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The American Chamber of Commerce for Brazil, being the largest Amcham
outside the United States is constantly serving its members by building
bridges for Brazilian businesses worldwide. Our foreign investment
attraction efforts have also been a key leading point for Amcham. The How To
Series is part of this initiative, with the support of some of our corporate
members we are putting together strategic information on the most various
aspects of doing business in Brazil. Over the last year the Brazilian economy
has clearly demonstrated an outstanding economic performance. The
country's business environment as well as foreign investment numbers are
also very positive. The International Monetary Fund estimates that crisis apart,
the Brazilian economy should grow on a 4.5% basis.The 2014 FIFA World
Cup has been estimated in USD 56.8 billion and the 2016 Olympics USD
19.3 billion in investment. These events have had an impact on direct
investments in the country and in infrastructure projects needed to hold these
events in Brazil. It is now more than ever, a strategic time for businesses
opportunities in Brazil, we welcome you and hope that the information you
are about to read serves you best.
CONTENTS
RIO DE JANEIRO – CHANGE OF ROUTE FOR INVESTMENTS IN THE STATE ...... ......17
BUILD-TO-SUIT..................................................................................................... ......25
INTRODUCTION
The economic growth of Brazil in the last few Up to 2015, seventeen ports will receive
years has boosted the increase of both investments to improve their infrastructure
internal and external investments. The and increase the logistic capacity.
positive conditions referring to tax
performance and controlled inflation have In the Northeast region, the Transnordestina
generated an increase in income and easier Railroad has the main objective of leveraging
access to credit, creating possibilities for the the sustainable and economic development
emergency of a new middle class, the major of the region, connecting the Northeast and
responsible for the increase of consumption Middle West regions, with focus on
in the country. agribusiness and mining industries.
The segment of industrial and logistic Initially, the industrial and storage areas used
condominiums in Brazil is relatively recent for logistic were mainly occupied by specific
(less than 15 years) and it has shown an industries, such as automotive, consumer
increased growth after 2005. Economic goods, retail, among others, concentrating in
factors have contributed for the increase of the same property the production,
the industrial activity in the country, administrative, financial and commercial
consequently stimulating the operations areas. These properties were located in the
related to logistics and distribution. metropolitan and suburban regions of large
8 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
cities, where the transportation and logistics with larger number of docks, sprinkler
costs would be significantly lower. system, and large parking and maneuvering
patios. In summary, logistic and industrial
With the increase of population density in parks have been offering some differentiators,
urban centers and the new residential which include:
developments near industrial areas, the so-
called industrial exodus began. The flow of • Modules above 5,000 sqm;
trucks, the pollution from factories, and the
increase of taxes (such as IPTU - urban
• Clear height above 11 meters;
property tax), have caused a migration of
entrepreneurs and their industrial plants to
• Minimum floor capacity of 5 ton/sqm;
smaller cities, away capital cities.
This scenario was reinforced by the increase • Two docks for every 1,000 sqm of storage
of the purchasing power along the last 15 area;
years, which generated an increase of
demand for storage and distribution areas, • Wide patios for maneuvers and larger
thus attracting new players for the logistics numbers of semi-trailers parking spaces;
and distribution parks’ developments all
around the country. The building standards • Sprinkler system;
have also improved to better serve large
logistic operations, which have been
• 24/7 security with TV cameras;
requiring sustainable and efficient
properties, with storage areas equivalent to
85% of the gross leasable area (or higher), • LEED or Acqua certification.
REAL ESTATE 9
Notes: LEED and Acqua Certifications are assigned to sustainable developments, i.e., those
with reduced use of energy and water, eco-friendly use, preservation of green areas, etc.
It is always recommended that developers and Another important factor, which often is a
investors carry out a thorough prior study, decisive one when selecting a location to
contemplating a mapping of competing build a logistic park, is the municipality and
projects/developments in the region of state tax incentives, which usually vary from
interest with their respective stages of delivery, one location to another, due to the
potential demand in the region of interest, development policies in each region.
accessibility of the development (roads,
railways, ports and airports), among others.
10 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
Source: Colliers International Brazil (data referring to the 1st quarter of 2012).
*Exchange Rate: USD 1 = R$ 1.82 - 1 square meter = 10.7639 square feet
In early 2012, the existing logistic/industrial The location, access to main roads, local
park inventory in the market was 5.9 MM demand, region vacancy rate, building
sqm, of which 6.4% is vacant. The heat of the quality and land price are some of the reason
market in 2011 was evidenced by the total for the lease price variation from US$ 6 to
absorption of more than 1.0 MM sqm all over US$ 16/sqm/month in Brazil.
the country.
