The office space contracted in Barcelona recovers in 4Q 2020

The office space contracted in Barcelona recovers in 4Q 2020

This quarterly data is the highest of the year marked by COVID-19. Even so, it is 30% less than the same period in 2019.

«Although this figure is still moderate, an improvement is already detected compared to previous quarters. Many companies put off making long-term decisions and the lower entry of demand registered in the months of confinement is inevitably reflected in a fourth quarter of the year», says Lindy Garber, director of Advisory & Leasing Offices at CBRE Barcelona.

According to the developer, in the accumulated annual, the hiring of offices in the Barcelona market has reached almost 160,000 sqm, 60% less compared to the previous year and around 50% below the average of the last five years.

Increase in surface supply

The general vacancy rate in 2020 stood at 7.8%, which is why it has risen 1.1% compared to 2019. The increase in vacant space is mainly due to the return to the second-hand asset market , to which 16,000 sqm of new stock have also been added. In any case, the vacancy rate for Grade A buildings remains at historical lows of 0.9%.

Currently, a total of 435,000 sqm of offices are under construction. Of these, 372,000 are already available. The most active submarkets in new developments are 22@ and Front Marítim, which accumulate more than 75% of future projects and a total of 334,000 sqm (87% of them still available) that will be added to the market in the next three years. 120,700 sqm is expected to be delivered in 2021, of which slightly less than half are already committed. In this way, the available surface will increase with these deliveries by around 79,000 sqm throughout the year.

Readjustments in rents

The low contracting recorded and the general increase in supply in all submarkets is reflected in a slight adjustment in prime rent, which contracted by 2% to stand at 27.75 euros / sqm / month. «While it is true that current circumstances are pointing to rent adjustments, it is also true that higher-quality buildings continue to close at high rents, as some closed operations demonstrate», Garber says.

Regarding the weighted average rent, at the end of 2020 it stood at 17.34 euros / sqm / month, in line with the figures already registered in 2019.

Investment in offices

Investment in offices in the Barcelona market amounts to approximately 473 million euros, which represents a decrease of almost 69% (1,500 million) compared to the previous year, as well as 47% below the 880 million euros on average for the last five years. «Without a doubt, the effects of the pandemic weigh heavily in an exercise that, however, registered a record first quarter only surpassed by that of 2017», says Xavi Güell, director of the CBRE Barcelona office.

During the last quarter of 2020, the activity has been scarce, with only 37.8 million euros transacted, since many of the operations in progress have been delayed and are materializing during these first months of 2021.

Güell added that «despite the market circumstances, during 2020 there have been no notable adjustments in prices, the prospect of a recovery in the short and medium term has allowed a protection of said prices, especially for those in the Core category and location. In totally anomalous circumstances, both sellers and buyers feel especially comfortable with off-market sales processes, which have accounted for 80% of the total operations closed in 2020. In fact, during the last quarter of the year, three of the four closed operations were processes of this type».

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