Office contracting in 2021 slightly exceeded the forecasts made at the beginning of the year. Madrid closed at around c.414,000 sq.m contracted which respectively represents an increase of (+22%) than in 2020 and (+90%) in Barcelona with c.300,000 sqm more than in the previous year, these excellent figures demonstrate an effective and rapid recovery.

2022 will continue to be a favourable year for occupiers. We expect the take-up recovery to continue between c.30-35% y-o-y in Madrid and around c.15-20% in Barcelona, thanks to an increase in employment in office-demanding sectors (around 2% on average in 2022-2023).

Interest in the Spanish office market, from both domestic and international investors, has pressured prime yields. During Q4 2021, prime yields have compressed to 3.25% in Madrid and 3.50% in Barcelona. This brings them back to pre-pandemic levels and back to historical lows.                             The compression of prime yields, together with the increases in prime rents in the Q3, have driven capital values to record levels in both the Madrid and Barcelona markets.

An evolution and major increase can be noticed in the two most important cities of Spain specially in this segment, reaching 132,509 sq.m and 114,370 sq.m in Madrid and Barcelona respectively only in Q4 2021 which allows us to forecast a positive and higher figure for Q1 2022, vacancy rate has experienced a decrease it is now 9,9% and 8,5% for the respective cities mentioned earlier. The lower vacancy rate it’s a clear sign that offices are a good asset to invest due to the comeback from the Covid-19 Vacancy Rate.

It is also worth highlighting the increased interest of investors in cities such as Malaga and Seville, which have shown that they can become a good place to invest in the coming years, projecting a new place of business.

From CG Capital Europe, we anticipate that large operations will take place in the upcoming months and at the start of 2022, thanks to the Spanish economy going through a solid recovery from the Covid-19 crisis, providing improved economic indicators, and a disappearing generalized uncertainty that has been present during almost two years. The good development in the office contracting sectors indicates that in the course of 2022 there will be a remarkable growth.

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