eBay Moves Its Headquarters To One Of Axiare’s Offices

26 October 2017 – Expansión

The e-commerce and online payments specialist eBay has a new home in Spain. The Spanish subsidiary of the US group is packing the final boxes ahead of the move of its Madrid headquarters to c/Don Ramón de la Cruz 84, in the Salamanca neighbourhood.

Until now, the company’s employees have been split between its offices in Paseo de la Castellana, 95, in the skyscraper known as Torre Europa, where most of the workforce was based, and 67 Don Ramón de la Cruz, just a stone’s throw from the new headquarters.

As a result of this move, eBay will become one of Axiare’s new tenants and will share its new office space with the strategic consultancy firm Boston Consulting Group, the other major company that has chosen to move its workforce to this property, which used to house Telefónica’s headquarters.

Specifically, Boston Consulting Group will occupy 3,624 m2, whilst eBay will lease 5,471 m2 of the property.

The office building, located at number 84 Don Ramón de la Cruz, is a clear example of the modus operandi of the Spanish Socimi. In just two years, the company has completed the purchase of the building, modernised it by renovating the property’s interior and leased it out in its entirety. Specifically, eBay and Boston Consulting Group will together occupy the whole building, including 300 m2 of space on the ground floor, which was originally intended for retail but will end up being used as office space.

Revaluation

The firm led by Luis López Herrera-Oria purchased this building from Telefónica in October 2015 for almost €33 million and, following its renovation, which has involved an investment of €4.35 million, the building has seen its value rise by 70%. The property, constructed in 2001, has a surface area of 9,340 m2, spread over five floors, and 90 parking spaces.

To adapt the offices to the needs of the new tenants, the Socimi has renovated the reception and modified the common areas. Moreover, it has replaced the old air conditioning and lighting systems with state-of-the-art technology (including LEDs).

In addition, Axiare has boosted the brightness of the property by placing a skylight in the internal courtyard and installing floor-to-ceiling windows that provide plenty of natural light (…).

Of the Socimi’s total asset portfolio, almost 42% has now been repositioned, whilst the remaining 58% is in the process of being transformed to create value.

The company’s portfolio, which had a valuation of €1,710 million at the end of September, offices account for 70% of the total; logistics assets for 20%; and retail for the remaining 10%.

So far this year, Axiare has acquired six office buildings and logistics assets in Madrid and Barcelona, in strategic locations, for €215 million in total. Moreover, the real estate company is currently analysing operations worth almost €1,000 million, of which €100 million are now in an advanced stage of analysis.

Original story: Expansión (by Rebecca Arroyo)

Translation: Carmel Drake

Madrid Attracts Many Of The Companies Relocating Their HQs From Cataluña

10 October 2017 – Expansión

Over the last 10 days, several companies with their headquarters in Cataluña, such as Oryzon, Dogi, Eurona, Proclinic and Sabadell have announced that they are moving their HQs outside the region. Oryzon has established its registered address on Carrera de San Jerónimo in Madrid (…) and the telecommunications operator Eurona has also moved to the Spanish capital (…). Meanwhile, Proclinic has announced that it is moving its headquarters to Zaragoza; Sabadell is moving to Alicante; CaixaBank to Valencia; Gas Natural and Abertis to Madrid, in both cases; and Catalana Occidente is still considering if/where to move.

According to sources consulted, no effective consultations are being carried out at the moment, but Madrid is becoming one of the major alternatives. Prime rents are higher in the capital than in Barcelona, ranging between €25/m2/month and €35/m2/month along Paseo de la Castellana, and peaking at historical maximums of €37/m2/month in Torre Serrano. Meanwhile, in Barcelona, the average rent in the city centre amounts to €19/m2/month, reaching maximums of €24/m2/month on Avenida Diagonal. In any case, the performance of prime rents in both cities has been very good so far this year, with growth of 9% in the last quarter with respect to the same period last year, according to CBRE (…).

