CORPORATE MARKET MORE FAVORABLE FOR TENANT IN 2013

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1 4th QUARTER 213 OFFICE São paulo MARKET REPORT OFFICE CLASSES A+, A AND B OFFICE MARKET REPORT CORPORATE MARKET MORE FAVORABLE FOR TENANT IN 213 Existing Inventory: 3.95 million sqm Under Construction Inventory: 95 thousand sqm Under Project Inventory: 224 thousand sqm Delivered in the Quarter: 55 thousand sqm Availability: 13.1% Net Absorption: 43 thousand sqm Average Asked Price: R$ 18/sqm/month: General R$ 121/sqm/month: A+ A ECONOMIC AND MARKET OVERVIEW The year of 213 was characterized by a warm economy, lower growth staying below the estimated on the previous years. Inflation rate, for example, ended the year at 5.91% according to IBGE (Brazilian Institute of Geography and Statistics). About the monetary policy, COPOM (Monetary Policy Committee) raised Selic (interest rate) to 1%, after closing 212 at 7.25%. With respect to the exchange rate, was announced by the Central Bank at the end of 213 that intervention policies should prevail in 214, however, in a smaller scale. The price of US Dolar ended the year at R$ In the opposite direction, the employment generation remains increasing. The unemployment rate reached the minimum historical in December with 4.3%. The average of real income increased by.7% in November compared to the previous month. Despite the economy brake in Brazil, the demand for corporate real estate market remained stable compared to previous year. The supply generated in the period resulted in an availability increase and led the market for what is being considered the tenant moment, where asked prices show signs of decrease and commercial conditions tend to be more flexible. The current situation should prevail until the mid-216 when the delivery forecast for corporate areas will decrease, considering a slight increase of demand. The net absorption should be higher in class A +, due to the profile of current real estate cycle delivery. However, class B corporate buildings should be focus of attention once are occurring migration of companies that are usually installed on this properties profile. EXISTING INVENTORY The office market of São Paulo ended 213 with 3.95 million existing square meters considering A +, A and B buildings and received approximately 3, sqm in the year. The number, however, should be reached a level next to the recorded in 212 (377, sqm) if the delivery schedule of all constructions have been completed. HISTORICAL EXISTING INVENTORY (THOUSAND SQM) CLASSES A+, A AND B 3,126 1,89 1,317 3,278 1,839 1,439 3,655 1,858 1,797 3,953 1,889 2, Classes A+ and A Class B The current market s composition has the highest percentage in the submarket of Vila Olímpia, followed by and now that, due to the delivery of the largest share of new annual new inventory surpassed the submarkets of, and Faria in market size. About the developer side, 214 may be a year of opportunities for new developments. Those that starts the development cycle on 214 will enter in a moment with few deliveries and decreasing availability rate.

2 Considering the deliveries realized only in Q4, were added to inventory the building Torre Z, located in and Vila Olimpia Corporate Tower in Vila Olimpia submarket. Comparing the average amount delivered in the period 21/211 and the projected between 212/215 there is a difference of 291%, which explains the current market condition. NEW INVENTORY BY YEAR (THOUSAND SQM) CLASSES A+ A AND B Oversupply AVAILABILITY RATE The availability rate calculated considering A + and A classes was 18.7% and 6.9% for class B generating a percentage of 13.1% for the market. HISTORICAL AVAILABILITY RATE (%) DISTRIBUTION OF EXISTING INVENTORY (% BY SUBMARKET) Chácara Santo Antonio 6% 3% 7% 3% Barra Funda 3% 6% Vila Olimpia 16% 14% It was verified that A + properties ended 213 with 27.7% of availability, contributing massively to the increase of market rate. It is important to mention that this class is the profile of the new current inventory and features the largest share of net absorption in the year. 7% 8% 8% 9% 1% Colliers International p. 2

3 AVAILABILITY RATE BY CLASS (%) 26.3% 27.7% 22.2% 22.% 12.8% 13.1% 5.% 9.% 9.7% 9.3% 4.8% 5.7% 7.4% 6.9% 9.% 1.5% A+ A B Market Vila Olímpia submarket, as well during the course of the year stays with the largest amount of available square meters, a fact that intensified in the second semester. EXISTING INVENTORY (THOUSAND SQM) X AVAILABILITY RATE (%) 29.9% % 9.% 18.2% % % % % % % 18.6% % 2.6% Barra Funda Chácara Santo Antonio Vila Olímpia Inventory Availability p. 3 Colliers International

