Madrid and Barcelona top cities with more thrust, followed by Valencia, Malaga and Saragossa

According to the latest data on the Office market made by consultants of ample experience as Aguirre newman, Atisreal, DTZ, Exa, knight Frank or Jones lang lasalle, sector offices is regaining its status of yesteryear, recording historical records in terms of absorption and recruitment.

All these consultants defined 2007 as a historic year in the Office, both of Madrid as Barcelona market. And, although after 11 years of expansionary phase, Spanish estate present clear signs of slowing, according to the data presented in the latest report by Aguirre Newman "activity in the Office market has been remarkable throughout the year 2007", especially on the market of Madrid, where it has set a new record of 941.424 square metres gross absorption, 15 percent more than the of 2006 ". With regard to the Barcelona Office market, stability has been the fundamental characteristic, while the consultant pointed out the significant volume of new offer which is scheduled to leave to the market during 2008-2009, around 870.000 square meters.

The year 2008 is expected as a very busy year where it will be necessary to make many decisions

According to Aguirre Newman, 2007 has been the exercise which had been recruited more office space in the city of Madrid. Large users, mainly banks and service companies, have had a role in the activity of a demand that has absorbed a total of 941.400 square meters, a 15 per cent more than in 2006. In the second half of 2007 highlights the significant volume of operations of prealquiler, especially those in the Torre Espacio and Torre Caja Madrid Cuatro Torres Business area. More than 260,000 square during the entire exercise meters have been recruited under this formula. The operations of large size, on more than 3,000 square meters surface have grown 38 percent during 2007.

In what refers to the supply, during the past year, he joined the Madrid office market a 213,000 square meters surface, 61 per cent of the initially planned volume. With this new offering, the offices of the City Park reaches 11.200.000 square meters.

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.

In his latest report of offices in Madrid, DTZ points that the hiring of offices in the 4th quarter of 2007 reached the 260,000 square meters, also defining this exercise as a historical record for the community of Madrid. For DTZ, "these data reflect, that the demand for offices has been very active during the year, highlighting the hiring by companies in the sector of telecommunications, professional services and the financial sector". Looking ahead to 2008, the consultant expected that demand will continue at high levels, although probably be moderate from the second half of the year due to forecasts of a slowdown of the Spanish economy.

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.

In the next 2 years the new supply of Office will focus on the A-1, the A-2 and in the District 4 towers. Photo: Juan Carlos Rodríguez

For Knight Frank, 2007 has also finished with a record high of recruitment in the Madrid office market.

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.

Only 19% of the total surface of offices offered is for sale

In regards to the offer, the good behaviour of the demand in the whole of the year has been crucial to maintain the downward trend of the availability in the comparative annual. In early 2007 there was some concern about what effect would have on the offer the incorporation of various business projects on a large scale, whose completion was scheduled for later this year. Finally, the impact on the availability has been mild, so that 77 per cent of the total area of Tower space is already committed at the time of completion of works. Recent earnings in the last months of the year, will also highlight the completion of another phase of the Business Park Cristalia in way of the villages as well as the Adequa Business Park in the Burgos Avenue or the complex business of Méndez Álvaro.

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.

During 2008, provide for the placing on the market of 204.730 square meters of new surface on offer, of which, 77.5 per cent corresponds to exclusive buildings from Knight Frank. This level is 41.5 per cent less than the number of new surface on offer than was expected for 2007. Effective this number of planned surface exit will be on the basis of the evolution of the rate of absorption. It is expected that the rate of availability will not experience significant variations, since it is estimated that much of the surface to be incorporated into the market will find previously committed.

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 ".

For Exa, the Office of Madrid in 2007 market has lived an unusual exercise: the best first half which is remembered in the history of the sector has had its continuation in a second part of the year far less dynamic where recruitment figures have fallen significantly. In the words of the consultant, "the credit crisis in USA has been the turning point that marked the year real estate and the world economy." Thus, although Spain has continued to grow above the European average, has done much less than expected, at the same time inflation was fired in the last months of the year reaching more than 4%. In addition, the promising figures of absorption that we saw earlier this year had been declining gradually.

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.

Reviewing data relating to the offer only, Exa report highlights that, in 2007, were given a total of 215,000 square meters, more than half of the originally planned. Most of these projects were already committed and most were delivered during the first half of the year, as in the last two quarters as soon as it has incorporated new offer free market. Also, the ratio of absorption/supply of less than 1 year has increased due to the shortage of new supply delivered, compared with the two previous exercises. This ratio reflects the fact that, despite the housing crisis, the demand for offices has not fallen significantly while new supply this year has been much lower than expected and lower to the forwards. This has remained very low availability which in turn have pressured the upside prices.

For the future, in 2008 it is expected that joining the market 500,000 square meters of new projects, of which almost half are already committed, so the real entry of offer will not be much higher than the year just ended. For 2009 the forecast is of 320,000 square meters of which almost 100,000 square meters are already committed.

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.

The delivery of projects such as the Cuatro Torres Business area business park is planned in 2008

According to Exa, absorption of 156.088 square meters, 9 per cent less than in the third quarter of the year, and 37 per cent less than in the same quarter of the year 2006 was reached in the last quarter of 2007. This decline has motivated 2007 closed with a recruitment environment 800,000 square meters, slightly less than in 2006 but much higher than the average for the past five years.

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).

With regard to the data provided by relating to the Madrid market Atisreal, January 2008, the stock of offices reached the 11.020.000 square meters, relatively homogeneous distributed between the four areas of Madrid. Incorporated new supply throughout the year barely reaches the 150,000 square meters, i.e. a minimum for the past 4 years.

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.

This year, the volume of surface area contracted registers a new record with more than 940,000 square meters, promoted by the recruitment of large spaces, the delivery of new projects and the continued dynamism of the market. And, even with the slowdown in international economic has noticed a decline in recruitment during the last quarter, this can be explained in part by the, still, not accounting for the surface prealquilada in the space Tower. However, the last quarter has been an increase in the weight of small operations. More than half of the operations had a less than 500 square meters surface.

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.

On the supply side, the area immediately available in January 2008 reached the same levels as in 2007, with more than 800,000 square meters. However there are numerous products to deliver throughout the year. In the central business district still lacking space, but the delivery of planned surface could meet a part of the demand of the zone and reduce the current imbalance.

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.

According to the figures of Atisreal, January 2008, the stock of offices reaches the 4.955.000 square meters, with more than two-thirds located in the central areas of the city of Barcelona. The new offer incorporated in 2007 is the same level of Madrid with 154,000 square metres, i.e. more than double that of the surface in 2006.

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.

On the market of offices in Barcelona, Atisreal points out that, "Although reducing hiring expectations for 2008, there is no doubt that it will be a very strong movement year". Thus in Madrid as Barcelona expected delivery of a large number of product while "the placing on the market of real estate assets from financial and promoters in search of liquidity will impose the Spanish market as a new investment opportunity for international investors".