Faria Lima Faces Tenant Exodus: What’s Behind the Decline in São Paulo's Premier Real Estate Hub?

The financial sector leads the exits from Faria Lima. Since the first quarter of 2023, they have represented 23% of all new vacant areas. In the first six months of 2024, they accounted for 25% of exits, totaling 13 thousand square meters left vacant. 

The largest exit was SulAmérica Seguros, which vacated the Edifício Roberto Bratke, releasing 12 thousand square meters at once. The insurer's exit occurred in the first quarter of 2024 and had been planned since 2023, when the company's health operation was purchased by Rede D’Or, and employees were relocated to a new development in the Av. Paulista region. 

Another significant departure is Meta, the owner of Facebook, Instagram, and WhatsApp, which vacated 7.9 thousand square meters of Birmann 32. In the case of the American company, it was not a complete exit from the building, as the company still occupies part of the development. 

Caixa Econômica Federal, for instance, occupied two suites in the New Star building. Despite having a bank branch there, the institution ceased leasing its corporate space and maintained the branch on the ground floor. When contacted by REsource, the public company did not disclose the reasons for its departure but stated that it is relocating the team to other nearby units. 

"CAIXA informs that the areas in question are currently vacant and in the process of being returned to the owner. Regarding the units that were located there, they have been moved to other properties leased by the bank, where several administrative units are already centralized. We emphasize, therefore, that there was no new lease to meet a specific demand, but rather a rationalization of the spaces already occupied," the company told REsource. 

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Today, Faria Lima has the second-highest total occupancy cost, in class A+ and A properties, which is R$ 288.29 per square meter, second only to Itaim Bibi, with R$ 357.14 per square meter. Unlike Faria Lima, Itaim Bibi's stock of developments is lower, with 239 thousand square meters compared to 784 thousand square meters in Faria Lima. 

One of the main factors that can influence the region's real estate ecosystem is the fact that the Average Market Value of Faria Lima is R$ 237.52 per square meter, almost double the average of São Paulo's central business districts (CBDs), which is R$ 126.92 per square meter. All these figures increase costs for companies in this area, causing rents to exceed millions, as previously reported. 

For example, in 2020, Google rented 7.1 thousand square meters for R$ 1.4 million, or R$ 206.91 per square meter, in the Pátio Victor Malzoni building. More recently, Banco Master is occupying the space that belonged to Meta and Shopee in Birmann 32, paying R$ 2.3 million to occupy 7.9 thousand square meters. 

The expansion and popularization of boutique offices have been attracting the attention of various companies, especially those occupying smaller floors. Galapagos Capital, for example, stopped occupying nearly 400 square meters of San Paolo in Faria Lima to occupy 100% of the Edifício Rebouças 3507. 

Located in the Pinheiros region, on Av. Rebouças, Galapagos now occupies the 3.2 thousand square meters of the boutique building. The occupancy cost did not vary much, moving from R$ 189.94 per square meter in the Faria Lima building to R$ 142.54 per square meter. However, in the new headquarters, the company is occupying an entire newly delivered building.

Of the 143 companies that left or reduced space in the region, 59 occupied 300 square meters or less, and 122 occupied less than a thousand square meters. On the other hand, there are large companies establishing themselves in the area, such as Banco Master, which rented Birmann 32, and Uber, which expanded its area in the Faria Lima Plaza.

Chucri Zaidan, despite having the largest amount of vacant square meters, is one of the regions experiencing the largest vacancy reductions—from 27% to 25.1%. 

It was one of the areas in São Paulo with the greatest decrease in vacancy over the past year. With a reduction of 5.86 percentage points, Chucri Zaidan went from 31% vacancy in the first quarter of 2023 (Q1 2023) to 25.1% in the second quarter of 2024 (Q2 2024). 

The entire Rebouças area, within the Pinheiros region, is also attracting the attention of tenants and landlords after the zoning law review. 

For SiiLA specialists, this emptying does not mean the end of Faria Lima, which is still one of the most consolidated and desirable regions in the city, but it highlights that the area is a concentration of large players. 

Of the 143 companies that left or reduced space in the region, 59 occupied 300 square meters or less, and 122 occupied less than a thousand square meters. On the other hand, there are large companies establishing themselves in the area, such as Banco Master, which rented Birmann 32, and Uber, which expanded its area in the Faria Lima Plaza.