4 NET ABSORPTION Although a year of changes in the market s behavior, the demand remained stable compared to the previous year. For high standard properties (A + and A), the net absorption was 136, sqm compared to 138, sqm recorded in 212. A reduction was verified in class B, from 14, sqm in 212 to -23, sqm in 213. HISTORICAL NET ABSORPTION (THOUSAND SQM) PRICES Following the trend observed in all quarters, the average asked lease prices presented a decrease of 2.8%. However, considering the average transitioned price there was a difference of approximately 15%. We also must consider that there are many contracts signed with tiered discounts and allowances provided by the landlord. Since 29, when the corporate market felt the impact of global crisis, there wasn t a year-end with decreasing asked lease prices HISTORICAL AVERAGE ASKED LEASE PRICE (R$/SQM/MONTH) Classes A+ and A Class B NET ABSORPTION BY CLASS (THOUSAND SQM) Classes A+ and A Class B A+ A B Market -31 On the accumulated year s net absorption, the submarkets that had the best results were, and. NET ABSORPTION BY CLASS (THOUSAND SQM) Barra Funda Chácara Santo Antonio -1 Vila Olímpia Colliers International p. 4

5 AVERAGE ASKED LEASE PRICE BY CLASS AND SUBMARKET (R$/SQM/MONTH) Q Barra Funda Chácara Santo Antonio Vila Olímpia Classes A+ and A Class B p. 5 Colliers International

6 STATISTICS TABLE TOTAL A+ A AND B (EXISTING MARKET) SUBMARKET TOTAL AREA (sqm) AVG PRICE A+ A AVG PRICE B AVG MARKET AVAILABLE AREA (sqm) AVAILABILITY (%) Barra Funda 17,451 R$ 77. R$ R$ , % 558,61 R$ R$ R$ ,343 9.% Chácara Santo Antonio 24,276 R$ R$ R$ , % 18,432 R$ R$ R$ , % 369,949 R$ R$ R$ , % 334,478 R$ 16. R$ R$ , % 216,116 R$ 13. R$ R$ , % 125,237 R$ 1.17 R$ 6. R$ , % 33,121 R$ R$ R$ , % 283,362 R$ R$ R$ , % 379,423 R$ R$ R$ , % 274,524 R$ 63.5 R$ R$ , % Vila Olímpia 625,746 R$ R$ R$ , % Total 3,953,716 R$ R$ R$ , % ALPHAVILLE Existing Inventory: 53 thousand sqm Under Construction Inventory: 136 thousand sqm Availability: 34.4% Net Absorption: 2.4 thousand sqm Average Asked Price: R$ 56.64/sqm/month EXISTING INVENTORY AND AVAILABILITY RATE The year ended with existing inventory of 53, sqm. The availability rate had a slight increase over the previous quarter, due to inferior net absorption entered, however, during the year showed stability. The buildings that have the largest amount of available square meters for lease are: Canopus Alphaville, itower and Brascan Century Plaza. AVAILABILITY RATE (%) X EXISTING INVENTORY (THOUSAND SQM) % % % 32.9% Inventory Availability Colliers International p. 6

7 NET ABSORPTION AND PRICES The annual net absorption of 25, sqm was not sufficient to prevent the increase of availability rate in the market. As observed in previous years, the absorption trend for next two years is about 2, sqm and 3, sqm. Prices were relatively stable for the buildings of higher classes, despite the available percentage still be considered far from the ideal to balance the market. ASKED LEASE PRICE MARKET (CLASS A+, A AND B) (R$/M/MONTH) NET ABSORPTION BY CLASS (THOUSAND SQM) A+ A B Market STATISTICS TABLE TOTAL A+ A AND B (EXISTING MARKET) SUBMARKET TOTAL AREA (thousand sqm) AVG PRICE A+ A AVG PRICE B AVG PRICE NET ABSORPTION (thousand sqm) ÁVAILABLE AREA (sqm) AVAILABILITY (%) Alphaville 53,24 R$ R$ 39.2 R$ , , p. 7 Colliers International

