21 December 2016
BNP PARIBAS REAL ESTATE RESEARCH ON QUALITY BUILDINGS IN MADRID
BNP PARIBAS REAL ESTATE: «ONLY 5% - 6% OF HIGH QUALITY BUILDINGS IN MADRID ARE VACANT»
- The first study regarding the distinction of offices in Madrid, compiling property tax register data since the 19th century and undertaken by BNP Paribas Real Estate, “The quality of offices in Madrid”, confirms that high-end offices are the most sought-after and scarce. The availability of the best offices in the capital city falls by 5% - 6% of the total of 1.4 million square metres.
- According to BNP Paribas Real Estate, the office stock in Madrid amounts to 14.8 million square metres (3,300 properties), the age of 80% of which exceeds 10 years. Faced with this situation, the scarcity of high quality spaces and high rents is making refurbishment an essential alternative in order to increase the supply of centrally located, high-quality offices.
- BNP Paribas Real Estate estimates that a total of 170,000 square metres of office space will come onto the market in Madrid in 2017. For the close of 2016, it is estimated that 57,000 square metres of offices will be delivered in Madrid.
The refurbishment of buildings is becoming an ideal method to increase the stock of high quality office spaces in Madrid. Within the capital city, there are 14.8 million square metres of office space (3,300 properties), of which the majority, some 80%, is more than 10 years old and of greatly varying characteristics.
In fact, only 1.4 million square metres of offices in Madrid are of excellent quality. However, the good news is that only 5%-6% is vacant according to the BNP Paribas Real Estate study “The quality of offices in Madrid”. “This situation indicates that a significant part of the offices in the capital could be let were their quality level to meet market demand and that this improvement of the stock would undoubtedly increase both occupancy and profitability ”, it adds…..
The demand prefers high-end offices with good location. In the latter sense, 80% of this scarce offering is located in Madrid's financial centre.
“In Madrid there are only 2,881,000 square metres of offices aged less than 10 years and of high specifications, in other words 20% of the stock”, explains Ilan Dalva, National Agency Director of BNP Paribas Real Estate. This figure includes both buildings delivered since 2006 and full-scale refurbishments carried out over the last decade.
Madrid's business centre (Gran Vía-Nuevos Ministerios-Chamartín) has 412,111 square metres with a maximum age of ten years, of which 31.3% (129,200 square metres) consists of refurbishments. Beyond the centre, refurbishments are few and far between, representing only 7% in the decentralised zone and 3% on the outskirts.
Forecasts for the end of 2016 and 2017
The decentralised zone and outskirts of the city possess the greatest supply of offices, cornering 72% of the total available floor area. In fact, only 172,145 square metres are vacant in the prime business zone, corresponding to 123 buildings which represent 10% of the total floor area. The Centre occupies second place at 17%, with 303,370 square metres vacant. This amounts to half of the footage available in areas beyond the M-30 ring road.
Alcobendas has the greatest percentage of vacant supply, with 11% of the total floor area in Madrid, followed by Josefa Valcárcel (10%) and Julián Camarillo (9%). The area with the highest proportion of vacant property in the Centre is Chamartín, at 4.3%.
For the close of 2016 it is anticipated that 57,000 square metres will be delivered and that a total of 170,000 square metres will come onto the market in 2017. The Central zone of Madrid brings together the highest volume of gross floor area, comprising 32% of the total. Madrid currently has 1,691,000 square metres of available office space, amounting to a vacancy rate of some 11.4%.
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