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São paulo

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1st QUARtER 2014 | OFFICE

MARKET REPORT OFFICECLASSES A+, A AND B OFFICE MARKET REPORT

Exinting Inventory:

4.03 million sqm

under Construction Inventory:

961 thousand sqm

under project Inventory:

221 thousand sqm

Delivered in the Quarter:

12 thousand sqm

availability: 13.5%: Market

18.8%: a+ and a7.7%: B

Net absorption: 16 thousand sqm:

Market- 8.016: a+ and a

- 8.839: B

avg asked lease price:R$ 106/sqm/month:

MarketR$ 119/sqm/month:

a+ and aR$ 88/sqm/month: B

MIGRATION OF COMPANIES SHALL PREVAIL IN 2014

MaRKET oVERVIEWThe characteristic that shall prevail during 2014 and probably 2015 is the migration of companies. Actually, the market is going through a moment of transformation and modernization. This process occurred in a very fast pace compared to the historic and how the market has behaved in last years. This increase ally with economic uncertainties issues is contributing to potential tenants get good negotiations.

The migrations mentioned not always means expansions, since in most part of the old buildings there are loss of efficiency due to the constructive model and lack of applied technology. The current number of modern properties allows in some cases, even with a decreasing occupied space to remain stable or increase the efficiency. Another important feature concerns to the unification of some operations that were distributed in several buildings.

Prices are expected to become more sensitive during the course of the year, since according to developers forecast, a total of 278,000sqm will be added to the high standard market up to December.

EXISTING INVENToRYWith the delivery of 12,000sqm, Q1 ended with 4.03 million sqm of existing inventory considering classes A+, A and B. As occurred in the last periods, the amount received was lesser than the previously estimated by the developers.

The buildings that have been delivered are: Design Tower / Vila Olímpia, Corujas / Pinheiros and Sphere Corporate / Jardins.

HIstORICAL EXIstING INVENtORY (MILION sQM) – CLAssEs A+, A AND B

3.145 3.2803.638

4.023 4.035

2010 2011 2012 2013 Q1 2014Classes A+ and A Class B

1.334 1.439 1.7552.107 2.110

1.812 1.8411.884

1.916 1.926

The submarket of Roque Petroni has 30% of inventory under construction, with an expected delivery of most of these projects for next two years, followed by submarket of Vila Olímpia with 21% with a massive participation of the two towers of Camargo Correa.

CollIERS INTERNaTIoNal | p. 2

MARKET REPORT OFFICE | 1st QUARtER 2014

DIstRIBUtION OF EXIstING INVENtORY BY sUBMARKEt (%)

Vila Olimpia 15

Brooklin 14

Roque Petroni 9

Faria Lima 10

Itaim 8

Paulista 9

Pinheiros 7

Santo Amaro 7

Chácara SantoAntonio 6

Jardins 6

Morumbi 3Cidade Jardim 3 Barra Funda 3

INVENtORY UNDER CONstRUCtION BY sUBMARKEt (%)

Vila Olimpia 21Brooklin 11

Roque Petroni 30

Faria Lima 8

Itaim 5

Paulista 5

Pinheiros 3

Chácara Santo Antonio 12

Jardins 1Barra Funda 4

AVAILABILItY RAtE BY CLAss (%)

22.0

26.3

9.311.1

5.77.4 6.9 7.7

10.512.8 13.1 13.5

9.79.0

27.726.1

A+ A B MarketQ3 2013 Q4 2013 Q1 2014Q2 2013

HIstORICAL OF AVAILABILItY RAtE (%) – MARKEt

3,22,3

8,6

13,1

2010 2011 2012 2013 Q1 2014

13,5

For Q2 ending around 100,000sqm are expected in Brooklin through the buildings Berrini One, Thera Corporate, LWM Corporate Center, The Bridge Tower and CEB – Centro Empresarial Berrini. In Faria Lima submarket the expected deliveries are the projects Vera Cruz and Praça Faria Lima.

Opposite to the observed in last quarter, the percentage of Class A + decreased because this is the profile of property with the highest occupancy rates. For classes A and B there was an increase, a situation that may prevail or fluctuate during the course of the year.

The greatest variation occurred in the submarket of Vila Olímpia, which decreased by 7% compared to the fourth quarter of 2013, explained by leases in the buildings Sky Corporate and Vila Olímpia Corporate.

In contrast, the submarket of Pinheiros had a significant increase due to the devolutions on building Eldorado Business. Brooklin and Santo Amaro submarkets also showed an increase.

aVaIlaBIlITY RaTEThe availability rate keeps the already expected increase for the course of 2014 ending at 18.8% for Class A+ and A, and 7.7% for Class B. Considering all three classes, the percentage calculated is 13.5% against 13.1% in the previous quarter.

