The Spanish office market has clearly regained momentum in 2025, confirming its recovery after the structural disruption caused by the pandemic and the rapid expansion of remote working. The sector has once again attracted top-tier institutional capital, supported by rising rents, sustained take-up and an increasingly constrained and selective supply, particularly in Madrid and Barcelona.

Throughout the year, market activity has remained solid, with stable demand and healthy leasing volumes, largely driven by mid-sized transactions. While a structural shift towards decentralised locations and peripheral submarkets continues—mainly due to the scarcity of available space in central districts—prime areas retain a key role, especially for high-quality, ESG-compliant assets.

Supply constraints remain a defining feature of the market. Around 300,000 square metres of office space have been removed in recent years as a result of change-of-use conversions to prime residential, hotels and hospitality projects. In the Madrid region, only 227,000 square metres are currently under development or refurbishment, with delivery expected between late 2025 and 2026—still insufficient to fully meet structural demand.

This imbalance has fuelled continued rental growth, particularly in best-in-class assets. Prime rents in Madrid have reached highs of approximately €46/sqm/month, with average levels around €38/sqm/month, while top-quality peripheral assets are now achieving rents close to €19/sqm/month, confirming a broad-based upward trend.

Leasing activity has also remained robust. By the end of the third quarter, over 667,000 square metres had been leased across Spain’s two main office markets, with Madrid accounting for 403,626 sqm and Barcelona for 264,017 sqm. Barcelona stands out, posting its strongest performance since 2019, narrowing the historical gap with Madrid and reinforcing its appeal to both occupiers and investors.

Investment activity has mirrored this operational recovery. Office investment reached €1.63 billion by September, representing a nearly 50% year-on-year increase, excluding change-of-use transactions. Full-year volumes are expected to approach €2 billion, driven by the return of institutional investors, improving macroeconomic visibility and stabilising yields across core and core-plus assets.

Madrid continues to lead in terms of volume, with strong participation from funds, SOCIMIs and insurance companies, while in Barcelona, although the city centre remains dominant, the 22@ district is emerging as a clear opportunity, supported by improving occupier demand and renewed off-market activity.

At CG Capital Europe, we believe the office sector is entering a new phase of maturity and selectivity, where asset quality, ESG standards, location and adaptability to evolving workplace models are key value drivers. While the recovery is not uniform across all submarkets, it is clearly structural for prime and well-positioned assets. In this environment, deep market insight, disciplined risk analysis and active asset management are essential to unlock value in a segment that is once again offering attractive opportunities aligned with the new real estate cycle.

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