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Lease Renewal at R$ 400/m² in Faria Lima’s Core Could Impact Local Real Estate Market
- The lease renewal sets a new price standard in the Faria Lima area
By: SiiLA News
11/01/2024 Having an office on Faria Lima is set to become more expensive as Scotiabank renews its lease at the Plaza Iguatemi Business Center. The 989 m² occupied by the financial institution was renegotiated at a nominal rate of R$ 400/m²
The Plaza Iguatemi is a multi-owner asset; however, the seventh floor, where Scotiabank is located, is owned by José Roberto Auriemo, a member of the Auriemo family, which owns JHSJ.
Currently, Plaza Iguatemi has an average market rate of R$ 304.35/m², making the rate agreed between the owner and Scotiabank 31.4% higher than the average.
Recently, REsource reported that rents in some São Paulo developments are exceeding one million reais.
At Plaza Iguatemi, floors average 940 m² each, with a total private area of 20.4 thousand m².
Scotiabank did not responded before the report’s publication deadline.
Impact
Felipe Leite, director of Primaz Co., notes this upward trend is expected for Faria Lima, given low vacancy rates, yet believes there is an upper limit for rents.
“It’s natural to see prices exceed R$ 400/m², but when there are excellent buildings a block away on Faria Lima at competitive prices, you create a ceiling. Just because space is scarce doesn’t mean people will pay R$ 600 or R$ 800 per m². This eventually supports secondary areas near Faria Lima. However, we will certainly see many cases above R$ 400/m² from now on,” Leite comments.
In the third quarter, Market Analytics data shows that Faria Lima has a 9.7% vacancy rate and recorded a net absorption of 10.5 thousand m², in A+, A and B properties.
Leite believes that nearby areas like Vila Olímpia, Jardins, and Paulista may benefit from these higher rents. Vila Olímpia, for example, has a vacancy rate of 13.5%, Berrini at 20.1%, and Pinheiros at 16.2% — all close by and ready to accommodate companies seeking more competitive prices.
“When some markets get too expensive, companies start considering other areas. The Berrini area, which is quite worn, still captures part of this demand. Vila Olímpia has partly benefited from its proximity to Faria Lima. Undoubtedly, the whole chain is interconnected, and high prices drive the broader market,” Leite concludes.
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