Taxes and Bureaucracy Accelerate Company Exits and Impact the Logistics Market

Industrial properties are often among the first indicators of corporate retrenchment. Before shutting down operations, companies typically reduce inventory, consolidate distribution centers, or exit regional markets — moves that quickly become visible in warehouse occupancy contracts.

The impact extends beyond vacancy rates. The downsizing of these operations reduces demand for warehousing, transportation, and labor, affecting a supply chain that depends directly on the physical presence of companies across the national territory.

The so-called “Brazil Cost” is one of the main drivers pushing companies out of the country. High operating expenses combined with structural inefficiencies lead firms to reassess their physical footprint in the Brazilian market.

Bureaucracy and tax burdens make Brazil’s operating environment more expensive for companies. In 2025, Brazil’s tax burden represented 32.4% of GDP, approximately 21% higher than the Latin American average.

Taxes levied on consumer goods and service sectors account for 13.7% of GDP. By comparison, income tax represents 9.1%.

Retailer Forever 21, which ended its operations in Brazil in 2022, cited high operating costs — driven by taxes and import expenses — along with difficulties adapting to the Brazilian market and mounting debt as reasons for its exit. As a result, 5,300 sq m of logistics space became vacant.

Similar justifications were cited by Ford Motor Company, Walmart, Mercedes-Benz, and Makro. In the case of Carrefour, the French retailer sought to improve profitability and reorganize its portfolio, while high interest rates reduced Brazilian consumers’ purchasing power. The company also delisted from the B3.