19 September 2016 – Expansión
London: €116.25/sqm – and up to €198/sqm in the West End -. Dublín: €64/sqm. Frankfurt: €45/sqm. Madrid: €34.5/sqm. Barcelona: €28.5/sqm.
Spain’s two largest cities still have the lowest office rental costs in Europe. But, how are these costs calculated and why are Madrid and Barcelona still the most attractive cities in this sense?
A study prepared by the real estate consultancy Knight Frank compares average rents for prime offices, along with occupancy costs, which include amongst other items, taxes, services and establishment costs that companies deciding to open offices in these cities must incur.
For Raúl Vicente, Director of the Office Agency at Knight Frank, “if we compare our markets with those of our European counterparts, then the office markets in both Madrid and Barcelona are still more attractive in terms of costs”.
Moreover, the available supply is also greater and we are currently at a low point in terms of the rental cycle”. The Madrilenian market is proving to be particularly active and the sector may still generate lots of good news between now and the end of the year. Madrid leads the ranking of cities with the greatest potential for rental growth, followed by Amsterdam, Barcelona, Budapest, Lisbon, Milán, Paris and Stockholm.
Average rents have increased in some of these cities, including Madrid, but the price level is still a long way below that of other capitals such as London, where costs soar. The occupancy rate has grown in the Spanish capital by just 1% during the first half of the year and it is noteworthy that no major operations have been signed – i.e. those involving leases for more than 10,000 sqm of space – during the first six months of the year.
Despite everything, the real estate consultants are optimistic and they expect the Madrilenian office market to experience a better second half of the year. Madrid’s capacity to attract businesses is one of the variables that will help this improvement.
Original story: Expansión (by E. Viaña)
Translation: Carmel Drake