REAL ESTATE 11
Minimum and Maximum Asking Lease Per Capita Logistic Inventory (sqm)
Prices per State in Class A
Industrial/Logistic Parks (R$/sqm/month)
• Baixada Santista (Santos, São Vicente, •Ribeirão Preto (Ribeirão Preto, Franca and
Guarujá and Cubatão);
Araraquara);
Regions
Pedro I and Santos Dumont; sqm. For next 4 years the delivery of 672 K
sqm is estimated;
• Occupation Profile: Segments of
• Low offer of areas for rent;
technology, automotive/auto parts, logistics
and distribution;
• Predominance of transportationand logistic
companies;
• Local market in expansion.
• City of São José dos Campos – one of the The highest asking lease prices charged in the
largest technologic parks in the country. State are seen in the regions of Barueri and
Guarulhos, both at USD 16/sqm/month – the
Between the years of 2010 and 2011, the second highest asking price in the country.
inventory of Industrial and Logistic Parks in
the State had an increase by 17%. In the first The Campinas Region is also characterized
quarter of 2012, the existing inventory was by developments with lower asking lease
3.5 MM sqm – 59% of total inventory in the price, USD 7/sqm/month, in the cities of
country – and the vacancy rate was 7.6%. In Jaguariúna and Santo Antônio de Posse.
16 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
16 16
15
14
14
13 13
12
10
12 10
9 11 9
10
9 9
9 9
8 8
7 8
7
Atibaia
Vale do Paraíba
Jundiaí
São Paulo MR
ABCDM
Guarulhos
Ribeirão Preto
Barueri
Embu
Sorocaba
Piracicaba
Campinas
As the most important oil producer in the investments. In 2011, the sector received 3.5
country, the State of Rio de Janeiro attracts an billion dollars, and may be responsible in
increasingly higher number of foreign 2020 for 20% of national GDP.
The Metropolitan Arch, the major road The low number of industrial and logistic
construction project in the State, is boosting parks in the region has forced large
the logistic and industrial market of Itaboraí, companies to look for a logistic solution in
Duque de Caxias, Magé, Nova Iguaçu and build-to-suit operations (more information
Seropédica, increasing the accessibility to on Chapter "Build-to-Suit”).
the Ports of Itaguaí and Rio de Janeiro.
18 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
The key industrial regions in the State are: • Seropédica: Seropédica, Itaguaí and Angra
dos Reis
• Campos dos Goytacazes: Campos de
Goytacazes and Itaperuna • Serrana: Serrana, Teresópolis, Petrópolis,
Cantagalo, Cordeiro and Nova Friburgo
• Dutra: Pavuna, Queimados, Nova Iguaçu,
São João de Meriti, Belford Roxo, Mesquita • Vale do Paraíba Fluminense: Volta
and Nilópolis Redonda, Barra Mansa, Resende, Porto Real,
Itatiaia, Piraí and Quatis
• Macaé: Macaé
• Washington Luiz Highway: Duque de
• Niterói: Niterói, São Gonçalo, Itaboraí, Caxias
Magé, Cabo Frio and Cachoeiras de Macacau
Regions
• Total Existing Inventory – 465 K sqm; • New Inventory for 2012 – 28 K sqm;
16
16 16
14
13
14 14 12
12
12
8 10
9
Rio de Janeiro
Belford Roxo
Goytacazes
Duque de Caxias
Campos dos
Queimados
Itaboraí
Pavuna
*Exchange Rate: USD 1 = R$ 1.82
Source: Colliers International Brazil
The Industrial and Port Complex of Suape The key industrial regions in the State of
has received more than R$ 769 million of Pernambuco are:
public investments in the year 2010 (76%
higher than in previous year). Considered • Caruaru (Caruaru and Gravatá);
the best industrial business hub in the
Northeast region, the complex has some • Garanhuns (Garanhuns);
factors that determine the decision of an
entrepreneur to install a company in the •Grande Recife (Recife, São Lourenço da
region, such as: efficient infrastructure and Mata, Olinda, Abreu e Lima, Itapissuma,
labor training programs. Paulista, Igarassu and Itamaracá);
Note: There are speculations and projects For 2012, the delivery of 240 K sqm (10% of
under development for Logistic Parks to be the inventory projected for the country) is
built in the regions of Caruaru and Mata projected, distributed in the cities of Cabo de
Norte in the next three years. Santo Agostinho (94%), Jaboatão dos
Guararapes (3%) and Caruaru (3%). Up to
2016, the existing inventory of the State may
With the vacancy rate of 6% and current
be four times higher, representing more than
existing inventory of 292 K sqm, Pernambuco 1.3 MM sqm.
is a State in full development. In 2011 more
than 165 K sqm were delivered, of which The average asking lease price in the State of
95% were pre-leased. Pernambuco is USD 8.85/sqm/month.
