The office market in Madrid and Barcelona during the first six months of 2024 reveals a scenario of gradual recovery, albeit with certain variations between the two cities and between the different quarters of the year, according to the analysis conducted by Colliers.
In Madrid's financial district (CBD), record rents were reached, with rents of between 40 and 45 euros per square metre per month. However, rental volumes in Madrid suffered a 45% decline compared to the previous quarter. In contrast, Barcelona experienced a solid recovery in the same period.
The investment sector showed positive results, with an 11% increase in investment volume compared to the same period last year, totalling EUR 864 million. However, this is still below the ten-year average of EUR 2.5 billion.
Absorption levels in Madrid in the second quarter retreated after a robust first quarter. The lack of large transactions, specifically those above 5,000 sqm, marked this period. The shortage of available space within the M30 is prompting companies to consider other areas.
Martín Galbete, national office director at Colliers, says: "It will be the performance of the market during the second half of the year that will determine whether the trends of 2022 and 2023 continue, with annual absorption levels below pre-pandemic, or whether, on the contrary, the market starts to show clear signs of recovery. To a large extent, it will be the evolution of the demand for large surfaces, which is latent, that will define the real situation of the market".
In Barcelona, take-up in the first half of the year was comparable to pre-pandemic levels, with medium-sized operations between 800 and 1,000 sq m dominating the market. Rents in central areas experienced a slight increase, attributed to limited availability and the absence of new projects.
"Even though the fundamentals show a positive evolution of the user market in Barcelona, the oversupply in areas such as 22@ shows how the preference for prime areas is still in force, pushing some investors to halt their works. This situation could affect the amount of new supply available throughout the year," says Galbete.
On the other hand, Andalusia stands out in the investment landscape, capturing 37% of the total investment with 328 million euros, mainly due to the repurchase of a portfolio of 70 office buildings by the Andalusian regional government (Junta de Andalucía).
Alberto Diaz, Managing Director of Capital Markets at Colliers, concludes that "Investors continue to show a high level of interest in acquiring ESG Grade A office buildings in CBDs and city centres. However, in the more peripheral areas, they are looking for these buildings to be repurposed for higher returns today. The trend from office to residential, while still facing many challenges, seems to be consolidating as a preferred option for some types of investors in the market".
