Madrid - Business Immo

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Madrid - Business Immo

RESEARCH

H1 2012

Madrid

Office market report

Highlights

• Spanish GDP fell by -0.4% in Q2 2012, continuing the adverse trend after the country

returned to recession with two consecutive quarters of negative growth in Q4 2011 and

Q1 2012. The unemployment rate rose to a record high of 24.6% in Q2 and the IMF is

forecasting a contraction in GDP of -1.5% for 2012.

Madrid office take-up totalled approximately 120,500 sq m in H1 2012, 15% lower than in

H1 2011. With occupiers reluctant to take large spaces, over 50% of the deals concluded

in H1 were for less than 500 sq m.

• Prime rents fell to €26 per sq m per month during H1 2012, from €27 per sq m per

month at the end of 2011. The vacancy rate edged up to 10.9% from 10.7% as occupiers

continue to consolidate their accommodation needs.

• Prime office yields in the CBD softened by 25bps over H1 2012, to stand at 6.00%.

Negative market sentiment and a shortage of prime stock has led to the lowest

investment volumes seen in Madrid for more than a decade.


H1 2012

Madrid

Office market report

2

Cuatro Torres Business Area

Market summary

Tough economic conditions continue to

prevail in Spain, which has experienced

three successive quarters of negative

GDP growth. Spanish GDP fell by -0.4% in

Q2 2012, following contractions of -0.3%

in Q1 2012 and -0.5% in Q4 2011. The latest

annual growth forecast from the IMF is a -1.5%

contraction for this year. Spain agreed a

€100bn loan from the European Financial

Stability Facility to support its banks in

June, and it remains a possibility that the

government will request a full bailout later in

the year. The unemployment rate continues to

rise, reaching 24.6% in Q2, while over 50% of

those aged between 16-24 are unemployed.

The fragility of the economy has had a direct

impact on Madrid’s office market. Take-up

totalled just 120,550 sq m in H1 2012, 15%

lower than H1 2011, as occupier demand

remained very weak. The largest deals

completed in H1 included the letting of

8,200 sq m at Edificio Adequa 5 to Técnicas

Reunidas, and 4,720 sq m let to Indra at

Edificio Kenia. Over half of all deals concluded

in H1 were for less than 500 sq m, reflecting

the reluctance and inability of occupiers to

expand in the current environment.

Prime rents in the CBD fell to €26 per sq m

per month in H1, from €27 per sq m at the

end of 2011, and on an annual basis have

fallen 7% since the end of H1 2011. The

vacancy rate edged up to 10.9% during H1

2012, from 10.7% at the end of 2011. A lack of

funding and developer caution is inevitably

delaying the delivery of new schemes. As a

result, there is increased attention on the

refurbishment of existing space, particularly

as occupiers look for energy efficient

buildings as well as modern and adaptable

workplaces.

Prime CBD yields softened to 6.00% during

H1 2012, from 5.75% at the end of 2011.

A shortage of available prime stock and

negative market sentiment resulted in the

lowest investment volumes seen in Madrid in

over a decade, with less than €100m invested

in offices in H1 2012.

Madrid CBD

Tetuan

Alonso

Cano

Chueca

Sevilla

Calle de Sine s io Delgado

Ventilla

Parque de la Ventilla

Valdeacederas

Calle de Modesto Lafuente

Calle de Orense

Avda. del Brasil

Nuevos

Ministerios

Banco de

España

Calle del Capitán Haya

Cuzco

Moda

Shopping

Calle de Zurbano

Gregorio

Marañón

Calle de Miguel Ángel

Calle de Almagro

Calle de Montesquinza

Calle de Génova

Calle del Almirante

Calle de Prim

Av de Asturias

Paseo de la Castellana

Paseo de Recoletos

Plaza de

Castilla

Colón

Calle de Alcalá

Parque

de Castilla

Calle del Doctor Fleming

Calle de Vitruvio

Calle de Fortury

Paseo de la Castellana

Santiago

Bernabéu

Paseo de la Habana

Serrano

Calle de Serrano

Paseo de la Castellana

Calle del Darro

Rubén

Darío

Calle de Serrano

Begoña

Calle de Mateo Inurria

Calle de Joaquín Costa

Calle de María de Molina

Retiro

Parque

Valparaíso

Chamartín

República

Argentina

Núñez de

Balboa


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Madrid office submarkets

Las

Rozas

M-40

Pozuelo

Aravaca

A-5

M-40

A-6

Ctra. de

Castilla

Casa de Campo

Ctra.

Toledo

Monte de El Pardo

M-30

Tres

Cantos

Avda. de

la ilustración

Chamberí

M-40

Centro

Atocha

Av. Burgos

Cuzco

Río Manzanares

Ctra.

Colmenar

Chamartín

Salamanca

PRiME CBD REntS fEll to €26

per sq m per month over h1 2012,

A 7% DECREASE fRoM H1 2011.

