The conversion of buildings to new uses has experienced significant growth in 2024, with almost 70 changes of use identified across Spain, according to CBRE's latest report. This figure represents double the number registered in 2023, consolidating the conversion of assets as a key trend in the real estate market.
In terms of surface area, in 2024 more than 390,000 sqm have started a transformation process, with the fourth quarter of the year being the most active, concentrating more than 20 operations. Madrid continues to lead this segment, with 60% of the changes of use, although secondary locations have gained relevance. In these areas, only one in four changes of use originally had an office function.
The CBRE report notes that more than half of the transactions identified involved a real estate transaction, i.e. a change of ownership of the asset. In total, €900 million has been invested in the purchase of properties for change of use, compared to €330 million in 2023, an increase of 172%.
Smaller transactions have had a significant weight in the market: 75% of the investment has been allocated to transactions below 20 million euros, while half of the buildings sold have less than 3,500 sqm of floor space.
Living and hotels, the main destinations for changes of use
The high tourist and residential demand has driven these transformations. According to CBRE, 80% of the changes of use in 2024 have been destined for the living or hotel sector.
Within the Living segment, which accounts for 45% of the conversions, the projects destined for residential sale and purchase (BTS) and Flex Living conversions stand out. In the hotel sector, which accounts for 35% of the total, conversions have mainly been directed towards high-end and luxury products.
On the other hand, 60% of the conversions in 2024 originated in office buildings, demonstrating the reorientation of these assets towards new uses with higher demand.
Madrid continues to lead, but secondary locations are on the rise
Madrid remains the main focus of activity, accounting for 60% of the change of use registered in 2024. However, this figure reflects a slight drop compared to 2023, when it accounted for 74% of operations.
Within the capital, 83% of the conversions have originated in offices, with the Centro district accounting for 33% of the changes and Chamberí for 20%. In total, more than 83% of the operations in Madrid have taken place within the M-30, where higher demand and more flexible regulation have facilitated these processes.
However, peripheral areas are emerging as an opportunity for the transformation of assets, especially in areas with less economic dynamism. In this context, one of the most noteworthy transactions in 2024 was the purchase of the María de Molina 50 building, with an investment of more than 200 million euros for its conversion into luxury housing and a student residence.
Outside Madrid, other locations have also gained prominence. In 2023, secondary areas accounted for 26% of the conversions, while in 2024 they accounted for 40% of the changes. Behind Madrid, the cities with the most conversions were Barcelona and Malaga, with 7% each, followed by Seville, Alicante, Huelva, Bilbao and Zaragoza.
While in Madrid most of the conversions originated in office buildings, in secondary locations only one in four changes of use came from this type of asset.
The impact of conversion over the last decade
Since 2015, CBRE has identified more than 240 changes of use in Spain, with a significant upturn since 2019, the year in which asset conversion began to consolidate as a key strategy in the real estate sector. In these ten years, nearly 800,000 sqm of office space has been converted, with 430,000 sqm converted to residential use and more than 200,000 sqm to hotels.
In Madrid, the average office vacancy rate in 2024 is 11%, 70 basis points lower than in 2023, with the CBD registering the lowest rate, at 3.6%, close to historic lows. CBRE points out that in the capital there are around 300 office buildings classified as ‘Grade C’, considered obsolete, totalling 1.5 million sqm distributed across different submarkets and their catchment area.
According to María Mayoral, Head of Multistrategy and Senior Director of Investment Properties at CBRE, ‘there is great interest from both investors looking for market opportunities and owners who want to transform their assets to improve their performance. This interest is not only occurring in Madrid, but also in other capitals’.
CBRE stresses that asset conversion will continue to be a key trend in the real estate sector, driven by high tourist and residential demand. However, they stress the need for greater regulatory flexibility on the part of public administrations, which will allow these processes to be streamlined and facilitate the adaptation of assets to the new needs of the market.
