The Extrema Region, located in Minas Gerais state and on the border of São Paulo, stands out as one of the most renowned areas in the real estate market for industrial properties in Brazil. The popularity of Extrema has been driven by its superior location and the advantageous tax incentives provided to companies with operations in the region. Today, SiiLA reports an inventory of over 971.000 m² of GLA of assets in the region, which is dominated by companies in the Retail, Transportation and Logistics sectors.

Historically, the region has remained relatively tight, ending 4Q 2022 with a low 5.9% vacancy rate for Class A+, A, and B properties. Industry experts are questioning if the strong momentum can continue in the region given the restructuring of one of its largest tenants Tok&Stok, a leading Brazilian furniture and decoration chain.

In January of this year, the company announced its partnership with a consulting firm Alvarez & Marsal to assist in the restructuring, due to the estimated debt of R$ 600 million (approximately USD $118M). Furthermore, the company has initiated the process of closing some of its physical stores in Brazil in the last months.

Recently, two stores in Fortaleza, a city located in the northeast of the country, have been closed - one prime retail location and the other was inside Iguatemi Fortaleza. Before the recent crisis broke out, the company had strong fundamentals with 54 stores and 5 kiosks spread across 33 cities in 20 states in Brazil and the Federal District.

It is clear Tok&Stok in its current form did not beat the odds. The latest closure of the Tok&Stok Fortaleza locations were in addition to the prior closures of locations across Brazil including Recife (PE), Rio de Janeiro (RJ), Piracicaba (SP), Campinas (SP), Curitiba (PR), tree of them at the malls Shopping Recife (PE), Jockey Plaza (PR), and Norte Shopping (RJ). 

Given Tok&Stok is the fourth largest occupant of industrial properties in Extrema, it is certainly understandable that landlords in the region are apprehensive. The retailers' financial difficulties came to light in February, when the company was sued in court for non-payment of rent at Extrema Business Park I, in Extrema (MG). The property, where the Tok&Stok distribution center is located, is a Class A property delivered in 2020 and has 66,940 square meters of GLA. Today, the asset remains 100% occupied by the retailer, according to data from the SiiLA Market Analytics platform.

Despite the recent Tok&Stok instability, the demand for industrial properties in the region has remained incredibly strong, ending 1Q23 with an impressive 1.2% vacancy rate.

Want to know more data and statistics from Extrema or other regions monitored by SiiLA? Get to know our solutions or write us at comunicacao@siila.com.br.