ECONOMIC CONTEXT
2025 begins with continued uncertainty, influenced by geopolitical factors and ongoing ECB interest rate cuts. Spain’s GDP growth outpaces the Eurozone, with a 2024 forecast of 3.3% and expectations above 2.0% for 2025. Madrid’s unemployment rate stands at 9.06%, below the national average of 10.61%. The economic outlook remains positive, positioning Spain as a key Eurozone growth driver.
DEMAND OVERVIEW
Leasing activity in Madrid remains robust, with Q1 2025 recording 117,000 sq m leased in 125 transactions, mirroring the previous quarter. Demand is concentrated on high-quality, flexible assets, with A/B+ buildings comprising close to 70% of take-up. Notable transactions include Salesforce’s relocation in prime Madrid and Accenture’s expansion in Azca. The educational sector is emerging as a significant occupier, particularly in prime locations with large floorplates. Decentralised submarkets, such as Campo de las Naciones and Manoteras, are experiencing increased activity, while the periphery saw a 28% quarterly drop after a strong end to 2024. The CBD led take-up for the third consecutive year, accounting for 36% of leased space.
VACANCY TRENDS
Madrid’s overall office vacancy rate stands at 8.31%, with a downward trend expected. Availability is extremely tight within the M30 (below 3%), and even lower for A and B+ buildings (below 2.5%). Vacancy has decreased across all submarkets compared to 2023, though new deliveries have increased availability in some peripheral areas. The lack of quality space in the CBD and City Centre is pushing demand outward.
RENT TRENDS
Prime rents in the CBD have reached €42/sqm/month and are expected to continue rising throughout 2025. Rents have also increased in select submarkets, especially for newly refurbished or delivered assets within the M30. In less dynamic submarkets, rents remain stable. Landlord concessions are not specifically noted, but the focus remains on quality and flexibility.
CONSTRUCTION & SUPPLY PIPELINE
There are 56,598 sq m of office space under construction in Madrid, with notable completions and refurbishments adjusting the overall stock. The market has seen more than 100,000 sq m of office space converted to alternative uses over the past three years. New development is concentrated in areas with strong demand for quality assets, and the supply pipeline remains active to address ongoing occupier requirements.
