2 nd QUARTER 2013 OFFICE SÃO PAULO MARKET REPORT OFFICE CLASSES A+, A AND B OFFICE MARKET REPORT OFFICE CORPORATE MARKET PRESENTED STABILITY IN THE SECOND QUARTER Existing Inventory: 3.80 million sqm Under Construction Inventory: 743 thousand sqm Under Project Inventory: 534 thousand sqm Delivered in the quarter: 30 thousand sqm Availability: 10.5% Net Absorption: 4 thousand sqm Average Asking Price: R$ 111/sqm/month ECONOMIC OVERVIEW According to the data released by IBGE (Brazilian Institute of Geography and Statistics), the GDP increased by 0.6% in the first quarter compared to the last three years. The projection for the end of 2013 is an increase of 2.28%. Regarding to the official inflation (IPCA), the estimative for 2014 has advanced for 5.88%. In June, the unemployment rate has increased to 6.0% against 5.8% in May. With the seasonal adjustment, the rate was 5.5% in May and 5.7% in June. It was the highest level in 12 months; however, it remains below that is considered non-inflationary balance for Brazilian economy (6.5%). EXISTING INVENTORY Existing Inventory (million sqm) 3.77 3.80 The existing office corporate inventory of Sao Paulo presented slight changes compared to the previous period. Three buildings were delivered, an adverse situation over the past periods when the delivered inventory exceeded the historical quarterly average. During 2013, however, the situation is expected to change drastically, because, according to the data collected with the main developers of the market, the sum of the area to deliver until the end of year considering classes A+, A and B is about 300,000sqm. Q1 2013 Q2 2013 EXISTING INVENTORY As occurred in the previous quarter, commercial conditions such as free rent and flexibility has been frequent in part of transactions of the period. www.colliers.com.br
Existing Inventory by Region (%) Availability Rate by Region (%) Chácara Santo Antonio 6% 3% 3% 3% 15% 33.3% 7% 7% 6% AVAILABILITY RATE 7% 9% 9% 10% 15% Despite the market has received 30,000sqm in this quarter, the determining factor for increasing the market availability rate was the lower quarterly net absorption. The latest buildings delivered, especially the composition of class A+, have a weight of 50% on the formation of general availability rate. For class A buildings, the rate grew up by 4% in comparison to the previous quarter. The movement on class B buildings was lower than the others and the rate of 5.7% is considered healthy. 2.4% 8.6% 18.4% 18.5% 16.0% 5.8% 2.4% Chácara Santo Antonio 16.5% 8.5% 6.1% 6.1% 0.6% AVAILABILITY RATE (%) BY CLASS 25 22.2 22.0 20 15 10 9.0 10.5 9.0 5 5.0 4.8 5.7 0 A+ A B Market Q1 2013 Q2 2013 region with 33.3% available remains as the highest of the market due to the vacancy in the property Corporate Towers. The region Vila Olimpia has the highest amount of square meters available, a fact that should prevail in the coming quarters. region has the lowest availability rate, with 0.6%. However, it should receive the largest portion of under construction inventory. p. 2 Colliers International
AVAILABLE AREA X OCCUPIED AREA BY REGION 510 490 310 314 309 264 270 251 196 218 2.5 104 47 44 18 83 59 19 5.4 41 83 20 17 1.7 23 96 Chácara Santo Antonio Available Occupied NET ABSORPTION The market net absorption of 4,400sqm represents a drastic decrease compared to the previous quarter. Historically, however, it was verified that the second quarter is the period with the lowest net absorption of each year. By classes, it was verified that class B presented an important weight in the composition of overall number, however, is still not possible to say that there is a movement of migration of companies located in class B buildings for high end. The region Vila Olimpia presented the lowest net absorption with -7,437sqm. This is explained mainly for the devolution on the buildings International Plaza II and Atrium VI. Regions Chacara Santo Antonio, and also showed negative absorptions with -1,629sqm, 2,062sqm and 2,012sqm, respectively. Positive absorptions were detected in the regions,,,,, and. NET ABSORPTION Q2 2013 BY CLASS 70,000 63,536 60,000 50,000 43,432 40,000 30,000 20,000 10,000 0-10,000 19,747 8,096 4,400 357-19 -3,677 A+ A B Market Q1 2013 Q2 2013 Colliers International p. 3
