• Real Estate Trends: Change of Use

    January, 2024

In recent years, and especially in the post Covid-19 era, the adoption of new habits has forced the real estate sector to redefine itself and incorporate new building systems that meet contemporary demands. Buildings must strive to reach their full potential while respecting established standards of quality and sustainability.

Foremost among the transformative habits that have reshaped people’s lives is remote work, a practice that was unthinkable just five years ago. Companies and individuals no longer seek to confine themselves to traditional office spaces; rather, they desire flexible environments where they can work while also enjoying comfort. The demand for office buildings is shifting towards structures of high quality, in compliance with sustainability norms, and ideally situated.

Additionally, in recent years, we have witnessed a surge in alternative uses such as education, healthcare, and flexible living arrangements. These changing habits have led to requests for the conversion of one type of asset into another, primarily in cases where assets fail to meet contemporary standards of quality and sustainability. This transformation not only enhances the assets’ competitiveness and attractiveness for investment but also contributes to making cities more appealing, as it helps resolve issues such as limited land availability and a scarcity of residential offerings, which are currently in high demand.

In Spain, the demand for such transformations is steadily increasing, with cities like Madrid currently undergoing significant transitions. Notably, the Madrid Nuevo Norte project, located in the northern district of Chamartín, is poised to rejuvenate the entire area, adhering to established standards and enhancing the quality of life for its residents.

As previously mentioned, the practice of repurposing buildings has been in existence for some time, but it has gained prominence since 2019, with more than 70% of the requests over the last decade occurred in the last four years (2019 to 2023), and 86% of them have been located in Madrid and Barcelona. In the year 2023 alone, approximately €200 million have been invested in repurposing projects.

The most frequently sought change of use is the conversion to residential purposes, accounting for around 75% of all transactions, specifically equating to approximately 225,000 square meters of office space converted to living spaces in the last decade. It is evident that this approach is becoming increasingly prevalent and will continue to grow in importance in the years ahead.