The increase is explained by the negative quarterly net absorption, due to the moving of companies from old to modern properties as mentioned previously.

p. 3 | CollIERS INTERNaTIoNal


EXIstING INVENtORY (tHOUsAND sQM) X AVAILABILItY RAtE (%)

107

557

241

108

397337

245

126

347284

379

274

628

Inventory Availability

3.7

12.7

18.4

13.916.3

5.2 5.5

30.2

8.611.2

17.4

9.9

19.1

Vila O

limpia

Brooklin

Roqu

e Petr

oni

Faria

Lima

Itaim

Paulist

a

Pinheir

os

Santo

Amaro

Chác

ara

Santo

Antonio

Jardi

ns

Morumbi

Cidad

e Jard

im

Barra F

unda

NEt ABsORPtION BY sUBMARKEt (tHOUsAND sQM)

02

-4

1

6 5

-4

-18

3

-7

4

-2 -3

69

-7

-2

02

-7

0

18

22

21

5

0

-13

4

-4

3

-4-2

6

0

5

-9

4

000

-6

3 41 2 1 0

-2 -2

2 1

Vila O

limpia

Brooklin

Roqu

e Petr

oni

Faria

Lima

Itaim

Paulist

a

Pinheir

os

Santo

AmaroCh

ácara

Santo

Antonio

Jardi

ns

Morumbi

Cidad

e Jard

im

Barra F

unda

NET aBSoRpTIoNConsidering the classes A+, A and B, the net absorption verified was -16,000sqm. Class A buildings contributed in higher proportion to the total with -19.000sqm. The main devolutions were in the buildings: CENU – Centro Empresarial Nações Unidas and Berrini 500, located at Brooklin and Brazilian Financial Center in the submarket of Paulista. Class A + buildings had a positive net absorption of 11.000sqm.

NEt ABsORPtION BY CLAss (sQM)

A+ A B MarketQ3 2013 Q4 2013 Q1 2014Q2 2013

8

39

26

11

0

-6

5

-19

-4

-31

12

-9

4 3

43

-13



pRICESThe average asked lease price (classes A +, A and B) at the end of the first quarter was R$ 106.45, compared to R$ 108.73 in the fourth quarter of 2013.

Considering only classes A + and A, the average of R$ 119.26 represents a decrease of 2% compared to the third quarter of 2013.

The asked lease prices for Class B increased by 1.7% from the previ-ous quarter.

HIstORICAL AVERAGE AsKED LEAsE PRICE (R$/sQM/MONtH)

R$ 107.45

R$ 123.60 R$ 125.50 R$ 121.73 R$ 119.26

R$ 62.19R$ 72.33

R$ 89.50 R$ 86.89 R$ 84.85

Classes A+ and A Class B2010 2011 2012 2013 Q1 2014

AVERAGE AsKED LEAsE PRICE BY sUBMARKEt (R$/sQM/MONtH)

R$ 59.29

R$ 77.00

R$ 115.60

R$ 91.21

R$ 73.33

R$ 64.87

R$ 117.82

R$ 145.00

R$ 108.02

R$ 167.71

R$ 93.26

R$ 160.00

R$ 93.86

R$ 130.00

R$ 96.83

R$ 60.00

R$ 143.33

R$ 113.76

R$ 127.50

R$ 88.08

R$ 117.88

R$ 73.66

R$ 63.50

R$ 50.75

R$ 132.72

R$ 88.46

Vila O

limpia

Brooklin

Roqu

e Petr

oni

Faria

Lima

Itaim

Paulist

a

Pinheir

os

Santo

Amaro

Chác

ara

Santo

Antonio

Jardi

ns

Morumbi

Cidad

e Jard

im

Barra F

unda

Classes A+ and A Class B

Faria Lima is the submarket with the highest average asked lease price, with R$ 167.71. Santo Amaro is the one with the lowest average, with R$ 50.75.



tOtAL A+ A AND B (EXIstING MARKEt)

sUBMARKEt

Barra Funda

Brooklin

Chácara Santo Antonio

Cidade Jardim

Faria Lima

Itaim

Jardins

Morumbi

Paulista

Pinheiros

Roque Petroni

Santo Amaro

Vila Olímpia

Total

tOtAL AREA (sQM)

107,451

557,911

241,149

108,247

397,063

337,903

245,900

126,219

347,024

284,431

379,871

274,524

628,124

4,035,817

AVG A+ A (R$/sQM/MONtH)

R$ 77.00

R$ 115.60

R$ 73.33

R$ 145.00

R$ 167.71

R$ 160.00

R$ 130.00

R$ 96.83

R$ 143.33

R$ 127.50

R$ 117.88

R$ 63.50

R$ 132.72

R$ 119.26

AVG B (R$/sQM/MONtH)

R$ 59.29

R$ 91.21

R$ 64.87

R$ 117.82

R$ 108.02

R$ 93.26

R$ 93.86

R$ 60.00

R$ 113.76

R$ 88.08

R$ 73.66

R$ 50.75

R$ 88.46

R$ 88.39

AVG MARKEt (R$/sQM/MONtH)

R$ 68.14

R$ 107.47

R$ 69.10

R$ 135.94

R$ 147.81

R$ 137.75

R$ 111.93

R$ 84.,56

R$ 128.54

R$ 114.36

R$ 103.14

R$ 57.13

R$ 117.97

R$ 106.45

AVAILABLE AREA (sQM)

4,002

71,096

44,323

15,075

64,806

17,461

13,496

38,166

29,786

31,726

66,285

27,196

120,183

543,601

AVAILALIBILtY (%)

3.7%

12.7%

18.4%

13.9%

16.3%

5.2%

5.5%

30.2%

8.6%

11.2%

17.4%

9.9%

19.1%

13.5%

STaTISTICS TaBlE

Exiting Inventory:502 thousand sqm

Under Construction Inventory:136 thousand sqm

Availability: 34.9%

Net Absorption:-2,5 thousand sqm

Avg Asked Lease PriceR$ 54.07/sqm/month

ALPHAVILLE

EXISTING INVENToRY aND aVaIlaBIlITY RaTEAlphaville office market ended the first quarter of 2014 with 502 thousand, sqm, and the same amount of the previous period. The availability rate remained stable in comparison to the previous quarter at 34%.

