Demand for madrid offices exceeds all expectations

Demand for Madrid/">office space in Madrid has exceeded all expectations, according to new figures.

Savills' report shows that take-up of office space in the Spanish capital hit 70,000 square metres in the third quarter of 2012, bucking the economic trend to perform far better than expected.

The boost has been attributed to several large transactions involving newly refurbished offices, which accounted for one quarter of activity during the three months.

But while the uptake is encouraging, experts note that overall figures so far in 2012 are still down 16 per cent on last year. Indeed, supply has increased since the second quarter of the year, pushing vacancy rates up to 12 per cent from 11.75 per cent, an all time high in terms of supply and vacancy rates.

Ana Zavala, director of office agency at Savills Spain, comments: "The deterioration of the country's economic climate has had a direct effect on the Madrid office market, with rents on a continued downward spiral, excess supply and limited take-up.

"However, we have recorded a higher than expected take-up in Q3 and vacancy rates remain at a low level in the CBD compared to other markets. The prospect for the office market is largely dependent on an improvement in the wider economic recovery, which remains uncertain."

Pablo Pavía, capital markets director at Savills Spain, comments: "We do have a small group of active domestic investors in the market but they are looking for very specific types of property but the supply is just not fitting their requirements. Of the little investment we have seen, both sale and leaseback opportunities and properties with the potential for residential use have proved popular."

Yields are current 100 basis points higher than the third quarter of 2011, adds Madrid-office-market-Sees-q3-take-up-boost.html">SA Commercial Property News. Savills expects yields to stay steady for the rest of the year.