Madrid’s Office Market in 2019: Stable Yields & Investment of €3bn

20 February 2019 – Eje Prime

Investment in offices in Madrid is on the rise. Total investment of €3 billion is forecast in the office market in the Spanish capital this year, which will see it maintain the yield for prime offices at 3.75%. In terms of office rents, a boom of 9.8% is forecast, along with a decrease in the availability rate, which is set fall from 11.6% in 2018 to 9% in 2021. Modest growth forecasts for the sector, with a lower supply of prime spaces, are going to contribute to an increase in rents.

With this data, Madrid is positioning itself amongst the capitals with the lowest yields on its luxury offices, with a figure comparable to those of Singapore (3.34%), Amsterdam (3.35%) and Paris (3%), but well below those of Moscow (8.5%) and Washington DC (6.2%), according to the Global Outlook 2019 report, compiled by Knight Frank.

In terms of the growth forecast for office rents, the Spanish capital is expected to maintain stable growth (…).

In terms of the availability rate, Madrid is forecast to decrease from 11.6% in 2018 to 9% in 2021, placing it amongst the cities with most available offices, well below Berlin, with a forecast rate of 2.2% (…). Available prime offices will also decrease, which will lead to a rise in rents. According to the study, this is the result of the recovery of the residential market, which is also sparking interest amongst investors.

One of the greatest opportunities in the sector are the coworking offices, which are transforming conventional offices into new spaces for working and incentivising employees. “Whilst some markets are reaching maturity, at the global level, we expect to see a boost to this business in 2019”, say the authors of the report.

In summary, the office market in Spain is expected to be relatively stable during the year ahead, despite global challenges (…).

Original story: Eje Prime (by Marta Casado Pla)

Translation: Carmel Drake

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