In terms of absorption, 128,108 m2 of space was leased during the second quarter of the year in Barcelona and 156,334 m2 of space was leased in Madrid. Availability is greater in Madrid, at around 12%, compared to 8% in the Catalan capital.

According to José Miguel Setién, of JLL, whilst it is really hard to find spaces of 3,000 m2 on Avenida Diagonal, there is more high-quality space available in the business district in Madrid, due to the renovations that have been carried out since 2013. As such, the market for medium-sized operations has performed exceptionally well there, even during the summer.

Overall, it is estimated that 1.5 million m2 of surface area is available in Madrid; of which 220,000 m2 is free in the centre of the capital, according to Ángel Estebaranz, National Director of Offices at Aguirre Newman. There is space available in several well-known offices such as Torre Foster, Torre Europa, Castellana 81, Castellana 77, Castellana 200 and Plaza de la Independencia, mostly grade A renovation products. Even Torre Picasso has almost two floors available, which would allow the right tenant to locate its corporate headquarters in one of the most iconic buildings in the city (…).

When it comes to choosing a new location, the nature of the company’s business plays a critical role. In this way, financial and legal companies tend to locate their offices in the business centre of cities, whilst pharmaceutical companies, for example, position themselves between the M30 and M40 ring roads, since they do not require such iconic buildings, but do need a lot of space, available in areas such as Campo de las Naciones, Alcobendas, Moraleja, Sanchinarro… Tech firms, like Google and Amazon, tend to establish themselves within the city centre but not in prime areas, such as Atocha, for example. Meanwhile, publicity firms are moving to Chamberí, with WPP and Havas’ new headquarters to be located in that neighbourhood, and Telcos are concentrating in urban areas of the city with rents of between €22/m2/month and €25/m2/month, says José Mittelbrum, National Director of Offices at CBRE (…).

Original story: Expansión (by Lucía Junco)

Translation: Carmel Drake

Deloitte: Spain’s Office Sector Gets A Makeover

3 March 2017 – Expansión

The office markets in Madrid and Barcelona are getting ready to unveil their new image. They are preparing themselves to attract tenants that want not only good locations, but also new, high-quality products that meet the demands of today’s professionals.

At the end of 2016, the stock of offices in Madrid had a combined surface area of 12.9 million m2, whilst in Barcelona, the stock amounted to 5.9 million m2. Although still below the peaks seen before the crisis, the volume of new supply registered in Madrid and Barcelona grew by 56% during 2016 and the market is expected to recover over the next few years.

In this way, the office market will see more than 420,000 m2 of new office space opening up in these two cities between now and 2018, in addition to the 155,000 m2 of space that was added in 2016, thanks to new builds and renovations, according to a report compiled by Deloitte.

Projects underway

Specifically, this year, 180,000 m2 of new office space is expected to become available in Madrid, almost twice as much as last year. For example, Infinorsa, the main owner of Torre Europa, launched a complete overhaul of the building last year, following KPMG’s departure, which, until it moved to Torre de Cristal in March 2016, was the property’s main tenant.

The building – constructed in 1985 – is joining the league of smart skyscrapers, which are tailored to suit the needs of clients in the 21st century.

And just few metres away, on Paseo de la Castellana 77, the real estate group GMP is working on the complete renovation of Torre Ederra, with the renewal of its facilities and the transformation of all 18 of its floors.

What’s more, Madrid is not only renewing its existing supply, it is also welcoming new developments. One of the projects under construction is the property located on c/Estébanez Calderon, which is owned by Colonial. The building, which will have a surface area of just over 10,000 m2, is due be completed in the second half of 2017.

Colonial has also launched another construction project in the business district of Madrid, Specifically, the property located on Príncipe de Vergara will have a surface area of 11,300 m2 and 109 parking spaces.

