Madrid’s office space market is going through a golden phase. Driven by the service sector, office space rental has increased nearly by 30%, reaching 637,248 m2, the best figure since 2007. This is reflected in a report by Savills Aguirre Newman on the office space market in the capital, which credits the good results to improvements in the economy and favourable business expectations.
In particular, the record gross contract volume has been driven by demand in the last three months of 2017, which included four operations of over 14,000 m2. Likewise, 48% of total office market contracts included operations exceeding 3,000 m2. Demand-side behaviour was exceptionally positive during the past year within the M-30 ring road, over 92,000 m2, a historical high.
Less office space available and higher rents
592 transactions were carried out in 2017, 5% more than in 2016. The space available decreased by 133,500 m2 in the last twelve months. The percentage of available office space within the M-30 ring road dropped to around 5%, while the space between the M-30 and M-40 ring roads decreased to 13.3%.
This situation is also reflected in the increase in rental prices, which grew by 8.4% on average in Madrid. According to the consulting firm, the increase in rents has affected all zones; however, it is particularly steep in the business districts and in prime properties located in peripheral markets, including Campo de las Naciones and Arroyo de la Vega, which have a higher-than-average rental price. The average rental price in Madrid’s prime area is already close to €30/m²/month (€29.95/m²/month), with a maximum rental price of €36/m²/month.
According to Ángel Estebaranz, the national director of the Office Agency at Savills Aguirre Newman Office, rental prices in central Madrid have increased for five consecutive years, and in the decentralised zone between the M-30 and M-40 ring roads for three straight years.