Commercial Real Estate Market in Spain - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Spanish office real estate market remained stable throughout 2018. One of the key events that occurred was the purchase of a Barcelona-based Diagonal de Barcelona complex for EUR 250 million by Blackstone. The deal was important because not only did it demonstrate investor confidence in the Catalan capital, but it also turned out to be the largest single-asset transaction in Spain

The offices witnessed an increased demand across key cities in Spain, such as Madrid and Barcelona. In 2018, the office take-up reached around 5,41,000 sqm in Madrid, with most of the take-up by service and tech companies. In Barcelona, international companies saw an increased take-up in the office space, in 2018.

Due to the rising demand for office spaces in the country, the vacancy rates for the office market reduced significantly, especially in cities, like Madrid and Barcelona. The average vacancy rates of office space in Europe stood at 7%, as of 2019, with Madrid and Barcelona’s vacancy rates reducing to 9.5% and 6.1%, respectively. The vacant space is expected to continue reducing in both cities, with high levels of take-up forecasted for the coming two years, which may increase the demand for the office market in the country. 

The retail sector is performing quite well in the Spanish real estate market. Breakthroughs in technology and the greater influence of the younger generations are two of the main reasons for this rising demand in the retail sector.

In Spain, 17 new shopping centers are expected to open before 2021. In 2018, three shopping centers and five retail parks were added in Spain, adding a GLA of nearly 262,000 sqm to the stock. In 2019, around 16 projects were under construction, which were expected to add an estimated GLA of 300,000-350,000 sqm to the retail market. Expansion is more likely to be witnessed in the retail markets, including sporting goods, cosmetics, food and beverage, home, etc. Increasing development activity in the shopping center sector may also give a boost to the retail real estate sector.