Also in the capital, the family office Mazabi is restoring a building. The property located on Calle Velázquez 123 has a surface area of 2,346 m2 and benefits from a prime location in the heart of the Salamanca neighbourhood. Meanwhile, Mapfre is renovating a property on Plaza de la Independencia. The building, acquired in July 2015 from the Mutualidad Notarial for €82 million, has a total surface area of 12,000 m2, of which 4,000 m2 corresponds to three underground parking floors with more than 100 parking spaces.

In the same way, Barcelona is also reactivating its new office supply in response to the lack of available space.

According to Deloitte’s report, in addition to the six construction and renovation projects that were launched in 2016, the Catalan Capital expects to see two new projects in 2017, covering a surface area of 37,000 m2 and eight new projects in 2018, covering a surface area of 93,000 m2.

Amongst the new developments underway, the Castellví Group has initiated the construction of a new business complex on the corner of Calles Tánger and Badajoz in the 22@ district. (…).

Also in Barcelona, Colonial has launched a project next to Plaza de las Glòries and adjacent to Avenida Diagonal. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Azca: Madrid’s Financial District Gets A Makeover

26 August 2016 – Expansión

Three buildings in the area are currently being completely renovated, along with all of the public spaces in the financial district. Zara will move in soon and the neighbouring Bernabéu stadium will be renovated in 2018.

The refurbishment of some of its classic office buildings, the complete renovation of the public squares, the arrival of a fashion giant and some changes in the faces of some of the most illustrious neighbours. That is the urban landscape facing Azca at the moment and it means that the financial district will have a completely new image in a matter of months.

In the schedule of programmed works, we have the complete refurbishment of Torre Europa, one of the flagship buildings in the area, which has not had any space available for three decades. Following the departure of its veteran tenant – KPMG -, Grupo Infinorsa has decided to invest €20 million in the complete modernisation of the 32-storey skyscraper, including the renewal of the façade, which will be completed at the beginning of 2017. (…).

JLL has been commissioned to market the empty office space, equivalent to 70% of its 42,000 sqm surface area, and has already signed its first contract with the US multinational AOL.

Also for the first time since it opened in 1981, almost all of the Torre Negra is available for rent; until last year, it housed the corporate headquarters of BBVA, which continues to occupy the upper floors of the 28-storey skyscraper. A construction canvas currently covers the façade of the building, renamed Castellana 81, where GMP is undertaking work to improve the 38,000 sqm space.

The triangle of planned renovation work is completed by the former headquarters of the Saint Gobain group in Madrid, which is currently unoccupied. With a leasable surface area of more than 16,000 sqm, spread over 18 floors, the building’s façade is going to change with the inclusion of some unique wavy slats on the outside, although the internal refurbishment will be carried out from the ground floor to the roof terrace.

Whilst three of its most spacious office buildings are being updated, Azca is also participating in the renewal of its public spaces. (…).

For the time being, the first phase of the rehabilitation of Plaza Pablo Ruiz Picasso has been completed and the second, and final, phase is scheduled to begin before the end of the year. (…).

But the most high profile issue in Azca over the next few months will be the arrival of Zara to the financial centre of Nuevos Ministerios. The company owned by Amancio Ortega plans to open its largest store in Spain in the 5,000 sqm building currently occupied by FNAC, next door to El Corte Inglés.

The renovation of the area could be completed in the medium term with urban projects in the vicinity. One project that is already in an advanced phase is the renovation of the Bernabéu stadium, which will not involve the extension of the constructed surface area, but will allow the construction of a roof, which is what the club wants. Most of this construction work will be carried out in 2018.

Another project, which is in an embryonic phase, will be the transformation of the Palacio de Congresos on La Castellana into a 23-storey property, which will include, amongst other facilities, a five-star hotel. (…).

