The Office in Spain market regains its splendor
March 15, 2008
Madrid has a record of hiring
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The placing on the market of 395,000 square meters, of which 37 per cent are already prealquilados is scheduled for 2008. About the new offering scheduled for this year, more than a third corresponds to three of the four towers of Cuatro Torres Business Area. The new offering scheduled for 2009 is of 431,000 square meters. During the next two years, it will tend to balance out the volume of projects that will come to the market in the areas of influence of the national-1 and the national-2.
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The largest recruitment focuses on the outskirts
By geographical areas, increased recruitment in the 4th quarter accounted for the outskirts (55 per cent of the total area), followed by the central district of business (or CBD) with 16 percent, and the periphery (13 percent). The CBD offices demand continues to be important, and in many areas of the periphery and the outskirts has been strengthened thanks to the expansion in the public transport network (Metro North to Alcobendas and San Sebastián de los Reyes) and the light rail to Majadahonda and Pozuelo. On the other hand, areas where public transport is less developed, the demand for offices is more limited. In the medium term is expected to continue the trend of relocation of headquarters of large companies of the city centre to the outskirts, as the BBVA has recently decided to regroup all its offices in Madrid on Business Park forest (in the A-1).
On the supply side, the rate of availability of the Office market has increased slightly during the last quarter of the year reaching the 3.66 per cent, equivalent to 402.000 square meters. Much of the area currently available is located in business parks on the periphery; specifically in the A-2 (nudo Eisenhower), the A-1 (from the knot Manoteras to Alcobendas) and the M-40 (route of the villages). The CBD availability is low, especially for large surfaces from 1,000 square meters. In the short term is expected a slight rise in the availability as a result of the delivery of various promotions of offices, especially in the periphery.
The new surface delivered in Madrid in the fourth quarter amounted to 187,000 square metres. However, an important part of this surface is not as it's own buildings in marketing. For example, the second phase of the campus of Telefónica (90,000 square metres in Las Tablas) and one-third of Tower space that is reserved for use of the property.
Other projects delivered in the last quarter were the second phase of the Business Park (25,000 square meters in Arroyo de la Vega) Omega, and an office building of 12,000 square meters in the mount street of el Pinar (in El Plantio). The delivery of the other three skyscrapers in the District 4 towers is scheduled for 2008: Torre Caja Madrid (56,000 square meters for own use), Torre de Cristal (45,000 square meters) and Torre Sacyr-Vallehermoso, 53,000 square meters (of which 19,500 square metres are for offices and the rest to hotel). Business Park at Méndez Álvaro Nozar (22,000 m2) and an office building of 17,000 square metres at the Manoteras Street (prealquilado in its entirety to the consulting firm Everis) will also be delivered.
The absorption of the last few months is stabilized
The consultant notes that this exceptional result "has been as a result of the maintenance of a good rate of absorption in the whole of the year, product of a dynamic to the summer and an activity more moderate but sustained increase in the last months of the year". In addition, specific that the last few months have been marked by greater stability in the values of rental market, with a maximum value of the closing of 42 euros per square meter monthly registered in Torre Espacio.
On the other hand, the figures of the consulting firm aim that the market of sale user has shown a very good result. During 2007 have hired some 129,500 square metres for sale at nearly 159 operations. Even so, persist the shortage of offices for sale: only 19.5 per cent of the total area on offer is intended exclusively for this purpose.
The offer of Madrid back positions
As to the composition of the tender, and depending on the type of buildings, most of it remains concentrated in the real estate of exclusive use, representing a 71 per cent of the total number of offerfollowed by property type semindustrial with 19 percent and mixed, which represent the remaining 10 percent.
In addition, the shortage of supply continues to be important in the immovable property intended for sale to user. Of the total of current surface on offer, only 19.5 per cent is reserved exclusively for this purpose. 43 Per cent of the total area on offer for sale is located in the urban environment, while the remaining 57 percent is located in the business areas of the near and distant periphery.
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Great expectations in the near future
However, since the consultant show that the dynamic of the demand seen during 2007 will be hardly sustainable in 2008: "the less favourable economic Outlook has generated greater uncertainty, which will be felt in the market." The officers will adopt an attitude of waiting and caution which will be translated in a slowdown of the pace that the closure of operations had been taking place in 2007 ".
Availability remains too low
Also, from Exa point that always low entry of new supply, much lower than anticipated, has maintained the low availability and high prices: have already arrived on time reach the EUR 40 per sqm per month in the area Prime and prices have continued to grow well above inflation, although in a more rational and moderate way in previous exercises. On the other hand, investment in offices for its part has returned to beat records driven by a handful of multi-million dollar operations in a context of relocation of the main companies of the IBEX have taken advantage of to get rid of its main buildings at the height of the real estate cycle.
The offer, has picked up
Areas, more than 40 percent of the new offer of Madrid in the next two years will be located in the decentralised zone, in particular in the area of Las Tablas, in the North of the capital. The periphery will also benefit from more than 220,000 square meters of new developments between now and 2009, which are more concentrated in the vicinity of the A-6 (La Florida, Pozuelo.
