In an environment where offices are seen as key to attracting talent, a preference has emerged for refurbished spaces that encourage synergy and collaboration between teams. Although the centre of Valencia has a large proportion of obsolete offices, decentralised areas with more modern or recently upgraded facilities have attracted a considerable share of demand, according to BNP Paribas Real Estate's latest report on the office market in Valencia, highlighting key developments through to 2023.
Francisco López, head of asset class at the company, indicates that the active dynamism of the market in 2023 has driven the availability rate to historic lows for the third year in a row. This phenomenon has affected rental figures, which could have been higher if there had been a wider supply of high-quality space. López emphasises the importance of accelerating the renovation of these areas in order to provide larger spaces adapted to the expectations of the new generations.
Offices in Valencia: surpassing the 50,000 sqm barrier
The year 2023 closed with 51,024 sqm of offices under contract in Valencia, making it the second best year after 2019, and reflecting an increase of 6.2% compared to 2022. The lack of availability and the increase in demand for spaces larger than 1,000 and 2,000 square metres, especially from technology companies, highlight the insufficiency of the current supply.
Analysing the areas, the centre of the capital city of Turia accounted for 40% of the contracting and 43% of the transactions, with an average contracted area of 380 square metres. The decentralised area, although the most sought after, accounted for 34% of the total take-up for the year, with an average contracted area of 411 square metres, mainly due to the scarcity of options above 1,000 square metres.
The report also highlights that rental prices in Valencia are closing the gap with those in Madrid and Barcelona. In particular, rents in Valencia's Zona Descentralizada, which are as high as €16/sqm/month, compare favourably with those in Madrid's Arturo Soria area. Meanwhile, the prime area of Valencia shows a range of rents peaking at €17/sqm/month, approaching the average rent of 17.29 euros per square metre per month in central Barcelona.
2024: offer on the rise
By 2024, 8,000 square metres of office space is expected to be added on the outskirts of Valencia during the second quarter. However, this new supply is not expected to ease the pressure on current availability, as unmet demand in 2023 is expected to rapidly occupy this space during the third quarter.
Highlighting future additions, an innovative project in Valencia Centre will deliver approximately 2,000 sqm of leasable space following a complete refurbishment of a 1976 building, achieving Leed, Well and AIS certifications in Q2 2024. Although no further significant deliveries are scheduled for 2024, a major development is expected in 2025 that will meet the highest quality standards.
Although the area around Cortes Valencianas presents the greatest potential for expansion in the short term, decisions to start new construction continue to be postponed, although this area could expand its supply by 30,000 square metres given the continued high demand.
