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Market Bulletin 3rd Quarter 2013 - São Paulo / Rio de Janeiro / ABCD and Alphaville

Ocupantes locates new corporate headquarters for Melitta in São Paulo Melitta was established in 1908 in the German city of Dresden, operating in Brazil since 1968. The country is the second most important market for the brand and for the past 10 years has occupied the same address on Avenida Paulista. Since then, the company has undergone expansion, leading to the rental of non-adjacent office spaces within the same building. However, as growth and investment has become more latent in Brazil, Melitta, who currently operates in more than 19 countries, began searching for new Brazilian corporate headquarters, to reflect this new company scenario. To be in a position to select a new location, Melitta would have to be certain of its requirements, in order to ensure that its objectives in terms of location, rent values and the implementation schedule would be achieved. Additionally, Melitta would be required to report the entire process to its head office in Minden, with consistent and well-documented information. Having then decided on the need to relocate to new headquarters, Melitta promoted a tender amongst real estate consultancies with the objective of identifying the most suitable premises in accordance with their requirements. After evaluating all the proposals and the services offered by each consultancy, Melitta selected Ocupantes, who offered the best proposal and array of services directed at end users of corporate office spaces. During the transaction execution, Ocupantes offered a wideranging support in all the phases of locating and contracting

a new office space, initiated by establishing the schedule for each phase of the project. After understanding Melitta’s requirements, Ocupantes prepared a report containing all the options available, including office spaces still under construction or shortly to be vacated. The experienced team of Ocupantes, led by the Director Haroldo Lopes, conducted the negotiations to reach the best results for Melitta. Ocupantes, accompanied by a representative of the client, carried out preliminary visits in order to gather sufficient data to pinpoint the solution desired by the client, in addition to balancing out the values for each available option, considering the region and standard of the development. After engaging these initial visits, further discussions were held on the assumptions laid out, leading to the conclusive visits that indicated four alternatives. This was followed by negotiations to conclude the agreement for the office space most suited in terms of location, layout, technical features and good corporate image for this new phase of the company in Brazil: the Morumbi Corporate Golden Tower. During the final evaluation of the services rendered by Ocupantes, the financial Director of Melitta, Mr. Cesar Jordão, made the following statement: The choice for Ocupantes was a key factor for the relocation process of the corporate headquarters of Melitta do Brasil. Among their notable strengths are in-depth knowledge of the market, reflected by the mapping of available office spaces, the adequate selection of office spaces according to the client’s profile and timely service whenever prompted by Melitta. Haroldo Lopes Haroldo Lopes is Director of Corporate Services at Ocupantes. He has a Bachelor’s degree in Business Administration from Mackenzie University in São Paulo. With an in-depth knowledge of and experience in executing tenant representation services for corporate clients, Haroldo joined Ocupantes in 2004, having taken part in differing key Brazilian real estate markets in the office, industrial and retail segments.. CRECI 70.954

For offices, industries or retail, our services are:

• Valuations

• Relocations

• Divestments

• Rent Reviews and Lease Renewals

• Build-to-Suit

• Lease Terminations

• Sale & Leaseback

• Management of Opportunities and Critical Dates

• Project Management

SÃO PAULO RIO DE JANEIRO BELO HORIZONTE GOIÂNIA

SALVADOR RECIFE ARACAJU FLORIANÓPOLIS

www.ocupantes.com Rua Fernandes Moreira, 1.166, 4º andar 04716-003, São Paulo - SP, Brazil Tel. +55 11 5182.3455


São Paulo The new stock of 2013 will reach the highest ever in São Paulo Vacancy Rate

