According to a recent article on Estado de SP, for the first time in almost ten years the lease prices of commercial offices in São Paulo ended the year (2013) in negative territory, a clear indication of a much-needed correction.
Seems like the early signs of a bubble deflation.
“Prices have already reached the maximum limit so we’ll hardly see upward price adjustments above inflation,” said Fernanda Rosalem, Director of of real estate firm Cushman & Wakefield.
The firm’s research shows that the average asking price in São Paulo dropped about 15% in 2013. In addition, vacancy rates increased from 14.6 % in late 2012 to 17.2 % in December 2013.
According to the executive, falling prices reflect a combination of factors, mainly the abundant supply in the market from all the new projects delivered in recent years.
In the city of São Paulo alone, were made available 419,000 m² of space for lease in 2013. “It’s a record mark, twice the average of the last five years. An entire Vila Olimpia!” compares Fernanda.
The executive explained that the increased supply of offices in the city was the result of projects were started in the period in which the economy was accelerating a few years ago, though were delivered only now when the pace of economic activity has cooled .