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Some key statistics released by Cushman & Wakefield’s quarterly analysis of commercial real estate in Brazil and the EXAME magazine showed the following:

• Asking rents across the seven cities analysed (Rio de Janeiro, São Paulo, Brasília, Salvador, Porto Alegre, Vitória and Curitiba) were higher when comparing quarter 4 of 2009 with 2010;
• Apart from Vitória and Rio de Janeiro, vacancy rates have decreased when comparing 2009 and 2010 in all of the cities analysed from an average of 8.3% to 7.8%;
• Rio de Janeiro was classified as possessing the most expensive commercial real estate in the country;
• When comparing quarter 4 of 2009 with 2010, commercial rents in Salvador increased by 89.2% and in Rio de Janeiro by 46.9%;
• In the country’s economic hub – São Paulo – there has been a 87.4% increase in lease rates between 2005 and 2010.  The EXAME magazine reported rapid rises being witnessed particularly in the high end and luxury retail region around the Haddock Lobo and Oscar Freire streets where demand continues to significantly outpace supply.

Despite what are rapid increases and strong buoyancy levels – on the back of our analysis of Brazil residential real estate price analysis showing indications of slower movement – industry comments have been pointing to signs that the commercial market may be following suit.  According to specialists interviewed by the EXAME magazine, the effects of rising national interest rates (the SELIC has increased by 3% in the space of one year) as well as other controls on credit and income growth should slow down what some commentators have been stating as a bubble like pace.  Nicolas Retsinas, director of housing studies at Harvard University stated: ‘it is natural that there will be a slowdown, although this does not mean that values ​​will plummet.’

In Rio de Janeiro, Cushman & Wakefield data showed a drop in average rental rates for high end office buildings by 5.9% when comparing quarter 4 with quarter 3 of 2010.  It is also expected that the increase of stock supply is likely to bring more equilibrium – for example Rio de Janeiro is set to hit a new record with 225,000m² being delivered in 2011 in comparison to 83,000m² in 2010 and in São Paulo 240,000m² of space is expected to be delivered compared to 151,000m² in 2010.

The full Cushman & Wakefield Q4 market beat analysis can be viewed here.