Campinas Has Many Jobs, Not Much Office Space

Campinas skyline; photo courtesy of Fasouzafreitas

Brazil's booming economy has had no problem attracting multinational companies over the past decade, but not nearly as many commercial real estate developers. Long deterred by high interest rates, foreign investors are beginning to recognize Brazil's shortage of leasable office space--especially in Campinas.

Its proximity to the financial capital, Sao Paulo, high quality of life, highly educated workforce, diversified economy, and of course, low cost of doing business, have made Campinas a top investment destination. Aptly named the "Silicon Valley of Brazil" due to its high concentration of universities, research centers and high-tech companies, such as Bosch, Compaq, Dell, General Electric, IBM, Lucent, Samsung, and Texas Instruments, Campinas is also home to automobile giants, General Motors, Honda, Mercedes-Benz and Toyota, and pharmaceutical giants, Merck and Novartis. In all, well over 50 Fortune 500 companies have major regional operations here, contributing to a relatively low unemployment rate of roughly 6% and one of the highest average income rates in the nation.

Campinas' job growth has generated a lot of buzz in recent years. In 2009, Bloomberg/Businessweek named it one of its "Cities that Could Steal Your Job" and KPMG listed it as one of its top destinations for IT business processing outsourcing. Last year, Forbes called Campinas one of "The Next Decade's Fastest Growing Cities" and Wired magazine named it one of the fastest growing high tech centers of Latin America.

Several major infrastructure projects promise to bring thousands more jobs to the region. For example, the $ 18.8 billion public-private Rio-Sao Paulo-Campinas high-speed railway will soon connect Campinas with both Sao Paolo and Rio by 2016, perhaps in time for the Olympic Games in Rio. In addition, a $ 1.5 billion airport expansion project due for completion in 2015 will add a runway and start the first phase of a new passenger terminal.

Notwithstanding the recent job growth, Campinas' commercial property market remains largely underdeveloped. Office vacancy rates are less than 6% on average compared to roughly 14% on average in U.S. cities, signaling a potential dearth in Campinas--particularly when it comes to Class A office space.

Brazil's central bank cut the interest rate last month by 0.5% to 11.5%, and investors expect another 1.25% in cuts by April 2012. This could be enough to spur a new wave of much needed investment in one of Brazil's most favored markets.