8 213 OVERVIEW 1st QUARTER 213 Reclassification and revision of the existing inventory Inclusion of class B in quarterly analysis Change in the submarkets perimeters and new nomenclature Inventory of 3.77 million sqm, with an availability of: A+ and A: 13.3% and B: 4.8%. Net absorption verified in A+ and A: 36,179 sqm / B: 357 sqm Average asked lease price in A+ and A: R$ / B: R$ nd QUARTER 213 New inventory of 3, sqm - Main deliveries: 2 towers of Espaço Empresarial Nações Unidas in the submarket of Chácara Santo Antônio Increase of availability rate: A+ and A: 15.2% and B: 5.7% Net absorption of A + and A: 8,76 sqm and B: - 3,677 sqm Slight increase of average asked prices 3rd QUARTER 213 Tatuapé presents corporate projects under development. Delivery of 92, sqm: 2 towers of Corporate building on and Vila Olímpia Corporate Tower B. Delay in obtaining occupancy certificate in some properties Availability rate for A+ and A: 18.% and B: 7.4% Market s net absorption of 2,944 sqm, influenced by devolutions of company Vivo: 22, sqm. A+ and A classes featured 34, sqm of net absorption. Decrease of asked lease price, reflection of market supply: A+ and A: R$ and B: R$ th QUARTER 213 National economy with lower increase. Market is in oversupply cycle, with increasing availability rate and stable demand compared to the previous year. Period favorable to the tenants. Increased margin between asked prices and transitioned prices New inventory of 55, sqm ending the year with a total of 3.95 million square meters available The migration process and consolidation of operations indicates a tendency for short term Major deliveries totaled approximately 3, sqm in the year Availability rate calculated in A+ and A: 18.7% and B: 6.9% Decrease of asked lease prices in A+ and A: R$ and B: R$ It s projected for next two years a net absorption of 15, sqm. Colliers International p. 8

9 Colliers opportunities Ed. São Luiz Gonzaga - SP Total Area: 2,32 sqm Ref: 3146 Ed. Chicago - SP Total Area: 2,16 sqm Ref: 3145 DOMO Corporate ABC São Bernardo do Campo - SP Total Area: 38 sqm to 3.6 sqm Ref: 319 Ed. Memorial Office Building Barra Funda SP Total Area: 4,368 sqm Ref: 3143 Colliers International More than 482 offices in 62 countries in 6 continents USA: 14 Canada: 42 LATAM: 2 Asia: 38 ANZ: 157 EMEA: 85 EENU (Espaço Empresarial Nações Unidas) Chácara Sto. Antonio - SP Total Area: 3,5 sqm Ref: 314 Ed. Tenente Negrão Bibi SP Total Area: 2,488 sqm Ref: 3139 US$ 1,95 billion in annual revenue More than 14 millions sqm under management More than 13,5 profissionals CONTACTS REAL ESTATE MARKET vocabulary Sao Paulo R. Olimpíadas, Sao Paulo SP TEL Absorption: Amount of sqm occupied in the previous period. Development Category: Real estate properties are classified as A+, A, B and C. Stock / Inventory: Amount of usable constructed area in square meters. Availability Rate: Ratio between area available area and total area. Ceilings Height: Space between the finished flooring and the 1st structure ceiling interference. Build-to-Suit: Customized construction Colliers international do brasil REAL ESTATE CONSULTANCY for INDUSTRIAL, office, retail, land, rural, HOTels, HOSPITAls and educational institutions. Real Estate Investments. Tenant and Landlord Representation - Leasing, Acquisition and Sale. Advisory and Disposals for real estate assets and/or portfolios. Build-to-Suit and Sale & back Operations. Administration and Property Management. Real Estate Valuation for Leasing, Acquisition, Sale and Guarantee. Market and Technical-Financial studies, Highest and Best use studies. Advisory for Investment Funds and Private Investors. Research and Market Intelligence. Green Consulting for LEED certification Rio de Janeiro Av. Almirante Barroso, Rio de Janeiro RJ TEL Recife Av.Gov. Agamenom Magalhães, Recife PE TEL Fortaleza Av. Dom Luis, Fortaleza CE TEL More information: RESEARCH AND MARKET INTELLIGENCE research@colliers.com.br OFFICE office@colliers.com.br This document was prepared by Colliers International Brazil. All information in this material may be changed without prior notice. Colliers International is a worldwide affiliation of independently owned and operated companies. This publication is the copyrighted property of Colliers International and /or its licensor(s) All rights reserved. Accelerating success. p. 9 Colliers International