Original story: Expansión (by Marta Belver)

Translation: Carmel Drake

Infinorsa Renovates Torre Europa To Attract New Tenants

8 August 2016 – Expansión

Torre Europa is completing the final details (of its renovation process) ahead of the debut of its new image from September. The iconic building – one of the first multiple ownership office buildings in Madrid, constructed in 1985 – will boast a new external façade, as well as a refurbished entrance lobby, floors and common areas, in order to appeal to new tenants.

Infinorsa, the majority owner of the property, has launched an ambitious transformation project, in which it is investing €20 million, with the aim of updating and improving the inside and outside of Torre Europa, equipping it with more light and technological innovations, and whereby allowing it to charge 20% higher average rents. Until now, the rent for Torre Europa has fallen in the middle band for buildings in Azca. With the changes, the rental charge could exceed €27.5/sqm/month.

Tenants

The building, designed by the architect Miguel Oriol e Ybarra, is located in Madrid’s financial district of Azca, just a stone’s throw away from the Santiago Bernabéu stadium and the Palacio de Congreso. The property has 32 floors and is 121 metres tall.

Following the departure of the building’s main tenant, KPMG, a few months ago, Torre Europa, with a leasable surface area of 43,000 sqm, currently has around 20,000 sqm of space available for rent. “High quality spaces are currently in demand. We must respond to the new paradigm, with brighter and technologically prepared spaces. This transformation seeks to adapt the property to the needs of the day, whilst at the same time retaining its essence and enhancing its unique qualities”, explained Fernando Ferrero, Director of Operations at Infinorsa.

The renovation process has been complicated by the fact that it has been performed at the same time as the current tenants are occupying approximately half of the building. For this reason, the construction work has been carried out during the night: “This has made the process more expensive, but, in return, we have caused less disruption to the tenants”.

Inside and outside

The work inside the building has involved the renovation of the entrance hall, the common areas and the floors, which is expected to be completed in September. The transformation of the hall will give rise to a much airier entrance, with higher ceilings and a brighter space overall. In terms of the floors, the glass of the windows will go down to the floors, in order to benefit from the natural light and the height of 260 cm per floor.

In terms of the changes outside, the plan involves covering the pillars with steel to preserve the structure, at the same time as updating the image. Similarly, an integrated glass canopy will be added to the external structure. This work is expected to be finalised during the first quarter of 2017.

In terms of technology and other new features, the building will have LED lighting and sensor systems to control both the light and ambient temperature. In addition, Torre Europa will have the technological tools to benefit from big data and geolocation services. Sources at Infinorsa explain that the project fits with the push that the Administrations are giving the capital’s financial district.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Rental Prices Will Rise On La Castellana After The Summer

6 July 2016 – Expansión

Madrid’s financial district is refreshing its image and prices are set to rise in the area after the summer. The Spanish capital’s La Castellana thoroughfare is aiming to attract tenants who are willing to prioritise the quality of space over rental costs.

Whilst investors remain attentive to the course of events unfolding in the City (London), following Brexit’s victory in the EU referendum held on 23 June, and the formation of a new Government in Spain after the election on 26 June, business is continuing as usual and the capital’s financial district is getting ready to open its doors to some new tenants. Some of the countries in the Eurozone may, over time, attract some of the activity that has been performed in the United Kingdom until now, and if this becomes a reality, Madrid’s financial district could represent a good option for companies currently headquartered in London.

Torre Europa is preparing itself to this end. Grupo Infinorsa has launched a process to renovate the property following KPMG’s departure and will allocate €20 million to the modernisation of its facilities. In the same way, GMP is in the middle of renovating the Castellana 77 skyscraper, known as Torre Ederra – the former headquarters of Saint Gobain – as well as Castellana 81 – Torre BBVA – to adapt them both to the new demands of the market. Another building that is looking for new tenants is Torre Picasso following EY’s move to Torre Titania. (…).