9 9 9
8 8 8
Some Advantages offered by the State built in a Regions which will also hold a
of Pernambuco: housing complex for C and D classes, a
Commercial Center and a hotel;
• Suape Port is considered the best Port of
Brazil operationally, by its users; • Great investment opportunities;
BUILD-TO-SUIT
Payment
Securitization Agent of rent
R$ CRI
Investors
26 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
When selecting this type of building modality • Estimated budget of future property.
the following points are also important: Determine which investment is feasible;
Excel/Unilever
Louveira – SP
Total Built Area: 120,000 sqm Land Area: 230,000 sqm
Excel/Kraft
Araucária – PR
Total Built Area: 42,697 sqm Land Area: 2,223,355 sqm
Excel/Unilever
Rio de Janeiro - RJ
Total Built Area: 17,500 sqm Land Area: 40,048 sqm
Natura
São Paulo-SP Land Area: 111,732 sqm
Total Built Area: 51,000 sqm LEED Certification
Cases: Colliers International Brazil
28 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
• Lack of knowledge of local market to perform each different step of the project,
practices: It is suggested that a previous study from search of location to the installation of a
of basic assumptions and real estate practices new plant or logistic unit. This planning must
is conducted for the new market, avoiding include the necessary terms for internal
precipitated decisions. It is important to approvals of the company. As to the process
understand the laws, the market, the economy of property search, longer periods must be
and all other factors that will guide the estimated, since it is probable that a higher
decision making process. number of options will be identified.
Note: HABITE-SE is a certificate authorizing the beginning of the effective use of a property after its
completion, which is issued by public departments where the property is located.
32 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
• Tenant obligations - The common practice month’s rent. The guarantee or letter of credit
is to return the space to the landlord in its covers one years´ costs including rent,
original layout, bare shell condition, with condominium expenses and taxes. It must be
normal wear and tear. Such condition can be renewed every year. It is also common for
negotiated by the parties. the bank guarantee, letter of credit or
insurance covers the costs for the entire term
• Second Hand - space with tenant of the lease. The law also allows for a
improvements included - It is rare to find personal guarantee, the guarantor shall be
second generation space to lease because responsible for the tenant´s obligations
tenants are obligated to return their during the term of the lease.
space to its original condition. If second
generation space is found, the lease must be • What regulations cover holding over of
agreed to by the landlord (typically the the current premises? If the tenant does not
previous tenant has left the space and there is
notify the landlord of their intention to renew
another company interested in leasing the
and the tenant remains in the premises for
space with the improvements included).
more than 30 days without the landlord
opposing, the lease shall be considered
• Regulations - The parties may negotiate
renewed in a monthly basis. In such event,
subleasing and assignment clauses. If not
the landlord has the right to ask the tenant to
expressly provided in the lease agreement,
the sublease and assignment are only leave at any time, with a 30-day previous
permitted with the landlord´s prior approval. notice.
The rent paid by the sub-tenant cannot be
higher or lower than the rent paid by • About space - the tenant has the right to
the tenant. make alterations/ customizations in the
space but the all them must be formally
• Lease guarantees - Most commonly the approved by the landlord and municipality (if
landlord asks for a bank guarantee, letter of required). It is uncommon for the tenant
credit or lease insurance. A deposit is to use the landlord´s architect or project
sometimes accepted, usually equivalent to 3- manager for any alterations.
34 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
Colliers is a real estate consulting firm present •Consulting and disposals of Assets and or
in more than 62 countries, for the following Real Estate Portfolios
segments: Industrial, Offices, Retail, Land
lots for Incorporation, Rural Areas, Hotels, • Build-to-Suit and Sale & Leaseback
Hospitals, Teaching Institutions, among operations
others. In Brazil, it has offices in São Paulo,
Rio de Janeiro, Recife and Fortaleza, with •Property Management and Lease Contract
approximately 100 professionals offering Management
services such as:
• Assessment of Real EstateProperties for
• Real Estate Investments
Purchase, Sale, Guaranty and Lease
• Assessment, consulting and advice for the Our expertise in offices coupled with the
acquisition/disposals of assets for Investment knowledge of the Market Intelligence and
Funds. Research team allows us to offer the best
solutions to speed up the successs of
•Green Consulting for Obtaining the LEED® customers in the real estate market.
Certification
Web-site: www.colliers.com
E-mail: relacionamento@colliers.com.br
38 How to CHOOSE YOUR LOGISTICAL/INDUSTRIAL FACILITY in BRAZIL
REAL ESTATE 39