International real estate consultant Jones Lang LaSalle published today the report on rent and investment in offices within Barcelona during the fourth quarter of 2013.
Office Market in Barcelona
The prime rentals on the office market in Barcelona seem to reach the rock bottom level with the price of 17 €/m2/month. After five years of continuous fall, one can speak of adjustment completion assuming the dip down by 40% comparing to rental prices´golden age of the areas of Paseo de Gracia and Diagonal.
The report informs that the short- and medium-term tendency in the office rents will result in price stabilization and future benefit as there might be little supply of this kind of units in Barcelona. The office stock will continue to witness rehabilitation which started 2 years ago.
Jones Lang LaSalle highlights that the availability rate at the end of 2013 was 14.7%. The appearance of the Cornerstone in 22@ project for a short moment increased slightly the availability. However, the indicator will start to go down from the second quarter of 2014 on due to lack of new offices on the market and a rebound in the contracting in the friendlier economic environment.
In the part about transactions, the report emphasizes that in 2013 Barcelona registered the lowest number of the office rent contracts in last 16 years. In the last quarter of the year the contracts involved mere 55.000 square meters which added to the accumulated 122.000 m2 from the previous three quarters equals to 177.000 m2.
According to Jordi Toboso, the CEO of Jones Lang LaSalle in Catalonia “(…) The last quarter of 2013 has been the most vivid over the whole year and the first quarter of 2014 already looks promising”.
Public Administration will play important role in the sector due to its relocation and space rationalization plan for 2014.
Investment Market in Barcelona
As the consultant company claims, the last quarter of 2013 marked rising interest in the real estate investments in Barcelona. Both national and foreign investors turn their eyes to the property in the city center. Precisely, the talk is about all types of investors: opportunistic, value-added and core. If it comes to the individual assets, the demand focuses on portfolios, debts, management companies, etc.
The demand for the office buildings in profitability has not changed and 2013 showed relevant consolidation on the part of the hotel investors about the office property, both empty and with short-term tenant contracts. Conversions became an important part of the market (in 2013 20% of total investment) (…).
In turn, the supply lacks property in profitability that would meet the investors´expectations. The property put on sale by the Regional Government of Catalonia (Generalitat) allowed to test the interest and prices (…).
The major investment demand also provokes conduction of off market transactions (…) however in 2013 they were scarce.
(…) During the last quarter of 2013, only two transactions have taken place: the sale of the building Córcega 289 destined for a hotel by the insurance company Zurich and the sale of the trade premises of Cahispa at 16-18 Roger de Lluria Street to Princess hotel group.
The report informs that the total investment amount in 2013 was 290 million Euros, 8% more than in 2012. If it comes to the profitability, it has slightly gone down in the area of Paseo de Gracia/Diagonal by 6.5%, in hope for the tendency to continue in 2014 in the city center.