CBRE: New Builds Will Account for 60% of the Office Supply in Madrid Until 2019

15 May 2018 – Eje Prime

Change of tack in the office sector in Madrid. In 2016, 100% of the supply that was put on the market corresponded to renovated properties; just three years on, 60% of the office space handed over during the last 24 months has been newly built. The segment is, therefore, going to experience a metamorphosis over the next two years (…). Moreover, with the volume of leased surface area rising year after year, a significant increase is expected over the medium term in the number of square metres in total in the office stock in the Spanish capital, according to a report from the consultancy firm CBRE.

Thus, whilst in 2016, the new surface area created saw the introduction of 170,000 m2 into the stock that year, last year, 238,000 m2 of new space was created. In 2018 and 2019, office developers will dispense 255,000 m2, of which 153,000 m2 is going to correspond to new build properties.

These figures reflect the definitive return of the Socimis and funds to the construction of new office space in the office market, according to CBRE. In the case of Madrid, after 606,000 m2 of office space was leased during 2017 – the best year in the last decade – the report forecasts similar figures for this year.

In addition, traditional players, such as the Socimi Colonial and GMP, in which the Singapore sovereign fund has held a stake for several years, have been joined by other managers and companies that want to take advantage of the strong performance of the office market in the new real estate cycle, resuming projects that were parked due to the crisis. Such is the case of Iberdrola Inmobiliaria, the French firm Bouygues and Torre Rioja, amongst other companies.

In this sense, Colonial, which has now also reinforced this line of business with Axiare’s assets, has a project underway, Alpha III, in which it is going to invest €480 million between Madrid and Barcelona, highlighting the investment that it is going to make in the Méndez Álvaro area of the Spanish capital. In that southern stretch of the central business district (CBD), the Socimi is going to build more than 110,000 m2 of office space (…).

Barcelona: record year for the hand over of new offices

Whilst Madrid is getting ready to build offices, in Barcelona, developers are on the verge of handing over the newest spaces. The Catalan capital has been immersed in a construction phase that, in addition, has been sold at the speed of light. The majority of the new developments that are being carried out already have tenants, who have signed pre-lease contracts with the developers of the different projects.

Nevertheless, the greatest supply is being built in the 22@ district, the most-sought-after area at the moment by technology companies and large operators. As a result, in 2017, the Catalan capital recorded a 4% increase in the volume of space leased, to 344,000 m2, according to CBRE.

Boosted by this dynamic of constructing buildings in the city’s new hub, Barcelona will handover 170,000 m2 of new office space during 2018, which will represent the best surface area record since 2010 (…).

In recent months, several land transactions have been closed in the 22@ district for the development of new (office) projects. Perhaps the most noteworthy of all is Parc Central, a plot spanning 52,000 m2 for which Värde paid €50 million to Oaktree and Alza Real Estate. The fund will allocate just over 40,000 m2 of those plots, known as Can Ricard, to office buildings.

Madrid, the city in Europe where prime office rents will rise by the fastest

(…). Prime rents grew by 10% in Madrid in 2017 and by 8% in Barcelona, with average prices per square metre of €31/m2/month in the Spanish capital and €23.5/m2/month in the Mediterranean city.

In 2018, CBRE forecasts that Madrid is going to be the European city where prime rents are going to rise the most markedly with a growth forecast that could reach €34/m2/month on average, boosted by the CBD. Meanwhile, Barcelona is going to close this year as the fourth-ranked capital in Europe in terms of the increase in office rents, a rising trend that is going to continue in both cities until 2022.

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

Bankia Buys 10,000m2 Office Building In Madrid From Activum

3 March 2017 – El Confidencial

Bankia outgrew its Torre Kio offices in Madrid several years ago. In fact, it was more than a decade ago when the entity (still operating under the guise of Caja Madrid) began to consider moving offices. To that end, it acquired the imposing skyscraper from Repsol that Norman Foster had designed on the site of Real Madrid’s former Ciudad Deportiva.

But that operation ended up being disastrous for the bank, which paid €800 million to acquire the property and ended up selling it for half that sum. Nevertheless, Bankia’s expanding space requirements are a reality once again, and under the mandate of José Ignacio Goirigolzarri, the entity is embarking on a cautious but gradual policy of acquiring assets for corporate use.

In this vein, the entity acquired an office building from Activum in December. The property is located in the Julián Camarillo district of Madrid, a secondary area that is currently enjoying a revival, thanks to the boost being given by property companies such as Torre Rioja.

The building in question is located at number 32 on Calle Santa Leonor, it has a surface area of 10,134 m2, spread over two basement floors, with more than a hundred parking spaces, one ground floor, four upper floors and one top floor. Bankia has acquired this building to house all of the workers from its Multi-channel Department, which until last year occupied a rental property, specifically, the Torre Foster, which Amancio Ortega has just purchased. The entity has confirmed the acquisition of this building, but declined to reveal the amount paid, which according to market sources must have amounted to between €2,000/m2 and €2,500/m2, taking the final figure for the transaction to around €20 million.

This is the second major purchase of an office building that Bankia has signed in recent months, after it closed the acquisition of the property that houses its IT services in Las Rozas, for €130 million, from the Swedish group SEKin December 2015. Five years earlier, SEK had bought the building from Caja Madrid for €108 million, with the commitment from the entity to remain as the tenant (‘sale & leaseback’).

With these two operations, the entity has managed to balance out some of its past mistakes, given that, on the one hand, it has exchanged an expensive rent in one of the most iconic buildings in Madrid for a purchase that it has managed to make at a reasonable price and, on the other hand, it is readjusting the numbers for a sale that it completed during one of the toughest periods of the financial crisis.

Through this sale, Activum has completed its second divestment in Spain, following the sale of an office building on Calle Manuel de Falla to the Socimi Axiare. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Carmena Works With Property Owners To Design Madrid’s Office Supply

6 February 2017 – Cinco Días

The Town Hall of Madrid, led by Manuela Carmena, and large property owners and companies in the real estate sector, which are grouped together into the Spanish Office Association (AEO), have committed to creating a working group to define the future model for the office market in Spain’s capital.

Last week, José Manuel Calvo, Councillor for Sustainable Urban Development, held a meeting with most of the members of the AEO in which he appeared willing to create a working group to establish collaboration between the Administration and the private sector, according to a statement made on Wednesday by the Association.

The AEO includes large office owners such as BBVA, Mapfre, Mutua Madrilieña, Pontegadea (the family office owned by Amancio Ortega, the founder of Inditex), Repsol, Acciona and Telefónica, together with large real estate companies such as Merlin Properties, Colonial, GMP, La Finca, Torre Rioja and international funds such as GreenOak, Blackstone and Iba Capital Partners, amongst others.

Over the next few months, the Councillor will present a study “which will allow them to lay the foundations to create a working group between the sector and the other parties involved, with the aim of facilitating the design of a rational future model, which will strengthen and improve the supply of offices in Madrid”, said sources at the AEO in a statement.

Sources from the companies that attended the meeting highlighted the opportunity to hold conversations with the Town Hall’s Head of Town Planning. They also said that Calvo has committed to working together with the Community of Madrid and the Central Government, in a combined effort, to try to attract to Madrid some of the companies that are leaving London due to Brexit.

The politician also reminded the businessmen about the town planning matters that are still pending at the Town Hall. Amongst other items, he explained his efforts to unblock Operación Chamartín, promoted by Distrito Castellana Norte (controlled by BBVA) and his commitment to build a major office nucleus close to Chamartín station, once it has been refurbished.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake