Tag: Silicon Valley

Is Málaga the Silicon Valley of the South? Its Offices Generate Yields of 7.25%

7 January 2019 – Eje Prime

Málaga is positioning itself as the possible Silicon Valley of the south of Spain. The second most populated city in Andalucía and the only Spanish city in the Top 10 for the best quality of life in Europe, according to Eurobarómetro, has attracted several technology giants in recent years. The interest from these companies in moving to the area and the lack of available space have driven up prime yields in the office market in Málaga to 7.25%, making it the most profitable place to own an office in Spain, according to data from CBRE.

The international consultancy highlights that Málaga is “consolidating its position as a city of reference in Spain in the development of the technology sector”. Oracle, Accenture, Microsoft, Huawei, Ericsson, Indra, Atos and Cisco, amongst others, have all opened offices in the city. The meeting point for these companies is the Andalucía Technology Park (PTA), recently included in the catalogue of European Digital Innovation Hubs, compiled by the European Commission, and which recorded a turnover of €1.9 billion in 2019, up by 8%.

In addition, the province is home to other smaller clusters, such as Málaga SmartCity and the ‘Polo de Contenidos Digitales de Málaga’, the first hub with those characteristics in Spain and which aims to accelerate projects and companies related to the digital sector.

The increase in demand for offices in the city also comes in response to the future forecasts for growth in the region. In fact, Oxford Economists names Málaga as the city where the economy is going to grow by the most in Spain over the next decade. The good connectivity of the province abroad and tourism are some of the factors driving those predictions.

In recent years, Málaga has enjoyed a facelift in recent years with improvements in its infrastructures, and the airport and port as anchors for tourism and business. In addition, the population has increased to 570,000 inhabitants in recent years and there are now more than 40,000 companies, of which 87.1% specialise in services.

These drivers have reactivated the office market, which has taken advantage of the boost in demand, on the rise since 2015. Rentals cost €17/m2/month in the city’s best buildings and the occupancy rate in the prime area exceeds 90%.

The shortage of competitive products in terms of location, finishes and facilities, has driven the increase in yields. In comparison with Madrid and Barcelona, the variation in prime yields is great, improving the yields of 3.25% and 4% that were being registered in the two major Spanish capitals at the end of the third quarter 2018.

Moreover, the office market in Málaga also generates higher yields than the market in Bilbao, although it is not far behind with average yields of 7%, as well as those in Sevilla and Palma, which do not exceed 6.75%. The yields in Valencia and Zaragoza amounted to 5.25% and 6%, respectively, in September last year (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Savills: Occupancy Rate of Málaga’s Prime Offices Reaches 90%

15 March 2018 – Eje Prime

The sun is shining over the office market in Málaga once again. The capital of the Costa del Sol achieved an occupancy rate of 90% in its prime office area, a figure that has not been seen since the start of the crisis.

The Málagan office market experienced significant demand last year in the central and financial districts of the city. In both areas, there was a notable reduction in office stock and rental prices rose to €18/m2 on the central street Calle Larios, according to a report from Savills Aguirre Newman.

In addition to Calle Larios, thoroughfares such as Corte-Inglés-Vialia recorded an increase in rents for spaces in the area up to €13/m2-€14/m2.

The main driver of the office market in 2017 was, precisely, the real estate sector. It was followed by technology companies, which, as usual, requested space in the most central parts of the city for offices with surface areas of less than 1,000 m2. Nevertheless, the tech companies that needed more space opened their offices in the Andalucía Technological Park in Málaga, according to the study.

Construction companies, law firms and telemarketing companies are also players with significant demand in the city’s office market, in which Savills Aguirre Newman has brokered operations spanning more than 10,000 m2 of office space over the last 15 months.

The consultancy firm indicates, moreover, that this trend is going to continue in 2018, which means that buildings that have been available for almost a decade will finally be occupied by new tenants. This growth in demand will lead to a record volume in terms of the number of rental transactions in the Málaga office park.

For this reason, Savills Aguirre Newman considers that, given the positive trend for the next few months in the office market, there is a need to develop new projects and to convert existing spaces in order to expand the office stock in Málaga. The Head of the Office Market at the consultancy firm in Andalucía, Aranzazu García, believes that “it is extremely important to identify an area of the city where we can establish future projects”, although, she says that “they must be conceived as exclusive-use spaces, to replace the mixed-use buildings that traditionally have carried a lot of weight in the city, with a market share of close to 50% in the city centre”.

In this sense, the executive believes that “the new projects must be positioned architecturally to house the corporate headquarters of international companies, to respond to their needs in terms of technical features, efficiency and sustainability standards, and locations that allow easy connections with the rest of the city, the airport, the AVE station and the main public transport services”.

Málaga’s Silicon Valley  

In addition to requesting new projects, García reflects on the use that may be given to the Andalucía Technological Park, located in Málaga. The director of Savills Aguirre Newman in the autonomous region calls on the competent authorities to collaborate in this area to position it as “the ideal enclave for the office market in the city or as the Silicon Valley of Málaga”.

In this regard, the executive hopes that they will resolve some of “the problems generated by the inadequate public transport network, with no forecast for a future metro line, service area and parking for users”.

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake