Today (31), SiiLA is releasing the first episode of its inaugural podcast, the SiiLA Podcast. Hosted by the company's CEO, Giancarlo Nicastro, the debut episode featured Daniel Takase, a partner responsible for mixed-use and office spaces at Tellus.

During the approximately 25-minute conversation, they discussed investment funds, market perspectives, and other topics. The podcast is now available on the SiiLA YouTube channel and Spotify. Read a preview of the conversation below.

GN: Before delving into some data here, I'm not sure if I can reveal it yet, but congratulations on achieving a 0% vacancy rate for the portfolio. How did that happen? Because everyone looks at the picture, but no one sees the story.

DT: There's no problem with revealing it. We did a live event at the beginning of the month, celebrating the 4-year anniversary of the TEPP11 fund, and we revealed this information. We signed the last lease last month, but its effectiveness will begin on October 1, so it wasn't included in the previous report.

We still had a 3% vacancy, but in this month's report, TEPP11 will show 100% occupancy. It was a significant challenge because from the fund's inception, we had never achieved a zero vacancy rate. Initially, we had zero financial vacancy; there was guaranteed income in the south tower, but due to the pandemic, we reached a 22% physical vacancy. With the consistent management work we've been cultivating since the fund's inception, with a strong focus on properties, commercial and financial aspects, we gradually achieved these results. We planted the seed, and now we're harvesting the results.

GN: In terms of your properties, I've noticed in the reports that you are very concerned about certification and sustainability. This is a significant differentiator, right?

DT: It certainly is. Since the fund's IPO, we've certified all the buildings. The Fujitsu building is the last one, and we should complete its certification by the end of this year. Then, we will have 100% of the portfolio certified by U.S. GBC, a LEED seal, and all the projects in development in these closed-end vehicles are all certified, without exception.

We're also taking this flag to the residential sector. Our residential projects will also be certified. We're moving to the Edge seal, which is from AFC, but it's also a green seal.

GN: Speaking of development, the market continues to be challenging. We have some important data here; this is the first quarter of the year with positive net absorption, meaning the first semesters had two declines. The first had about 30,000 square meters, the second saw a decrease of 14,000 square meters, and now we arrive in the third quarter with a positive net absorption of 81,000 square meters. This is very important; it's a significant step for the market. You will be entering the next year with new deliveries, right? What are you seeing? What are your expectations regarding the new inventory you will bring?

DT: We have also noticed this in the demand. We have 100% occupancy in São Luiz and Passarelli, but demands continue to come in for both. We have a completed building, Pinheiros One, located in the Butantã district, near the Eusébio Matoso Bridge. We have felt the demand; we have been working with potential tenants there, and there are proposals on the table.

In the Faria Lima region, there is no more space for large tenants. So, we are feeling this in Pinheiros One, a building we already have ready, but there is still vacancy. We also have the JK Square, a mixed-use complex with a 31,000 square meter tower that we will deliver in the middle of next year. We are already working on pre-leasing, including visits.

GN: Regarding the last mile, what is the strategy? Some say the last mile is in Cajamar, while others argue that it's small spaces within the city. What is Tellus's vision for the last mile?

DT: In our view, it's projects within a 40 km radius of São Paulo. We have operations that are closer to the cities and others that are a bit farther but still close to the capital. So, we have seen larger and smaller operations because the closer you are to the city, the smaller the land sizes. Therefore, we look at things within São Paulo, but we also expand up to 40 km.

We believe this is a good radius and proximity to São Paulo because it takes you far beyond the competition, rental prices are not as high, and construction costs are difficult to control, so there isn't much margin to gain. In industrial properties, it's not like residential or even corporate real estate. In industrial properties, you have to have a lot of costs on hand because many projects involve lands with some form of environmental restriction, springs, caves, and earthwork issues. It's quite challenging, complex, and not easy to find the right lands at the right prices; we don't go very far.

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