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| Madrid Office take-up records 179% year-on-year growth  In the latest research report by Savills the first quarter of 2013 closed with the highest quarterly Madrid office take-up recorded since 2008 at approximately 160,000 sq m, representing a 179% year-on-year rise, from 58,000 sq m in Q1 2012. The international real estate advisor notes that this is primarily due to three large transactions which make up almost half of this total. These include the largest letting since 2000, with Vodafone bringing two offices under one roof in 50,000 sq m of office space at Parque Empersarial Avenida de América. The other two major lettings include Iberia taking 16,000 sq m on the A2 in east Madrid, and Agencia Efe moving from Calle Espronceda to take 12,000 sq m in Edificio Génesis on Avenida de Burgos.Ana Zavala, head of office agency at Savills Spain, says: "The Madrid office market has had a very positive start to the year with the Q1 take-up total exceeding that of H1 2012 and the average lettings size increasing. Nonetheless, this is mainly due to three unusually large lettings and with a significant quantity of vacant stock we remain cautious about our market outlook." According to Savills data available office supply continued to grow with approximately 28,000 sq m coming on to the market in Q1 2013, resulting in a total supply of approximately 1.7m sq m. The firm highlights that this represents an average vacancy rate of 13%, a record high, with Madrid's CBD vacancy rate standing at 6.3%. Going forward 125,000 sq m of new supply is scheduled for delivery on the city's office market in 2013, 50% of which is refurbished stock and one third of this refurbished space has already been pre-let. Savills research shows that office rents in the Spanish capital remain stable, with average rents standing at €14 per sq m per month and achievable prime rents at €24.50 per sq m per month. On the Madrid office investment market the firm records a total investment volume of approximately €50m in Q113, which is stable compared with the same period in 2012 if the exceptional €400m Torre Picasso transaction of Q112 is excluded. However, Savills observes that European players, particularly German investors, are showing renewed interest in the Madrid office market whilst Latin American, US and Asian buyers returned to the market at the close of 2012. Luis Espadas, director of capital markets at Savills Spain, comments: "For several years domestic investors have dominated the Madrid office market due to their broad knowledge of all segments. Now we are seeing many foreign investors monitoring the market waiting for an opportunity to buy, which is evidence that the perception of Spain from abroad has improved thanks to measures adopted by the Spanish government such as restructuring the country's financial system and the creation of SAREB. The main reason for an ongoing low transaction volume is a scarcity of financing and the lack of quality product on the market at prices that are in line with buyer expectations. Once buyer and seller price expectations are aligned we expect this renewed international interest to transfer into actual deals." Savills data shows that prime locations such as Madrid's CBD and established sub-markets continue to be favoured by both Spanish and international buyers, with the key difference between these two investor types being the amount of capital behind them. Private domestic players look for product between €20m - €30m, international players look for assets at €30m upwards. In terms of yields the real estate advisor highlights that the low level of investment activity makes these difficult to calculate but states that Madrid CBD and prime areas of the market have remained stable compared with the previous quarter, standing at 6% in Castellana and 7.5% in the key business hubs. In spite of this Savills believes that trophy assets can still achieve much lower yields. write your comments about the article :: © 2013 Construction News :: home page |