office investment trends in europe
In the first half of 2022, Spain saw an office investment total of 1,164 million euros, representing more than half of the annual figure reported in the previous year. This data comes from the Office Property Telescope study conducted by EY. In 2021, both national and international funds invested 2,200 million euros in Spain’s office sector.
Investors including funds, insurers, family offices, and other market participants allocated 6,121 million euros to purchasing new office buildings. The breakdown shows 1,558 million euros in the short term, 2,755 million euros in the medium term, and 664 million euros in the long term. This level of activity could prove decisive amid any economic uncertainties affecting Europe, such as a slowdown in trade due to higher euro-area interest rates or geopolitical tensions.
The year’s largest office transaction involved the founder of Solarpack, José Galíndez, and the Ybarra Careaga family. Both family offices contributed 175 million euros to acquire Torre Bizkaia, the historic BBVA headquarters in Bilbao, funded through the Angelo Gordon vehicle. The 9,500-square-meter building has undergone recent renovations and is currently leased to the fashion retailer Primark and the Bizkaia Provincial Council.
The Europe, Middle East and Africa (EMEA) region accounted for 28% of all office transactions globally, totaling 37,000 million euros. Payouts in this region were lower than those reported for the Americas and Asia.
rents rise
In Madrid, the rent for a top-tier office building reached 32 euros per square meter, up 1% from mid-2021. The city’s unemployment rate stood at 9.5%. In Barcelona, the average rent for premium properties rose to 25 euros per square meter, marking a year-on-year increase of 5.3%. Barcelona’s unemployment rate was reported at 8.5%.
Among European capitals, Madrid led in the steepest rent increases, followed by Paris at 9.7% annually, Luxembourg at 6.1%, and Helsinki at 5.7%. In contrast, rents declined in Amsterdam, Warsaw, Dublin, Oslo, and Stockholm.
During the first half of the year, Madrid recorded 244,000 square meters of office commitments, while Barcelona saw 175,000 square meters, increases of 43% and 33% respectively compared with the same period the previous year. The 22@ district in Barcelona accounted for 24% of the city’s total contracted space. More than half a million square meters of new office space is slated to come online in Barcelona by 2025.
new trends
The office market has evolved significantly since the health crisis, with corporate headquarters remaining in place but occupying less space and focusing on venues for key events such as client meetings, presentations, and team-building activities. Major North American tech companies, including Meta, Google, and Airbnb, have already begun adapting to these evolving needs.
Traditional offices in prime locations are expected to feature high and inelastic incomes, but become more decentralized, with reduced income exposure and greater flexibility for workers. The consultant notes that roughly 50% of a company’s headquarters could be dedicated to meeting rooms, while about 20% would be allocated to private work areas. In Barcelona, flexible spaces account for about 2.6% of total office supply, compared with 1.3% in Madrid.
As the sector adjusts, the landlord-tenant relationship is shifting. Tenant fixed income may decrease to around 70%, complemented by revenue from flexible spaces, ancillary services, and advertising opportunities.