Sources at Cushman & Wakefield explain that demand is not growing in Madrid at the moment. “GDP levels are similar to during the years before the crisis, and so around 200,000 sqm of space is being leased out per year. The main explanation is uncertainty”. Moreover, it seems like the slowdown is more acute in the financial district, due to the quality of available stock and the cost. (…).

José Miguel Setién, Director of the Office Business at JLL, explains that renting in Madrid has been cheap until now and the price ratio is still very attractive when compared with other major European cities; this means that there is still a lot of potential in the Spanish capital. “Provided there are no political or structural macroeconomic problems, the figure trend is that the market will continue to rise”, he added.

The CEO of Aguirre Newman, Jaime Pascual-Sanchiz de la Serna, explained that offices in prime areas, as well as in the market in general, have been very static in terms of renovations and new projects. Pascual-Sanchiz says that several projects launched within the last 12 months will come onto the market within the next year. In his opinion, they will be a good indicator for measuring the evolution of offices. “The owners of those properties, including Pontegadea, Mutua Madrileña and the Consorcio de Compensación de Seguros do not have financial problems, and are not desperate to lease their properties at any price”. For the expert, although we are seeing small and medium-sized operations in the area, the large moves, which are more dependent on the domestic and international political situation, will have to be unblocked after the summer.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Infinorsa Invests €20M On Torre Europe Renovation

5 July 2016 – Expansión

Grupo Infinorsa is looking for tenants for Torre Europa after KPMG’s departure and will spend €20 million on the modernisation and renovation of the property. That figure comes in addition to the €11 million that the group has already invested to improve the building over the last five years.

The company, which has engaged JLL to market the property, has launched the renovation of the more than 20,000 sqm of available office space, as well as of the access areas, lobbies, common areas, facilities and façade, which is expected to be completed at the beginning of 2017.

The average price of assets for rent in this area amounts to €27.5/sqm/month, although prices of more than €30/sqm/month have been recorded for spaces located on the top floors of the towers located in the district.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

The March Family & GreenOak Compete To Buy Ahorro Corp’s HQ

13 April 2015 – Expansión

The financial group has given investors two weeks to submit their final bids. The leading candidates are the March (family), GreenOak, Colonial and Infinorsa.

Ahorro Corporación has prompted a new battle for real estate in the business district of Madrid. And it is proving to be the winner. The financial group is now on the home stretch in the sale of its headquarters, located on Paseo de la Castellana, 89; and the offers received to date have far exceeded the company’s initial expectations. The bids received are approaching €140 million, almost 50% higher than the price offered two years ago (€90 million – €100 million).

Ahorro Corporación and its advisor Aguirre Newman, have now made a shortlist of three candidates to buy the property. According to sources consulted, the investors with the strongest bids are Corporación Financiera Alba, controlled by the March (family), the fund GreenOak, the investor group Infinorsa – which owns Torre Europa – and the real estate company Colonial.

The improved macroeconomic environment (in Spain) and the war waged by these investors to acquire the main properties in Azca, have led to the rise in property prices. The over-supply of funding has also led to greater competition.

The price offered (€140 million) is at the high end of the consideration sought by Ahorro Corporación. Nevertheless, market sources say that the price may decrease slightly – to around €130 million – once the binding offers, which must be submitted in a couple of weeks, have been finalised. Ahorro Corporación has extended the initial deadline due to a request for new information from the interested parties.

100% occupancy rate

The financial group purchased the property from Banco Zaragozano in 2003 for €93.5 million. The building has a surface area of 20,000 square metres, spread over 14 floors and 530 parking spaces. As well as Ahorro Corporación itself, the building’s tenants include Sareb, the French opticians Alain Afflelou and Deloitte. The ground floor of the building is leased to restaurant chains including Lateral, Maki, Wagaboo and New York Burger. The building was constructed in 1977 and refurbished in 2008.

This is not the first battle between real estate investors in recent months. In January, BBVA sold the Torre Ederra, on Paseo de la Castellana, 77 – also in the Azca financial district – for €87 million. On that occasion, the real estate company GMP beat Infinorsa in the final round.

