• Spanish Office Market Overview 2023

    April, 2024

Investment volume in the Spanish office sector in FY23 reached c. €1,200 million (-57.1% vs. FY22). Madrid ended the year with c. €873 million (-27.3% vs. FY22),and in Barcelona investment figure stood at c. €274 million (-72.6% vs. an outstanding FY22). Despite the decrease in the investment volume, it was lower than the European average (-61%). Moreover, investors remained focused in prime assets.

FY23 saw a slowdown also in take-up volumes in both Madrid and Barcelona,with c. 431,000 sq.m. leased in Madrid (-14.0% vs. FY22)and c. 239,000 sq.m. in Barcelona (-20.0% vs. FY22).

Despite decreases in investment volume and take-up, prime rents in both cities have shown a slight increase, reaching €39.5/sq.m./month and €28.5/sq.m./month in Madrid and Barcelona, respectively. Pre-pandemic levels have been reached or even surpassed with a 14.3% increase in Madrid (levels not seen since 2007) and 3.6% in Barcelona.

Prime net yields have continued their upward adjustment following the hike in interest rates, reaching 4.75% and 4.90% in Madrid and Barcelona areas, respectively. Peripheral areas, suffering more in terms of attractiveness for investors, have shown higher net yields’ increases.

For FY24, an improvement of investing conditions in Spanish office sector is expected. The expected interest rate decrease will ease financing conditions for investors, leading to a potential yield compression starting by H2 2024.