Most of the demand looks for in areas outside the city
On the other hand, more than half of the absorbed surface, 55 per cent, is found in the decentralized areas and periphery, i.e. outside the limits of the M-30. This type of location is still the most demanded in the operations of large area mainly for two reasons: increased availability of space and best qualities. It's buildings generally of new construction much more adapted to business needs with a design and infrastructure today. The price factor also influences but is less critical because that incomes in some of these areas are already at the level of the of the town, beating them in some cases. As usual, most of the surface in this last quarter corresponds to exclusive office buildings, 82 per cent, while mixed buildings have brought a 13 per cent and the high-tech the remaining 5 per cent.
By space, the majority of operations have been for surfaces of less than 1,000 square meters, although they have meaning only 25 per cent of the total surface absorbed. This type of operation has been majority in the town centre, although there has also been a significant percentage of these operations on the periphery. The profile in both cases is similar: the first corresponds to small businesses seeking either a space with some representation in the Centre of Madrid in the second case is seeking an Office at an affordable price while for which there are no qualms about moving away from the city centre.
At the opposite end, operations in areas of more than 3,000 square meters accounted for 7 per cent of the total but crowd almost 49 per cent of the surface absorbed in the period. Such operations have been distributed in a manner more or less equal among all areas dominated the town in operations in the range of the 3,000 to 5,000 square meters while that larger operations have been almost exclusively in the areas of the periphery (operations of less than 10,000 square meters) and in the decentralized (operations above the 10,000 square meters).
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The new offer of Madrid stays in 150,000 m2
On the other hand, Atisreal drew a record contract with more than 940,000 square meters, maximum historical for the city. In addition the level of balance between supply and demand with an average of 7,31% rate of empty stands out.
In the future, new projects expected to deliver in the next four years should increase the total to 12 million square meter stock. A slowdown in hiring due to the prealquiler operations in 2007 and the current economic context is specifically however expected for 2008. Still, since Atisreal expect that future supply will respond to one part of the unmet demand in central areas, so far and risks extending the availability out of the M-30. In the same way, with the delivery of the surface of the CTBA (Cuatro Torres Business area), maximum revenues will stabilize at the levels.
Recruitment reached a new record
Areas, and with over 130,000 square meters contracted in 2007, the CBD exceeds its maxims due, mainly, to large operations but is characterised also by recruitment of small surfaces. Also, the activity in the downtown area has been similar to that of the previous year and is characterized by operations of supermarkets (between 6,000 and 10,000 square meters). Area decentralized for its part, has focused the greater volume of contracted space (41 per cent of the total), due to the increase in the supply in this area over the past years. On the periphery, it has registered several operations of more than 10,000 square meters but remains the area with increased availability.
The availability is maintained
Also, the rates of coverage in areas Centre and decentralised at levels of relative balance. However the quantity of products referred to in the second might pass this area in a situation of envelope offer. And, although the recruitment in the periphery has represented the third of the total surface area contracted, the availability is high.
According to the findings of Atisreal, the new offer and the competence of the decentralized area cause these increases and future supply provided for in this area could also increase the imbalance.
As for new construction, during 2007 they entered the market only 150,000 square meters of new surface of offices, this is about 50,000 square meters less than in 2006, all those on the outside of the M-30. However a significant number of projects have delayed their delivery at the beginning of 2008.
For the future, are expected, during 2008, more than 400,000 square meters of new surface.
Until 2011, is planned for the incorporation of more than 900,000 square meters. In addition, more than half of the surface of newly-built to deliver in the next 12 months is out of the M-30 and this proportion increases to the surface to deliver in the next 4 years. The CBD and the Centre its offer of offices will finally be increased in some 200,000 square metres.
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Thus, the year 2007 is positioned as the second year of increased recruitment, after 2005, with around 363,000 square meters. Total availability rate is maintained at levels of balance compared to the previous year. However Center and CBD areas follow scarcity of products, while the decentralised zone and periphery have high levels of availability.
Likewise, the uncertainty of the market is expected for 2008 a slowdown in hiring while projects of Barcelona offices are located in decentralized areas and on the periphery of the town. The increase in surface in these areas could increase the availability of them, as they are in a situation of oversupply.
With regard to the recruitment accumulated in 2007, it reaches the 363,000 square meters, second all-time after 2005. The demand for offices has been revived during the last quarter and the number of operations of more than 1,000 square meters size has increased to end of the year. The most significant operations for the quarter have been the installation of Cofidis at WTC Almeda Park and the pre-alquiler of Iberojet in the Inbisa Tower of the 22 @.
The CBD has not registered much activity due to the shortage of product. Unique operations concern small surfaces. The Center remains active with the third of the operations of the year, half of them carried out in the 'Eixample'. 25% Of operations were located in the decentralised zone, a new area of business increasingly attractive: 22 @-Diagonal Mar - Forum attracts almost half of the demand in this area.