The sale of its headquarters is just another one of a number of divestments undertaken by Ahorro during its redefinition process, which KPMG is advising.

Over the last year, the financial entity has carried out transactions such as the sale of its fund manager, ACGestión to Abanca; the transfer of its infrastructure funds to GEDCapital; and the sale of its securisation manager, Ahorro y Titulización (AyT) to Haya Real Estate, owned by Cerberus.

The group is continuing to focus on its strategic businesses, namely fixed income and equity brokerage and advisory services.

Ahorro is focused on the international diversification of its business in the face of the disappearance or absorption of its former shareholders and clients – the savings banks – by other financial groups.

This group will have to face the remodelling of its shareholder base in the short-medium term, given that some of its shareholders, such as Bankia, will be forced to exit. Other shareholders that holds stakes in the group include: Cecabank, CaixaBank, Kutxabank, Liberbank, BMN, Ibercaja, Unicaja, Abanca, BBVA, Sabadell, Ontinyent and Pollença.

Original story: Expansión

Translation: Carmel Drake

What Does The Future Hold For Azca?

16 March 2015 – El Confidencial

In Madrid, the ‘City’ is called Azca. It is the capital’s financial centre par excellence and, yet, a third of the office space in the area is empty. (According to sector experts), the time for change in upon us.

In Madrid, the ‘City’ is called Azca. It is the capital’s financial centre par excellence, home to iconic buildings such as Torre Picasso and many of the world’s leading companies own the properties, including Pontegadea (the real estate company owned by Amancio Ortega), GMP, Mutua Madrileña, El Corte Inglés, Metrovacesa, Testa and Infinorsa. The prime location, in the heart of the Paseo de la Castellana and next to one of the capital’s major transport hubs, Nuevos Ministerios, meant that until a few years ago, this area accounted for the majority of the capital’s prime office space. However, the opening of the Cuatro Torres, the arrival of the economic crisis, the departure of large companies to peripheral areas (of the city) and the lack of investment, both in the properties themselves as well as in the surrounding area, have dampened Azca’s appeal.

The combination of these elements has also had a significant affect on prices. Between 2008 and 2014, prime rents in the capital fell from €39/m2 to €25/m2 (per month), whilst in Barcelona, rents decreased from €22/m2 to almost €14/m2 (per month), according to a report called “Understanding the Office Market in 2014”, prepared by Deloitte Real Estate. The final nail in the coffin in terms of the pressure on the area came with the departure of KPMG, which (last month) decided to leave its headquarters in Torre Europa to move to the Torre de Cristal, at Real Madrid’s former Sports City (Ciudad Deportiva).

Furthermore, BBVA is set to leave its traditional black skyscraper to relocate to the suburb of Las Tablas, and the tenants of the Torre Saint Gobain and Torre Titania are planning to fully vacate; the latter was built by El Corte Inglés on the foundations of the former Windsor. In total, around 67,000 square metres of the 272,000 square metres of above-ground office space in the area is (currently) available to let, which gives rise to the question: is Azca doomed to reduce its prices further?

The answer is no, according to all of the experts, although they admit that the area is at a turning point. In their view, Azca is living through its own catharsis, which may be summarised by the classic phrase – adapt or die. And the widespread belief is that the former will happen. “Right now, Azca has an opportunity to reinvent itself as the ‘City’ of Madrid once more, but it must know how to seize it. In terms of its location, it has the right ingredients and moreover, the higher the vacancy rate, the easier it will be”, say the experts at Deloitte.

In Madrid, barely 2% of the office space in the high quality buildings inside the M-30 is vacant.

