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OVERVIEW
Further improvements have been noted in
the Spanish economy, building on the
recovery that began in the summer of 2013
and with 2014 growth expected to be
0.8%. Growth is driven mainly by exports,
which have benefitted from Spains rising competitiveness and
improved demand from its main trading partners. Domestic
demand is also expected to make a modest contribution to
growth this year after being a drag in 2013.
OCCUPIER FOCUS
Gross take-up in Madrid and Barcelona reached a total of
167,000 sq.m in Q1. In Madrid the CBD market is the most
popular, accounting for 46% of Q1 activity, while in Barcelona the
periphery was the most sought after location with its ability to
offers larger, modern floorplates. New leases, in both key cities,
are driving activity but this is largely linked to occupiers
consolidating their businesses and driving through cost
efficiencies and/or upgrading to better quality space without
increasing their balance sheets. Expansion driven take-up is
limited and it will be some time before this is seen in earnest.
Rents held firm across the board in Barcelona, while a marginal
uplift of 2% was seen in Madrids CBD as quality stock falls and
demand increases. However, vacancy was largely stable, albeit at
relatively high levels, as net absorption is low and there is a churn
in the market with newer stock taken-up at the expense of older
stock which is being released. Over time the overhang of space
should be eroded as there is no speculative space currently under
construction.
INVESTMENT FOCUS
Just over 200 million was transacted in Q1 in the Spanish office
market and there are solid indications that the recovery is not
merely perception, but that the market has turned a corner and
is indeed more of a reality now. There are many investors with
an eye on the Spanish market, attracted by macro-economic
stability and the prospects for improvements in the sector over
the coming years. The largest deal was the 117 million Avenida
de Amrica, 115 which was bought by London Regional
Properties from Spains Banco Sabadell.
OUTLOOK
2014 has seen the Spanish economy move into more solid
positive territory. Further acceleration of growth is not
anticipated to take hold until 2015. However, with sentiment
much more positive an improvement in the real estate sector
should follow. Investment activity should pick-up in anticipation in
a strengthening of the occupational market, led by Madrid.
MARKET OUTLOOK
Prime Rents: Overall prime rents are stable, but for pockets
of rental growth emerging for quality space.

Prime Yields: Rising investor interest and higher volumes will
see yields come under downward pressure.

Supply: The amount of quality supply decreases, but
this is at the expense of older stock.

Demand: Demand should persist for prime, well-located
spaces, putting secondary markets in jeopardy.


PRIME OFFICE RENTS MARCH 2014
MARKET (SUBMARKET) US$ GROWTH %
SQ.M/MTH SQ.M/YR SQ.FT/YR 1YR 5YR CAGR
Madrid (CBD) 25.00 300 38.4 2.0 -6.0
Madrid (Decentralised) 15.50 186 23.8 0.0 -7.2
Barcelona (CBD) 17.75 213 27.3 0.0 -5.5
Barcelona (Decentralised) 13.75 165 21.1 0.0 -7.7

PRIME OFFICE YIELDS MARCH 2014
MARKET (SUBMARKET)
(FIGURES ARE GROSS, %)
CURRENT LAST LAST 10 YEAR
QUARTER QUARTER YEAR HIGH LOW
Madrid (CBD) 5.75 5.75 6.00 6.00 3.50
Madrid (Decentralised) 7.00 7.00 7.25 7.25 4.75
Barcelona (CBD) 6.00 6.25 6.25 6.25 4.00
Barcelona (Decentralised) 7.50 7.75 7.75 7.75 4.75
With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of
Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very
much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used
as a comparable for any particular property or transaction without regard to the specifics of the property.

RECENT PERFORMANCE

Source: Cushman & Wakefield

-10.0%
-5.0%
0.0%
5.0%
10.0%
4.00%
5.00%
6.00%
7.00%
8.00%
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
AVERAGE PRIME YIELDS (left) RENTAL GROWTH (right)
SPAIN








OFFICE SNAPSHOT



MARKETBEAT

A Cushman & Wakefield Research Publication

Q1 2014