According to a recent study, the office property market in Madrid will remain below pre-coronavirus levels until 2028. Among the reasons for this are, for example, falling rents or stagnating demand for office space due to home office regulations introduced during the pandemic. Nevertheless, it can be worth investing in office real estate. The Ecovis experts explain why.
Many companies no longer need as much office space as they did before the pandemic due to working from home, more flexible working hours and less need for personal meetings. This change also appears to be definitive and set to continue even after the pandemic. Prestige offices are still in demand, but with reduced floorspace. It is now common in many offices not to assign specific workplaces to employees but to let them occupy whatever free space is available as and when they need to be in the office.
We will be happy to advise you on your investments in Spanish office properties.Christian Koch, Partner, Lawyer, ECOVIS Legal Spain v. Carstenn-Lichterfelde Abogados, Madrid, Spain
Significant drop in rents for office space
This has led to a significant reduction in the rents paid for office space in most Spanish cities and a reduction in investments in office property. Paradoxically, some cities, such as Madrid, have embarked on mega urban renewal programmes (for example Madrid Nuevo Norte or the new airport zone) where major office towers are planned. These developments, however, fall more into the category of prestige offices which, as mentioned above, are still attractive.
Also, many offices in central Madrid and Barcelona, which were previously too expensive, are now being occupied. However, in the suburbs prices are being slahed, or offices are even being re-purposed for residential rental. This means that there are still investment opportunities in office space. However, investors should check very carefully which properties are suitable for an investment.
The market for private property in Spain
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Christian Koch, Partner, Lawyer, ECOVIS Legal Spain v. Carstenn-Lichterfelde Abogados, Madrid, Spain