NET ABSORPTION Q2 2013 BY REGION 6,097 3,489 3,975 1,129 1,034 133 365 1,319 0-1,629 Chácara Santo Antonio -2,062-2,012-7,437 ASKING LEASE PRICE As expected for the current year, the projected slight increase tending to the stability is being realized. The average asking lease price at the end of quarter is 1.9% higher than the previous period with R$ 111.23/sqm/month. The highest average prices remain in the regions (R$ 161.00), (R$ 142.37) and (R$ 140.17). AVERAGE ASKING LEASE PRICE (R$/SQM/MONTH) GENERAL R$ 180.00 R$ 160.00 161.00 R$ 140.00 R$ 120.00 R$ 100.00 R$ 80.00 R$ 60.00 140.17 115.69 83.60 68.64 142.37 136.70 127.61 122.15 Average Price R$ 111.23 100.67 97.16 86.78 63.45 R$ 40.00 Chácara Santo Antonio p. 4 Colliers International
AVERAGE ASKING LEASE PRICE BY REGION (R$/SQM/MONTH) 77 60 130 120 97 89 78 170 143 108 188 165 130 185 140 102 100 94 110 90 60 158 116 150 120 96 125 117 72 60 55 155 125 103 Barra Funda Chácara Santo Antonio Cidade Jardim Faria Lima Roque Petroni Santo Amaro Vila Olímpia Class A+ Class A Class B STATISTICS TABLE REGION TOTAL AREA (SQM) PRICES AVAILABLE AREA (SQM) AVAILABILITY (%) BARRA FUNDA 107,451 R$ 68.64 2,561 2.4% BROOKLIN 558,601 R$ 115.69 47,799 8.6% CHÁCARA SANTO ANTONIO 240,276 R$ 83.60 44,189 18.4% CIDADE JARDIM 102,431 R$ 140.17 18,933 18.5% FARIA LIMA 369,949 R$ 161.00 59,048 16.0% ITAIM 334,106 R$ 142.37 19,249 5.8% JARDINS 224,116 R$ 97.16 5,430 2.4% MORUMBI 125,239 R$ 86.78 41,706 33.3% PAULISTA 330,121 R$ 136.70 20,221 6.1% PINHEIROS 281,732 R$ 122.15 17,274 6.1% ROQUE PETRONI 272,144 R$ 100.67 1,735 0.6% SANTO AMARO 274,524 R$ 63.45 23,214 8.5% VILA OLÍMPIA 586,913 R$ 127.61 96,579 16.5% TOTAL 3,807.603 R$ 111.23 397,937 10.5% Colliers International p. 5
ALPHAVILLE Existing Inventory: 490 thousand sqm Under Construction Inventory: 116 thousand sqm Availability: 32.7% Net Absorption: 8.8 thousand sqm Average Asking Price: R$ 58.67/sqm/month AVAILABILITY RATE Alphaville market remains unbalanced with the availability rate higher than 30%. The delivered inventory in this quarter was approximately 20,000sqm. NET ABSORPTION Although the net absorption of 8,800sqm be 38% higher than the verified in the first quarter, it was still not enough to modify the rate calculated previously. AVAILABILITY RATE X EXISTING INVENTORY NET ABSORPTION Q2 2013 500,000 469,843 490,850 50.00% 45.00% 10,000 8,837 400,000 300,000 32.90% 32.70% 40.00% 35.00% 30.00% 8,000 6,412 25.00% 6,000 200,000 20.00% 15.00% 4,000 100,000 10.00% 5.00% 2,000 0 0.00% Q1 2013 Q2 2013 0 Q1 2013 Q2 2013 ASKING LEASE PRICE (R$ / SQM / MONTH) Regarding to the asking lease prices, the current scenario reflects the moment of the market and remains stable despite the flexibility offered in most part of negotiations. STATISTICS TABLE REGION TOTAL AREA (SQM) PRICES AVAILABLE AREA (SQM) AVAILABILITY (%) ALPHAVILLE 490,850 R$ 58.67 160,420 32.7 p. 6 Colliers International
COLLIERS REGIONS MAP 2013 << Alphaville 18 km International Airport (Guarulhos) >> 22 km Rod. Castelo Branco Marginal Tietê Marginal Av. Rebouças Av. Bandeirantes Av. Nações Unidas Chácara Sto. Antonio Domestic Airport (Congonhas) Collies International Corporate Office Colliers International p. 7
COLLIERS OPPORTUNITIES Paramount Chácara Sto. Antônio - SP Total Area: 2,214sqm Ref: 3116 DOMO Corporate ABC São Bernardo do Campo - SP Total Area: 308 sqm to 30.600 sqm Ref: 3109 Colliers International More than 482 offices in 62 countries in 6 continents Joseph Kryss - SP Total Area: 9,000sqm Ref: 3089 Ed. NBC Sale Barueri - SP Total Area: 3,109sqm Ref: 3063 USA: 140 Canada: 42 LATAM: 20 Asia: 38 ANZ: 157 EMEA: 85 Ed. Jabaquara Jabaquara - SP Total Area: 266 sqm to 7,000 sqm Ref: 3041 Bela Cintra Tower - SP Total Area: 3,644sqm Ref: 3106 US$ 1,95 billion in annual revenue More than 104 millions sqm under management More than 13,500 profissionals CONTACTS REAL ESTATE MARKET vocabulary Sao Paulo R. Olimpíadas, 205 04551-000 Sao Paulo SP TEL +55 11 3323 0000. 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 Rio de Janeiro Av. Almirante Barroso, 63 20031-003 Rio de Janeiro RJ TEL +55 21 2524 4242 Recife Av.Gov. Agamenom Magalhães, 4.575 50070-160 Recife PE TEL +55 81 3037 2222 Fortaleza Av. Dom Luis, 807 60160-230 Fortaleza CE TEL +55 11 8171 2727 More information: RESEARCH AND MARKET INTELLIGENCE research@colliers.com.br OFFICE office@colliers.com.br. Advisory for Investment Funds and Private Investors. Research and Market Intelligence. Green Consulting for LEED certification 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). 2013. All rights reserved. Accelerating success. www.colliers.com.br