Nearly 11 million square meters of office space in Madrid and Barcelona face the risk of obsolescence in the next five years, according to a report by the consultancy firm JLL. This surface area represents 44% of the office stock in both cities, and its modernisation will require an estimated investment of 14.5 billion euros.
The analysis details that the renovation of these assets would preserve their value, attract new tenants and increase rents. In fact, globally, 45% of occupiers would be willing to assume an increase in rent in exchange for sustainable offices, according to the same report.
"In an increasingly dynamic real estate market, anticipating asset obsolescence is essential. Age, design, location and regulatory developments determine a property's ability to remain competitive and attractive to tenants," says Laura Caballero, Director of Research & Strategy and head of JLL Spain's Barcelona office.
Madrid concentrates two thirds of the problem
In Madrid, the obsolete surface area amounts to 7.3 million sqm, with an estimated investment of 9.7 billion euros for its adaptation. The financial district is home to 1.04 million sqm of outdated space, which would require an investment of 1.5 billion euros. In the city centre, obsolete assets amount to 1.25 million sqm, with an investment requirement of 1.7 billion.
Most of the stock at risk is located in decentralised areas, outside the perimeter of the M-30, where 3.29 million sqm of obsolete assets are concentrated, with an investment potential of 4.3 billion euros. Finally, the peripheral areas of the capital have 1.7 million square metres in this situation, with a required investment of 2.1 billion euros.
Barcelona needs 4.8 billion euros to renovate 3.6 million square metres
Barcelona has 3.6 million square metres of obsolete office space. Forty-two percent of this surface area is located in the city centre (1.46 million sqm), whose modernisation will require an investment of 2.1 billion euros. In the financial district, the outdated stock is 260,000 sqm (400 million euros of estimated investment) and in the 22@ district it reaches 420,000 m2 (500 million euros).
Other submarkets such as Fira Europa have 330,000 sqm of obsolete stock, with a required investment of 400 million euros, while in the metropolitan area there are 1.12 million sqm to be renovated, with a potential cost of 1.4 billion euros.
Differentiated strategies
According to Paula Albaladejo, Director of Project & Development Services & Tétris Cluster Southern Europe at JLL, "the obsolescence of nearly 11 million square metres poses challenges for tenants, investors and authorities, who must act on three fronts: energy improvement, design of experiential spaces and compliance with sustainable certifications. In some cases, conversion to other uses must also be considered".
JLL proposes interventions adapted to the context of each building. In prime areas, a comprehensive refurbishment with energy improvements and commercial repositioning is recommended. In the city centre, mixed-use and decarbonisation processes are recommended. In peripheral areas, where the pressure of demand for offices is lower, a transformation to other uses, such as residential, could be chosen, taking advantage of the regulatory flexibility introduced by Law 3/2024 of the Community of Madrid.
The report also highlights the role of climate change as an accelerator of real estate obsolescence. 45% of tenants will prioritise properties with climate resilience in the face of extreme events. Madrid and Barcelona are among the ten European cities most exposed to these effects within the real estate sector, which reinforces the need to incorporate solutions such as natural spaces or green areas. According to JLL, 53% of citizens in the EMEA region would like to see more greenery in working environments.
