicastro.On the other hand, points out Ms. Hananias, returns continue and totaled 115,000 square meters, in the second quarter, with the service sector accounting for 61% of the total. "The remodeling of the offices continues to happen," she says. An example of area reduction was the migration of companies from the Novonor conglomerate (formerly Odebrecht) from Pinheiros One to the Aroeira tower, in Parque da Cidade. According to Newmark’s estimates, there was negative net absorption of 46,034 square meters in the market."We expect that soon the net absorption will be positive. The second half will be more intense in leases," says Ms. Matsuyama, with JLL...
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