In this sense, a public-private initiative, known as the Azca Master Plan (Plan Director de Azca), is underway, which seeks to open up the area and facilitate access from El Coste Inglés in Nuevos Ministerios to the Bernabeu, through three targeted efforts: construction work to improve (the area in general), environmental initiatives and planning. This would mean, amongst other aspects, modifying some of the uses (of the area); the main challenge is to convert the area that is the capital’s business district during the week, into an area for families, shopping and leisure on the weekends, rather than leaving it half empty when the office lights are turned off (on Friday night), which is what happens at the moment.

“Azca must become a digital icon that adapts to incorporate technological developments, that uses the facades of the buildings (creatively), that puts up digital screens to attract young people (to the area) at the weekend, that organises initiatives for the neighbours (of the area) and the wider city, that becomes an icon of ‘digital Madrid’, in the style of New York’s Times Square”, says Ángel Serrano, Business Director at Aguirre Newman.

His company is managing the last major transaction in the area, the sale of Castellana, 89, in which a great deal of interest is being shown; the price may reach €140 million. The same interest was seen recently in the bid to acquire the Torre Saint Gobain, which GMP ended up purchasing for €90 million (with plans to spend a further €14 million on its refurbishment) and the land that El Corte Inglés purchased from Adif for €136 million, when the starting price was €40 million.

These transactions confirm the conviction that the major landlords in Madrid have that Azca is going to emerge stronger from the current situation, which means it will be able to increase its prices again in the medium term. Nevertheless, for the time being, it will have to endure a couple of years “crossing the desert”, during which time GMP, Infinorsa and whoever ends up winning the bid to acquire Castellana 89 will refurbish their buildings as well as the Torre BBVA (where the bank will continue to occupy the top five floors and display its logo on the outside), Torre Saint Gobain and, most likely, the Torre Europa.

It is expected that all of these construction works will be carried out in parallel to the aforementioned Master Plan to relaunch the area, which means that now is the perfect time (for tenants) to move to Azca before all of these improvements have been completed and prices increase. “We are currently experiencing a historic moment in terms of low prices, which provides the perfect opportunity for many of the companies that moved out of the centre and now want to move back. Moreover, this is supported by the gradual recovery of the economy and the privileged location of Azca, which I think will play an important role in its favour (in the future)”, says José Luis Guillermo, managing partner of Inmospace. Nevertheless, in his opinion, this metamorphism of the area will require support from the Public Administrations, not only in terms of the necessary changes to certain uses (of the area), but also in terms of the adoption of measures to promote the entry of multi-national companies into the capital’s ‘City’.

Experts consider that now is the time to move to Azca, before prices rise.

Madrid has some of the highest forecasts for (rental) income growth over the next five years of any city in Europe. Currently, according to data from Knight Frank, its vacancy rate amounts to 11.9%, although in the central business district, known as in the jargon of the trade as CBD, the figure decreases to 7.3%, and for Grade A buildings (highest quality) within the M-30, the vacancy rate is a low as 2%. This means that there are very few good buildings (available) in prime areas in Madrid.

In this context, a third of the leaseable office area in Azca is currently vacant and, despite that, both the experts and the large investors that are bidding to purchase buildings expect average rental income in the area to return to €30/m2 (per month), i.e. 20% more than now, over the next five to seven years. How come?

Patricio Palomar, Director of Alternative Investments at CBRE provides a good summary of where Azca is going and the price of its rentals: “To analyse the evolution, three points should be taken into account: the Master Plan for the area, which will favour (higher) prices; how Azca is going to change in terms of immediate availability, since various buildings are currently being refurbished, which will work in the area’s favour, but that will also mean there is more supply and therefore, tenants will have greater bargaining power, which may contain the increase to some extent. The third element is that there are few square metres concentrated in one area in Madrid and there are few high quality buildings for tenants looking to rent more than 10,000 m2 of space inside the M-30; a supply that Azca will indeed have (in the not too distant future). Add to that the fact that many tenants of this type, which moved to peripheral areas in the past, now want to return to locations such as this one, make me think that we will see price increases”.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake