2015-12-31-莱坊-Oficinas_Madrid_S1_2016_8页_561kb

Summary of Madrid Office Market, Q1-Q2 2016

Macro-economic Context

Spain's economy continues on a growth path despite political uncertainty. Unemployment is high but decreasing, recording its largest one-month drop since 1996. Europe-wide employment growth is accelerating, with Spain contributing significantly, as it will create over one million jobs this year. The consumer confidence index remains elevated, supporting consumption.

Office Market Performance

The office market showed stability with moderate rent increases. Prime rents are steady, ranging from €10-€27 €/m²/mes, particularly in central areas. There is high availability of premium space in the Central Business District (CBD) due to new constructions and renovations, such as Cepsa's Torre Foster, fostering but not drastically changing rent trends. Absorption reached 220,160 m², driven mainly by transactions under 5,000 m², and a shift from central concentration to peripheral areas, though CBD remains dominant.

Investment Activity

Investment volume was strong, with foreign institutional buyers and family offices prominent. Transactions totaled €618 million, including major deals like Greenoak's purchase of Las Mercedes and Colonial's acquisitions. Returns for prime office properties are under pressure due to market volatility and the attraction of international capital, currently stabilizing at 3.9%.

Future Outlook

Growth is expected to continue, with employment and consumer confidence contributing to market strength. Q2 trends suggest sustained moderate rent increases and increased absorption. Investment may pick up, potentially reaching €1,300 million this year, but pressures on returns and uncertainties could limit overall gains. The market acts as a haven for capital until other investment risks are resolved.