There is no definitive answer to explain the stagnant performance of Rio de Janeiro’s office market. However, Nicastro outlined some factors that may have hindered vacancy reductions and overall sector growth. 

In 2016, the vacancy rate stood at 32.9%, reflecting a national economic and political crisis that culminated in the impeachment of then-president Dilma Rousseff. Additionally, infrastructure investments for the Olympic Games temporarily boosted the local economy but also left the state with a significant debt burden. 

The following year, in 2017, Rio de Janeiro faced a severe fiscal crisis, leading to a reduction in public investment and impacting the real estate market. Another key factor was the fallout from the Operation Car Wash corruption scandal, which forced Petrobras to return 52,000 square meters of office space, driving the vacancy rate up to 35.9%. 

Between 2018 and 2019, a modest recovery took place, bringing the vacancy rate down to 32.8% and then 32.1%. However, the COVID-19 pandemic in 2020 halted this progress and introduced new challenges to the sector. 

The worst moment for Rio’s office market came in 2021, when the vacancy rate peaked at 36.6%. Political instability, high inflation, and global uncertainty all contributed to this scenario. 

In the following years, the market began showing signs of recovery. In 2022, the vacancy rate dropped to 34.7%, followed by a further decline to 34.1% in 2023. The gradual post-pandemic economic recovery and a more stable political environment contributed to this improvement, despite ongoing macroeconomic challenges such as geopolitical conflicts and financial uncertainties. 

By 2024, the vacancy rate had fallen to 32.9%, marking a 1.22 p.p. improvement from the previous year. Despite relative political stability, the public sector still faces fiscal and financial challenges.  

Toward the end of the presentation, Nicastro shared projections for the coming years. The expectation is that Rio de Janeiro’s office vacancy rate will only drop below 30% in 2026, reaching approximately 29.2%. 

In terms of new developments, only a modest addition to the city’s inventory is expected. In 2025, just 3,000 square meters of new office space is projected to be delivered. That number is expected to rise to 24,000 square meters in 2026 and 35,000 square meters in 2027. 

"The outlook is optimistic, as the residential real estate market remains strong in both sales and rentals, attracting more residents and visitors to the city. This trend, combined with the gradual return to offices, a pattern already established in major cities worldwide, suggests that remote work is no longer dominant. Therefore, it's only a matter of time before office occupancy begins to rise again in Rio de Janeiro," concludes Nicastro.