27 November 2017 – Eje Prime
Madrid and Barcelona are continuing to take advantage of the boom in the office market. The sector, which accounts for 28% of all (tertiary) real estate investments in Spain, has its national breeding ground in the country’s two largest cities. During the nine months until September, the leasing of office space increased by 70% with respect to the same period in 2016, pushing up rental prices and also, reducing the available stock to a minimum. The forecasts indicate that the sector will close 2017 with a total of 780,000 m2 of space leased in Madrid and Barcelona alone: 460,000 m2 in the Spanish capital and 320,000 m2 in the Mediterranean city.
The leasing of office space grew by 21% in the third quarter in Madrid, where the leasing of workspace exceeded the 100,000 m2 threshold during the quarter to reach 102,000 m2. This increase is stimulating the sector, which by year-end may equal the total space leased in 2016 (450,000 m2).
In the Spanish capital, the central business district (CBD) continues to be the location of choice for companies, with an occupancy rate that accounts for 50% of the whole city. Between June and September, 73 operations were signed in Madrid, in other words, fewer than the 90 contracts that were signed during the same quarter last year, according to a report compiled by the consultancy firm Cushman & Wakefield.
In Barcelona, by contrast, the leasing of office space decreased by 56% during the third quarter (…) to 56,700 m2. On the other hand, of the 291 operations closed between June and September in the city, only 6% exceeded 2,000 m2; instead, contracts for spaces measuring less than 500 m2 predominated (61%), resulting in an average leased surface area of 900 m2. Similarly, in the Catalan capital, where the cumulative absorption has increased by 12% in 2017 compared to 2016, technological companies are the most active, accounting for 39% of the office space rented in the Mediterranean city, ahead of the industrial sector (11%).
The 22@ district, an area of constant growth, is home to 46% of the offices of companies headquartered in Barcelona. The rest are located in the centre (36%) and on the outskirts, where 18% of companies are situated.
Two of the largest operations carried out in Spain in the last quarter in this tertiary sector featured WeWork, one of the main players in the coworking segment. The US company leased 6,500 m2 of surface area in the Luxa building in the 22@ district of Barcelona and another 5,500 m2 of space at number 43 on Madrid’s Paseo de la Castellana.
90% occupancy rates
One of the challenges for the office sector in 2018 is going to be increasing its stock. Currently, the availability of space in Madrid and Barcelona is at minimum levels. In the Spanish capital, the supply of workspace has decreased to 12% of the total land constructed for that purpose, whilst in Barcelona, the figure is even lower, at 8%.
To this end, the plan for next year is to incorporate 139,000 m2 of new stock in the Catalan city and 80,000 m2 of space in Madrid. This lack of space has driven up rents, which are currently priced at €32/m2/month in the prime areas of the Spanish capital and €22.75/m2/month in Barcelona.
Original story: Eje Prime (by Jabier Izquierdo)
Translation: Carmel Drake