OFFICE MARKET MADRID AND BARCELONA - monitorimmobiliare.it

8 PROPERTY REPORT - OFFICE MARKET MADRID AND BARCELONA - Q3 2011
Prime rent evolution
€/m 2 /year
450
400
350
300
250
200
150
100
50
€/m 2 /year
600 60
500 45
400 30
300 15
200 0
100 -15
0 -30
2005 2006 2007 2008 2009 2010 2011
Average rents evolution
0
2005 2006 2007 2008 2009 2010 2011
Letting deals by rent
40
35
30
25
20
15
10
5
0
%
€/m 2 /year (lhs) QtQ Var.
CBD Centre Decentralised Outskirt
Q3 2010 Q3 2011
< 10 10 a 12.5 12.5 a 15 15 a 17.5 17.5 a 20 20 a 25 > 25
%
€/m 2 /month
Source: BNP Paribas Real Estate Research
Source: BNP Paribas Real Estate Research
Source: BNP Paribas Real Estate Research
MADRID 2011
Rent
The best offices face a captive demand that grant their rent
levels greater resistance to discounts. In this context, prime
rents since 2010 have tended to stabilise. At the beginning of
2011 prime rent held steady at the same level as the close of the
previous year, but from the second quarter has dropped slightly
(-1.8%). In the third quarter prime rent reached €27/m²/month
with a new quarterly decline of -1.8%. The outlook for the end of
2011 and early 2012 is for stability.
One year ago average rent stood at €17.5/m²/month. At the close
of the third quarter of 2011 it was €14.3/m²/month. The reason
for the decline is the weak demand, which encourages owners to
accept lower rents. This decrease in rent levels is accompanied
by incentive schemes (free rent periods and aid for moving
expenses) that result in even lower effective rent.
Discounts are being applied in all areas, although in the most
active and exclusive zones, Centre and CBD, there is not as much
pressure. In the most remote areas the owners offer higher
discounts and incentives to prevent their tenants from moving
to other areas and to attract potential occupiers.
In the third quarter of 2011 there were a higher percentage of
operations closed below €15/m²/month than one year ago. Rents
between €10 and €12.5/m²/month accounted for 36% of take-up,
confirming the better bargaining position of the occupants and
the opportunities that companies are exploiting.
Forecasts point to the maintenance of average rent until the end
of the year, although there is still a chance of additional declines
in peripheral areas and lesser quality offices. In addition, there
will be more attractive prices for the occupiers; the need to offer
take-up incentives such as the staggered rents and of grace
periods will remain.
Quarterly rent levels
€/m 2 /year
350
300
250
200
150
100
50
0
Max. Avrg. Min.
Madrid Avrg.; 171,7
CBD Centre Decentralised Outskirt
Source: BNP Paribas Real Estate Research