According to a Cushman & Wakefield report, Rio de Janeiro lost its leadership to Sao Paulo as the most expensive city for office rental, while Recife seems to have an unexplored potential in the Brazilian commercial real estate market.

Here are the report’s highlights:

The average of asking rents in the main office districts of São Paulo continues to climb, closing the quarter at R$ 123.7/sq. meter. This is now higher than the average in class A buildings in all regions of Rio de Janeiro, which since 2009 had led the ranking of the most expensive cities in Brazil of prime office spaces. Asking rents were up in most of the cities included in the survey, with the largest year-over-year changes being found in Curitiba, Brasília and Vitória.”

Even as vacancy rates seem to be going up (according to the graph above), Cushman remains bullish on the market for 2012, and mentions Recife ans the next big thing.

“Given the good results of the first quarter, it appears that 2012 will be another banner year for high level offices in Brazil. Construction continues to expand and the volume of new additions this year should be double the 2011 deliveries. These new offices will meet demand in traditional markets such as São Paulo and Rio de Janeiro, as well as demand in other state capitals. In this regard we would highlight the office market in Recife, which is included in our survey this quarter. It has one of the largest potentials and is increasingly the focus on interest on the part of companies and investors.”

Full report below.

Brazil Off 1q12

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