Rent in the region of Av. Faria Lima, in São Paulo, breaks record

With the financial market showing little attachment to the home office, the faster return to offices has caused a lack of corporate spaces for rent in the region of Avenida Brigadeiro Faria Lima, in São Paulo, the main financial corridor in the country. It is there that the headquarters of several investment banks, fund managers and mergers and acquisitions boutiques are concentrated.

The high demand has been directly reflected in prices. With no new development offers for the short term, the square meter of corporate space already reaches R$ 250, the highest in the entire city. A year ago, that figure was R$195, according to data from JLL, a real estate consultancy.

None of this has dampened interest in the region. As a direct effect, Faria Lima has raised the average price of corporate rent in Itaim, the neighborhood where the avenue is located, currently at around R$199 per square meter.

To give you an idea, in the Avenida Paulista region, which in the 1980s also boasted the title of the city’s financial center, the price is R$134. of new tenants, the asking price drops to R$95.70. In Alphaville, in the metropolitan region of the capital and where many non-financial companies are headquartered, it costs no more than R$54.

Monthly cost

Maintaining an office of 10,000 square meters in one of the most popular buildings in Faria Lima can cost as little as BRL 2.5 million per month. And this is not the only cost, given that the so-called corporate slabs are delivered empty, leaving the lessee to pay for the improvements to the space.

JLL data confirm the high demand in Faria Lima. The vacancy rate – a number that reflects how much space is unoccupied – is at a low of 6%, even with all the recent deliveries in the region, as new offices were quickly absorbed by companies. In Itaim as a whole, the rate of unoccupied rooms is today even lower, at 4% – compared to 30% at Berrini.

Market projects new highs

The race for office spaces on Avenida Brigadeiro Faria Lima, in São Paulo, tends to become even fiercer with the return of many companies to 100% face-to-face work or even in the hybrid model. As a result, according to experts, the price of rent in the region should not stop rising anytime soon.

According to Yara Matsuyama, director of the JLL real estate consultancy, the equation of strong demand with a shortage of new spaces explains the expectation. “It is to be expected that the vacancy rate (which measures the volume of areas still vacant) will decrease further”, says the specialist.

Faria Lima is known for hosting several companies in the financial sector, but the “face” of the region is not limited to this: the technology sector is also a large tenant.

Google, for example, which already has an office in Faria Lima, recently rented a new space of 2,300 square meters in a building in Vila Olímpia – a region “glued” to the avenue.

XP, which returned spaces at the beginning of the pandemic, resumed its offices. Currently, the biggest tenant on the avenue is Itaú BBA, the investment arm of Itaú Unibanco.

This all adds up to the fact that there are no new developments in Faria Lima for the short term. The last major building to go up in the region was Birmann 32, which stands out from the landscape of neighboring buildings by a mirrored sculpture of a whale. Its spaces were quickly occupied, many rented even before its official launch.

Yara says that, faced with higher prices in the region, some companies may start to rethink the location of their offices. This, according to her, tends to generate demand for nearby regions.

In addition to the neighboring neighborhood of Vila Olímpia, another area that in recent months has been rising in the city of São Paulo is Avenida Rebouças. “Bridal dress stores go out, offices come in,” he says.

Inflation effect

The JLL specialist explains that, with demand relentless, property owners have been inflexible when it comes to renegotiating existing contracts. This means that the renegotiation of values ​​has followed the full variation of the IGP-M, an indicator that is influenced by commodity prices linked to the industrial sector. In 2021, the variation of the IGP-M reached almost 18%, against 10% of the IPCA (considered the official inflation index in the country).

The president of the Buildings consultancy, Fernando Didziakas, says that the profile of the companies that are in Faria Lima helps maintain high demand, since they “are keen to be in the region”.

According to the president of the consultancy, in the region, unlike other places, there was little return of spaces, even in the worst moment of the pandemic, something that helps to explain the high rental prices. The rent value per square meter, according to the executive, is only replicated in another center of the financial sector in the country: the neighborhood of Leblon, in Rio.

“If Brazil grows, as it is projected, we will have an effect of replacement and price adjustment in other regions besides Faria Lima”, says the Buildings executive. The key percentage for starting price adjustments is when the vacancy rate of spaces reaches 10%, he explains.

“See and be seen”

Alianza Capital, a real estate fund manager, grew during the pandemic and its number of employees went from 18 to 28. As a result, a new office was needed. According to Ricardo Madeira, a partner of the manager, the opportunity arose for a space of 350 square meters on Rua Tabapuã, in the heart of Itaim. “It is important that we are there (in the Faria Lima region)”, he comments. This is explained, according to him, by the very nature of the business – in which circulating, seeing and being seen are important.

Madeira says that, on the other hand, there are companies that do not have an “obligation” to be in Faria Lima and that, with higher prices and a shortage of space, are starting to look to other regions of the city to set up their offices.

This is even the investment thesis of the manager Alianza, which has in its portfolio corporate buildings in other regions of São Paulo, such as Chácara Santo Antônio. According to Madeira, due to the lack of space and high prices in Faria Lima, other regions of the city are already seeing greater demand. “From the moment the company is unable to locate itself in Faria Lima, it will have to look for a secondary region”, says

The information is from the newspaper O Estado de S. Paulo.