New industrial properties advance, but construction costs pressure expansion

SiiLA data also shows significant differences among Brazil’s main industrial property markets. Average market rent stands at R$ 27.36 per m² in the Southeast, compared with R$ 22.98 per m² in the Northeast and R$ 22.21 per m² in the South. 

On the cost side, the Basic Unit Construction Cost, or CUB, based on data from each region’s Sinduscon construction industry association, stands at R$ 1,267.31 per m² for industrial properties in São Paulo, R$ 1,322.22 in Minas Gerais, R$ 1,475.96 in Paraná, R$ 1,219.47 in Bahia and R$ 1,240.79 in Pernambuco.

According to Market Analytics, the average total replacement cost of industrial properties is approximately R$ 3,687 per m². Of this amount, average construction costs account for R$ 2,118 per m², while land and earthworks represent an average of R$ 456 and R$ 80 per m², respectively. 

At the same time, leases effectively recorded in 2026 have an average rent of R$ 30.37 per m² per month, equivalent to approximately R$ 364 per m² per year. 

On a gross comparison, this annualized rental revenue corresponds to about 17.2% of average construction costs, but only 9.9% of the total replacement cost. The ratio is not equivalent to a yield or cap rate and does not account for factors such as vacancy, rent-free periods, taxes, expenses or cost of capital, but it helps illustrate the equation faced by developers.

The market had projected 3.46 million m² of new inventory for 2026. By the end of the third quarter, however, only 1.155 million m² had been delivered, equivalent to 33.4% of the projection.

Even if all of the approximately 986,000 m² expected for the fourth quarter were completed, the year would end at around 2.14 million m², still roughly 1.32 million m² below the original forecast.

In addition, 54.3% of the space expected to be delivered in the fourth quarter is already listed as pre-leased, meaning that a significant share of the new supply may reach the market already committed.

The strength of demand is also reflected in the largest recent transactions. Nine deals highlighted by SiiLA total 721,600 m², or approximately 14.6% of gross absorption over the past 12 months. All involve Mercado Livre or Shopee. 

Mercado Livre accounts for 491,700 m² of these transactions, while Shopee represents 229,900 m². Among the largest are 125,100 m² at Zolver Bandeirantes, 100,800 m² at BRZ 386 Logistics Park and two leases at Condomínio Piracicaba 2, totaling 85,900 m² and 61,100 m². 

According to SiiLA, the average replacement cost of industrial properties in Brazil stands at R$ 3,687 per m², while leases recorded in 2026 have an average rent of R$ 30.37 per m² per month. On a gross comparison, it would take around 121 months of rent, or just over ten years, to reach the equivalent of the replacement cost. 

The relationship varies by market. In São Paulo, where replacement costs reach R$ 3,893 per m², comparing that figure with the state’s average rent of R$ 28.38 per m² results in approximately 137 months. In Paraná, where replacement costs stand at R$ 3,490 per m² and the regional average rent is R$ 22.21 per m², the figure rises to around 157 months. 

Shopee’s lease at Condomínio Piracicaba 2 helps illustrate this difference. The 61,100 m² occupied by the company would represent approximately R$ 237.9 million in replacement costs, using the São Paulo benchmark. At Piracicaba’s average rent of R$ 21.86 per m², the same area would generate approximately R$ 1.34 million per month. On that basis, it would take around 178 months, or 14.8 years, to reach the equivalent of the replacement cost.