Net Absorption

New Stock

Construction Activity

Market Indicators

Differently to the previous quarter, the net absorption in the 3rd quarter 2013 reported negative figures, driven by the negative net absorption in the Others segment of 48 thousand m2, as opposed to a positive net absorption in Class A of a mere 25 thousand m2. One of the key factors to explain this figure was the vacating of the buildings occupied by Telefonica, namely the Paulista Star, a part of the São Luís Gonzaga and the Faria Lima 1188 building. All these positions were relocated to the Eco Berrini that Telefonica had already previously rented and was gradually occupying. The delivery of large developments such as the two towers of the Morumbi Corporate (73,370 m²) and Tower B of the Vila Olímpia Corporate, caused the new stock for 3rd quarter 2013 to reach approximately 147 thousand m2. Again, as São Paulo received an additional new stock and, at the same time, considerably large spaces were vacated, such as the Wtorre Nações Unidas III (6,040m²), São Luis de Gonzaga (5,005 m²), Paulista Star (9,772 m²) and the Bandeira Tower (5,194 m²) contributing further to an elevating trend in the vacancy rate. For the Class A buildings the vacancy rate settled at 19.89%, while in the Others segment the rate was 6.59%. New stock is forecasted to exceed 200 thousand m2 in 4th quarter 2013. Developments such as the São Paulo Headquarters - Blocks 3 and 4 (30,158 m²) and the Panamérica II - Block 01 (4,800 m²) had their deliveries postponed to 4th quarter 2013. Additionally to these, the following are noticeable highlights: Tower Z (33,909 m²), Casa das Caldeiras (29,610 m²), Vila Olímpia Corporate - Tower A (19,416 m²) and Praça Faria Lima (14,745 m²). Construction activity on the rise for the third consecutive quarter For the third consecutive quarter, the construction activity rose in comparison to the three previous quarters. In the 3rd quarter 2013 construction activity rose by 8% reaching 1.48 million m2 under construction in the city of São Paulo. The construction activity for Class A buildings is 851 thousand m2. **

Net Absorption and Vacancy Rate 160.000

Net Absorption (SqM) - Others Net Absorption (SqM) - Class A

(sqm)

Gross Absorption

Vacancy Rate - Others Vacancy Rate - Class A

800.000

135.000

600.000 500.000

85.000

15%

60.000

10%

400.000 300.000 Forecast

35.000 10.000

5%

48.372

0% -15.000

1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th

2006

2007

2008

2009

2010

2011

2012

200.000 100.000 0

2006

2013

2007

2008

2009

2010

2011

2012

2013

New Stock

Construction Activity 1.600.000

Class A Forecast

20%

110.000

-40.000

Others

(sqm)

25%

Others

(sqm)

Class A

1.400.000

800.000

Others

(sqm)

Class A Forecast

600.000

1.200.000

500.000

1.000.000

400.000

800.000 300.000

600.000

200.000

400.000

100.000

200.000 0

1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd

2006

2007

2008

2009

2010

2011

2012

2013

* Class A: Buildings delivered after 1993, with a leasable area of 700 m² per floor-plate, and high technical standards.

0

2006

2007

2008

2009

2010

2011

2012

2013

** Ocupantes works with information supplied by constructors and developers.

Market Bulletin is a quarterly publication about the office markets in São Paulo, ABCD region and Rio de Janeiro, prepared by Ocupantes’ departments of Research and Marketing. All rights reserved. Reproduction of this material in part or in its entirety is permitted as long the source is cited.


Market Bulletin

Rio de Janeiro

3rd Quarter 2013

The new stock in the city of Rio de Janeiro will also reach its highest level in 2013 Vacancy Rate

Net Absorption

New Stock

Construction Activity

Market Indicators

For the 3 rd quarter 2013, the new stock was only 40,600 m². The main highlights were the retrofits in Laranjeiras Corporate (4,560 m²) and Uruguaiana Corporate 118 (2,600 m²) buildings, in addition to the South Tower of the CEO - Corporate Executive Offices (14,300 m²). Added to the short deliveries, net absorption in Class A remained stable, practically at the same levels as the 2nd quarter 2013 – around 50 thousand m². As a result of these dynamics, vacancy levels for Class A had a slight increase, up from 13.73% to 14.95%. For the 4th quarter 2013 deliveries are forecasted at 106 thousand m², approximately 100 thousand m² solely in Class A. The highlights here are the Port Corporate (38,376 m²), and Oscar Niemeyer Tower - FGV (19,400 m²) as well as the new headquarters of Petrobrás Distribuidora (29,276 m²). The Construction activity continues an upward trend By the end of the 3rd quarter 2013, the construction activity rose by almost 20% from 548 to 664 thousand m² under construction. The great majority in Class A buildings — 511 thousand m². It is worth noting that the largest building under construction in the city of Rio de Janeiro is the REC Sapucai with 85,600 m², built alongside the Sambadromo, with delivery expected for the second quarter 2014. **