The buildings that have the largest amount of square meters available for lease remains: Canopus Alphaville, iTower and Brascan Century Plaza.



NET aBSoRpTIoN aND pRICESThe net absorption of Q1 is -2,546sqm. Class A + properties contributed to the negative net absorption.

The average asked lease price decreased by 5% compared to last quarter.

AVAILABILItY RAtE (%) X EXIstING INVENtORY (tHOUsAND sQM)

490

Q2 2013 Q3 2013 Q4 2013 Q1 2014

34.833.2

34.4 34.9

490

502 502

Inventory Availability

NEt ABsORPtION BY CLAss (tHOUsAND sQM)

98

2

-3

8

2

-5

10

2

8

-4

1

4

01

A+ A B MarketQ3 2013 Q4 2013 Q1 2014Q2 2013

AVERAGE AsKED LEAsE PRICE (R$/sQM/MONtH)

R$ 58.67

R$ 56.21R$ 56.64

R$ 54.07

Q2 2013 Q3 2013 Q4 2013 Q1 2014

STaTISTICS TaBlE

tOtAL A+ A AND B (EXIstING MARKEt)

sUBMARKEt

Alphaville

tOtAL AREA (sQM)

502,966

AVG A+ A (R$/sQM/MONtH)

R$ 61.84

AVG B (R$/sQM/MONtH)

R$ 38.55

AVG MARKEt (R$/sQM/MONtH)

R$ 54.07

ABsORÇÃO LÍQUIDA (mil m²)

175,685

AVAILABLE AREA (M²)

AVAILALIBILtY (%)

173,139 34.9



Average Leasable Floor Area (sqm)

Average Unit Leasable Area (sqm)

Average Building Leasable Area (sqm)

Average of Floors

Floor Type

Building Management System

Parking Ratio per Square Meter of Leasable Area

MAIN CHARACtERIstICs

750

300

7,100

12

Floor Channel/Raised

Optional

1 parking space/44 sqm

1,100

700

12,000

12

Raised

Partial


1,600

800

28,000

19

Raised

Complete


BAA+

SoME CHaRaCTERISTICS BY ClaSS

International Airport (Guarulhos) >>22 km

<< Alphaville18 km

Vila Olímpia

JardinsCidade Jardim

Morumbi

Pinheiros

Barra Funda

Itaim

Brooklin

Roque Petroni

Chácara Sto. Antonio

Santo Amaro

Domestic Airport (Congonhas)

Faria Lima

Paulista

Collies International Corporate O�ce

Marginal Pinheiros

Marginal Tietê

Rod. Castelo Branco

Av. N

açõe

s Unid

as

Av. Rebouças

Av. Bandeirantes

MAP OF sÃO PAULO sUBMARKEts



www.colliers.com.br

CollIERS oppoRTuNITIES

Ed. ChicagoLeasePaulista - SPTotal Area: 2,160 sqmRef: 3145

Ed. Memorial office BuildingLeaseBarra Funda – SPTotal Area: 2,500 sqmRef: 3143

EENu (Espaço Empresarial Nações unidas)LeaseChácara Sto. Antonio - SPTotal Area: 3,500 sqmRef: 3140

Ed. Tenente NegrãoLeaseItaim Bibi – SPTotal Area: 500 sqmRef: 3139

Ed. DoMo Corporate aBCLeaseSão Bernardo do Campo - SPTotal Area: 308 sqm to 30.600 sqmRef: 3109

Ed. São luiz GonzagaLeasePaulista - SPTotal Area: 2,320 sqmRef: 3146

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• US$ 1,95 billion in annual revenue

• More than 104 millions sqm under management

• More than 13,500 profissionals

CoNTaCTS

Sao pauloR. Olimpíadas, 20504551-000 Sao Paulo SPTEL +55 11 3323 0000

Rio de JaneiroAv. Almirante Barroso, 63 20031-003 Rio de Janeiro RJTEL +55 21 2524 4242

RecifeAv.Gov. Agamenom Magalhães, 4.575 50070-160 Recife PETEL +55 81 3037 2222

FortalezaAv. Dom Luis, 80760160-230 Fortaleza CETEL +55 11 8171 2727

More information:

RESEaRCH aND MaRKET [email protected]

[email protected]

Accelerating success.

REal ESTaTE MaRKET

VoCaBulaRY

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 & Leaseback Operations

. Lease 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

. 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

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.

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