3

Retiro

A-4

Alcobendas

S.S. de los Reyes

Manoteras

Pinar

de Chamartín

M-30

Méndez

Álvaro

A-1

La Moraleja

Arturo

Soria

Arroyo

de la Vega

M-40

Julián

Camarillo

Eje de

O’Donnell

A-2

Campo

de las Naciones

M-40

Eisenhower

A-3

Aeropuerto

Madrid – Barajas

Parque

Juan Carlos I

CBD

San Fernando

de Henares

Secondary Centre

M-30 North

M-30 East

M-30 South

M-40 North East

Periphery


4

Table 1

Madrid office market information H1 2012

Exclusive

buildings

Available (sq m) Take-up €/sq m/month

Mixed-use Semi-industrial Total (sq m) No of

transactions

Total (sq m) Minimum Maximum

CBD 275,945 31,754 0 307,699 68 38,724 26.00 28.00

Secondary Centre 101,558 23,289 0 124,848 21 12,138 16.00 22.00

M-30 North 103,416 2,120 38,451 143,987 13 18,629 12.00 17.00

M-30 East 158,134 1,351 59,315 218,800 14 15,152 12.00 17.00

M-30 South 41,874 0 13,750 55,624 1 836 7.00 11.00

M-40 North East 58,163 0 2,700 60,863 7 3,627 14.00 17.00

A1 178,451 0 40,812 219,263 21 14,982 7.00 14.00

A2 76,100 0 5,391 81,491 8 10,910 7.00 12.00

A3 44,119 0 0 44,119 0 0 6.00 9.00

A6 89,217 0 0 89,217 5 4,554 8.00 15.00

Colmenar Motorway 10,640 0 5,397 16,037 2 1,008 6.00 8.00

Table 2

Selected occupier transactions, H1 2012

1,137,616 58,514 165,817 1,361,947 160 120,559

Address Market Submarket Tenant Size (sq m)

Edificio Adequa 5 Avda. de Burgos, 89 M-30 North Las Tablas Técnicas Reunidas 8,200

Edificio Kenia. P.E. San Fernando de Henares A2 San Fernando de Henares Indra 4,720

Paseo de la Castellana 200, 2ª y 3ª Planta CBD Paseo de la Castellana Schweppes 3,563

Avda Bruselas, 31, Acceso y semisótano A1 Arroyo de la Vega Miele 3,210

Paseo de la Habana, 101 1 Secondary Centre Paseo de la Habana Norte Philip Morris 2,600

Moscatelar 1K M-30 East Arturo Soria Mobile Dreams 1,695

Edificio Ebrosa. Manuel Pombo Angulo 28 M-30 North Sanchinarro Nivea 1,590

Isla Manoteras. Edificio A, 4ª Planta Completa M-30 North Manoteras Thales 1,119

Edificio Tecnus. Bravo Murillo 178, 4ª Planta CBD Cuzco Ayuda en Acción 1,050

Source: Knight Frank 1 Purchased by Philip Morris for owner occupation

Paseo de la Castellana

MADRiD

office take‑up

totAllED

120,550 sq m

in h1 2012, 15%

lowER tHAn

h1 2011.


H1 2012

Madrid

Office market report

12

10

5

8

6

4

2

0

Madrid skyline

Figure 1

Office vacancy rate

%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

H1 2012

Figure 4

Prime CBD office rents

€ per sq m per month

60

50

40

30

20

10

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

H1 2012

Figure 2

Total stock

000s sq m

14,000

12,000

10,000

8,000

6,000

0

4,000

7

6

4

3

2

2,000

Figure 5

Prime office yields

%

5

1

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

H1 2012

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

H1 2012

Figure 3

Volume of take-up

000s sq m

1,000

900

800

700

600

500

400

300

200

100

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

H1 2012

Madrid data

Madrid population 6,489,680

Spain population 47,190,493

Madrid total workforce 3,410,100

Madrid unemployment rate,

Q2 12

18.9%

Spain unemployment rate,

Q2 12

Source for graphs: Knight Frank

24.6%

Madrid GDP per capita €29,731

Spain GDP growth 2012 (f) -1.5%

Spain inflation, Q2 12 1.9%

Source: Instituto Nacional de Estadística/IMF


RESEARCH

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Knight Frank

Madrid

José Luis Guillermo

Partner

+34 91 577 39 93

joseluis.guillermo@es.knightfrank.com

Daniel Díaz García

Research Analyst

+34 91 577 39 93

daniel.diaz@es.knightfrank.com

London

Chris Bell

Managing Director, Europe

+44 (0) 207 629 8171

chris.bell@knightfrank.com

Darren Yates

Partner, International Research

+44 (0) 207 629 8171

darren.yates@knightfrank.com

Matthew Colbourne

Senior Analyst, International Research

+44 (0) 207 629 8171

matthew.colbourne@knightfrank.com

Carly Tompsett

Analyst, International Research

+44 (0) 207 629 8171

carly.tompsett@knightfrank.com

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© Knight Frank LLP 2012

This report is published for general information only. Although high standards have been used in the

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can be accepted by Knight Frank Research or Knight Frank LLP for any loss or damage resultant from the

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