Office Rental Contracts Up 17% in Barcelona

6 August 2019

A total of 168 office rental contracts, totalling 249,000 square meters, were signed in Barcelona in the first six months of the year, an increase of 17% year-on-year and a series high.

The 22@ district accounted for 32% of the 168 operations. The average area leased also reached a high of 1,266 square meters. Co-working companies were again a major engine of market growth.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

BNP Paribas: Office Rentals Soar in Barcelona during Q1 2019

23 May 2019 – La Vanguardia

The office market in Barcelona broke historical records in terms of space leased and rental prices during the first quarter of the year, according to a report from the consultancy firm BNP Paribas Real Estate.

According to the data, 152,300 m2 of office space was leased during Q1 2019, up by 65% with respect to the same period in 2018, boosted by a 60% increase in demand for large spaces (those measuring over 3,000 m2).

According to David Alonso, Head of Research at BNP, the office market in Barcelona was traditionally dominated by SMEs demanding spaces measuring less than 1,000 m2. Nevertheless, since 2015, that trend has changed with the arrival of technological companies requiring larger offices, and since 2017, with the entry of coworking companies – the latter leased 22% of the space let during Q1 2019.

As such, 91 new contracts were signed during the first quarter of 2019, with the 22@ district as the main driver, accounting for 30 of the operations and 40% (60,900 m2) of the space.

Nevertheless, the two largest operations were closed in more secondary areas: the rental of 18,000 m2 in Sant Joan Despí by Gallina Blanca and the rental of 17,209 m2 on Gran Vía in Barcelona by La Caixa.

All of this activity drove up rents with prices in prime areas, such as the best buildings on the upper end of La Diagonal, reaching €27/m2/month, and some operations even reaching €30/m2/month, whereby exceeding the maximum recorded in 2008 (€27.5/m2/month).

Original story: La Vanguardia (by Rosa Salvador)

Translation/Summary: Carmel Drake

Investment In Offices Soars By 85% In H1 2015 To €1,300M

21 July 2015 – Expansión

Real estate investment in office buildings soared by 85% during the first half of the year to reach €1,300 million and whereby record “one of the best results in the last twenty years”, according to data from Aguirre Newman.

Madrid accounted for three quarters (75%) of the total investment, which was mostly concentrated in the business district of the capital.

Aguirre Newman attributes this remarkable increase in real estate investment (which does not include Merlin’s purchase of Testa), to the “consolidation of the growth of the economy”, the “return” of financing and the prospects of recovery in office rental prices in Spain, which are currently offering higher returns that investing in the stock market.

The firm considers that this “strong investment activity” will continue during the second half of the year, given the operations that are currently in the pipeline, such as the sale of Torre Espacio, one of the four skyscrapers in the Cuatro Torres business district, which the Villar Mir Group is looking to sell, but continue to occupy as the tenant (…).

Socimis and institutional investors led the real estate purchases during the first half of the year – they accounted for almost two thirds (65%) of the total acquisitions made.

On the sales side, financial institutions, insurance companies and institutional investors were the main sellers of property.

The interest shown by investors in office buildings has stemmed from the recovery that the sector is experiencing. During the first half of the year, the rent paid for those kinds of buildings increased by 23.7% in Madrid and 49% in Barcelona.

During H1 2015, in the capital, lease contracts were signed for offices with a total surface area of 262,790 m2 and in Barcelona, the figure was 177,499 m2.

Therefore, the average price of rents continued to rise, to reach €25.35/m2/month in Madrid, where prime rents are now €31/m2/month; meanwhile the average rent in Barcelona is €15.96/m2/month.

Aguirre Newman is confident that the increases in demand for office space and in office rental prices will continue for the next few months.

Original story: Expansión

Translation: Carmel Drake

Real Estate Invesment In Madrid Tripled In 2014 To €3,600M

16 March 2015 – Yahoo Finance

Real estate investment in Madrid tripled in 2014, to reach €3,600 million, compared with €976 million in the previous year, according to a study conducted by BNP Paribas Real Estate.

In addition, office rentals in the capital have risen for the first time since 2008, with an increase of 10% with respect to the previous year, due (mainly) to “prime” income, which reached €312/m2 per year at the end of the year.

In the meantime, investment in Barcelona also increased, although to a lesser extent (by +9%), to amount to €1,300 million in 2014. Similarly, the city registered record office rental figures, exceeding the levels achieved in 2007 by 18 basis points.

In this line, the study highlights the recovery in the markets that were hit the hardest by the crisis: in Dublin and Madrid, for example, investment increased by 120% and 278%, respectively (last year). London, which recorded a slight decrease with respect to 2013, attracted the highest volume of investment in Europe, with almost €30,000 million, followed by Paris, where investment amounted to €17,000 million.

(Across Europe), investment in non-residential real estate increased to €108,000 million, of which €74,000 million related to offices, a volume that made last year the best year since 2007.

Office leases increased by 10% in Europe

Office leases in Europe increased to reach 11.7 million square metres in 2014, i.e. 10% higher than in the previous year, driven by growth in Paris, Berlin and Brussels.

The study reflects that the improvement in economic conditions and the labour market in 2014 had a positive affect on the office market in Europe. In this way, the return of large transactions has contributed to good results in most markets.

As in previous contexts, the main drivers of demand were reductions in costs and rationalisation; similary, users maintained their preference for new buildings in good locations.

Despite the significant increase in office leases, the average vacancy rate in the 35 cities analysed decreased by 10 basis points only and is still above the threshold of 10%. These levels are possible because the reduction in available space was in partly offset by a higher volume of new developments and the freeing up of second hand space as users relocated, according to the real estate consultant.

However, the lack of supply in central areas has kept rents under pressure in the case of ‘prime’ category buildings. As a result, average ‘prime’ (rental) income increased by 3%, driven by increased activity in rising markets, such as London and Dublin.

By contrast, rentals in peripheral districts evolved in the opposite direction, as they continued to suffer from high vacancy rates, which forced owners to offer incentives to prevent price decreases.

Original story: Yahoo Finance

Translation: Carmel Drake