Net Absorption and Vacancy Rate 160.000

Net Absorption (SqM) - Others Net Absorption (SqM) - Class A

(sqm)

Construction Activity

Vacancy Rate - Others Vacancy Rate - Class A

700.000

140.000

Class A

600.000

120.000

16%

100.000

14%

80.000

10%

12% 8% Previsão

60.000 40.000

6% 4% 2%

20.000

0%

0

-20.000

Others

(sqm)

1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th

2006

2007

2008

2010

2009

2011

2012

500.000 400.000 300.000 200.000 100.000 0

1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd 4th 1st 2ⁿd 3rd

2006

2013

2007

2008

2010

2009

2011

2012

2013

New Stock

Construction Activity Distribuition by District

500.000

Others

(sqm)

Class A

450.000 Barra da Tijuca 32,4%

Others 43,8%

Forecast

400.000 350.000 300.000 250.000 200.000 150.000 100.000

Lagoa 1,6%

Botafogo 3,3%

Centro 20,3%

50.000 0

2007

2008

2009

2010

2011

2012

2013

Information contained in this document is a result of research undertaken by Ocupantes, with the aim of estimating trends in the corporate real estate market. It does not constitute a legal document.

OCUPANTES is the first Brazilian Real Estate consulting firm to exclusively represent corporate end users in Brazil. It is composed of highly skilled professionals with ample experience representing Brazilian and multinational companies.


ABCD and Alphaville Vacancy levels in Alphaville remain high Alphaville Total Stock and Vacancy Rate 3.000.000

Total Stock - Others Total Stock - Class A

(sqm)

Vacancy Rate - Others Vacancy Rate - Class A Forecast

40%

2.500.000 2.000.000

30%

1.500.000

20% 1.000.000

• The vacancy level in Alphaville rose in Class A buildings, from 26.25% to 27.68%. For buildings considered as Others, vacancy levels dropped from 22.34% to 20.60%.

10%

500.000 0

• After a quarter without any deliveries, noticeable deliveries in the 3rd quarter 2013 occurred in 3 cities: Barueri, Diadema and São Caetano do Sul, represented respectively by deliveries of the NBC New Business Center (18,159 m²), Niterói 400 Corporate (6,114 m²) and Workcenter Praça Da Moça (5,707 m²).

2007

2008

2009

2010

2011

• There are no deliveries forecasted of Class A buildings over the 4th quarter 0% 2013 2012 2013. For buildings classified as Others, the Cauaxi Empresarial Alphaville (12,390 m²), in Alphaville, and the Ufficio São Caetano (4,950m²), in São Caetano do Sul will be delivered.

• Currently, there are 16 buildings under construction in Alphaville totaling in excess of 350 thousand m2 with delivery forecasted for 2016. Once all these developments are delivered, Alphaville will have a total stock in excess of 1.1 million m2.

ABCD and Alphaville

Santo André São Bernardo do Campo São Caetano do Sul Diadema Barueri - Alphaville São Paulo

Success Stories - Ocupantes locates a furnished corporate office for Siga Fácil S/A on Faria Lima Avenue achieving cost savings of approximately R$ 500 thousand.

Siga Fácil S/A, a joint venture between Bunge Alimentos and Financial Investimentos, was in search of an office in São Paulo with a good corporate image and well located, in addition to low rent and low implementation costs. To assist with this project the company directors engaged Ocupantes Corporate Real Estate. Ocupantes is a specialized real estate consultancy servicing corporate clients occupying industrial and office spaces, enabling clients to maximize their cost savings and contributing to avoid very common obstacles encountered when conducting Brazilian real estate transactions. In the case of Siga Fácil, after the client’s requirements were established, Ocupantes submitted a report with search results and recommendations based on the best available opportunities in the market at the time. The Ocupantes’ team led by Gleidson Natividade recommended a commercial property on Av. Faria Lima, one

of the most upmarket districts of São Paulo, fully furnished and generating a cost saving of R$ 500 thousand in office implementation costs. At the same time, additional options were also presented to the client, in which negotiations had been initiated prior to achieving the expected results. Ocupantes consultants succeeded to obtain a series of interesting contractual conditions for the furnished office in the Edifício Torre Faria Lima, located in the district of Pinheiros, São Paulo.


Market Bulletin 3rd Quarter 2013