Oficinas Barcelona 2010


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The Barcelona office market showed strong take-up in the first quarter, a sign
that it may soon recover the levels marked in 2007 and 2008.

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Oficinas Barcelona 2010

  1. 1. APRIL 2010 TRENDS OVERVIEW Rental Market The Barcelona office market showed strong take-up in the first quarter, a sign Supply that it may soon recover the levels marked in 2007 and 2008. The first three New construction months of the year brought a total take-up of 94,000 sq.m, a dramatic contrast from the less than 32,500 sq.m recorded in the same months of last Take-up year. Rents There was also a trend towards the stabilisation of rental prices, following the TRENDS softening witnessed throughout 2009. Average prime zone rents stood at €20.50 sq.m/month, which was only 2.38% below last December’s level of Investment Market €21 sq.m/month. Supply Overall availability also stabilised considerably, since the four new projects Demand delivered in the quarter added only 39,000 sq.m to the entire stock of Prime zone yields Barcelona office space. Thus the overall availability rate reached 12.23% at the end of March. ECONOMIC ENVIRONMENT The recovery in take-up and the steadying of rental prices sparked a (Annual Change %) substantial revival of investor interest, as evidenced by the renewed activity in 2007 2008 2009 2010* the investment market, most notably the sale of an 18,000 sq.m office building in Diagonal Mar for 60 million euros. GDP growth 3,7 0,9 -3,6 -0,4 Private demand 3,5 0,1 -4,7 -0,6 ECONOMIC ENVIRONMENT Jobless rate 8,6 13,9 18,7 19,8 * Economist Intelligence Unit estimates – March 2010 Spain’s macroeconomic indicators remained mixed in the quarter: more new businesses were launched, but more businesses closed. Housing sales improved, but private consumption continued to stagnate, while the SERVICES SECTOR ACTIVITY INDICATORS household savings rate climbed to historic highs. The most telling services 10 5 BARCELONA OFFICE MAP 0 -5 % Prime -10 -15 City Centre -20 -25 dic-09 ene-08 abr-08 jul-08 oct-08 ene-09 abr-09 jul-09 oct-09 ene-10 Periphery Source: INE – Latest update March, 2010 New Business Areas Business volume in the services sector declined by -5,6% in November on year-on-year terms, but this was far less steep than that of April to April (-20.1%), and came close to the levels posted in mid- 2008. All services subsectors posted year-on-year turnover declines, the worst performer being “services to business” (-9.8%), followed by transport (-5.6%), tourism (-5.4%), information technology (-5.4%) and retail (-5.0%). 1 BARCELONA OFFICES APRIL 2010
  2. 2. sector indicators shows a halt in the recovery trend registered In the initial phase the project will bring10,296 sq.m of new since the final quarter of 2009, and manufacturing results were space, and the remaining 16,272 sq.m will be completed in the poorer than expected in January and February. But electricity third quarter. In distrito 22@, 21,000 sq.m of the Illacuna demand, a fairly reliable predictor of industrial activity, increased buildings will be dlievered in the new Eix Llacuna complex during the first quarter. adjoining the Parque Barcelona Media, owned by Colonial. While there is little doubt that the recovery from the current downturn will be a slow one, it is now clear that it is at last GRAPH 1- TYPE OF SPACE AVAILABLE underway. But there is a risk that the recovery will do relatively BY SUBMARKET little to ease unemployment, which now stands at 18.7% of the 450.000 labour force. Second Hand New 400.000 350.000 SUPPLY 300.000 As regards the supply of available space in Barcelona relative to 250.000 last December, the stock of office space increased by just 39,000 sqm 200.000 sq.m in the first quarter, thanks to the completion of such projects as the Eureka I building in the UAB university campus in 150.000 Cerdanyola del Vallès, the Media-TIC building designed by the architect Enric Ruiz Geli in the 22@ district, and one of the two 100.000 office towers in the Plaza Europa, the Zenit building, 45% of 50.000 whose area is now ready for occupancy. 0 Prime City Centre New Business Areas Periphery The year 2009 witnessed the largest increase in new office space in a decade, when the annual average came to about 200,000 Source: Cushman & Wakefield sq.m. But the large number of new buildings reaching the market in 2007-2009 was followed by a steep decline thereafter, and a halt in the construction of several projects in metropolitan Barcelona and its periphery. The suspension of so many projects and the absence of new ones means that deliveries of new space in 2010 and 2011 will be very sparse. In addition, about half of the new space under construction is already spoken for. At the end of the first quarter of 2010, total available office space in Barcelona stood at 684,596 sq.m, with an availability rate of 12.23%. The rate has tended to stabilise in recent months which is partly because of the small number of new projects delivered in the quarter, but mainly to the recovery in demand. Specifically, the quarter saw a sharper rise in the availability rate in the CBD than in other zones, reflecting the recent trend for companies to vacate space in CBD and relocate to new business Distrito 22@ - Illacuna office complex areas or more peripheral locations, where this is a good supply of new and high-quality buildings. As regards supply, the second quarter will bring the handover of TAKE-UP one of the building in Barcelona’s first inner-city business park, Distrito 38, on the Paseo de Zona Franca, designed by the Total take-up volume in the first quarter reached 94,000 sq.m, architects Arata Isozaki and Zaera Polo and owned by well above even the most optimistic forecasts, and much greater Gesmadrid. than the figure registered in the same quarter of 2009. The total number of transactions came to 80, of which 94% were rentals, and the remaining 6% were purchases and turn-key projects. 2
  3. 3. BARCELONA OFFICES APRIL 2010 GRAPH 2 – ANNUAL OFFICE TAKE-UP Of all the space taken up, among the most noteworthy operations were those of WTC Almeda Park in Cornellà de 450.000 Llobregat, where the insurance group AXA leased 9,000 sq m 400.000 and Puma Sports Spain leased 3,000 sq.m. 350.000 Turning to occupancy in the quarter, the entire 10,200 sq.m 300.000 Torre Pujades building in Provençals and Pujades streets in Take-up sqm 250.000 distrito 22@ was occupied by Servihabitat. Another major operation was the leasing to Bankpime of the 2,750 sq.m 200.000 corporate headquarters building owned Núñez i Navarro on 150.000 Barcelona’s Pere i Pons street. Meanwhile, in distrito 22@ 100.000 Sellbytel leased a total of 3,200 sq.m on levels 1-3 of Avenida Diagonal, 197. 50.000 0 In this first quarter, there was an unmistakable upturn in activity 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q12010 from the same quarter of last year, and a number of major Source: Cushman & Wakefield transactions took place. Companies, especially those located in older buildings, are capitalising on the weak market to upgrade in terms of both quality and efficiency of premises, while cutting RENTAL LEVELS occupancy costs. In the first quarter the long awaited convergence on supply and demand pricing has been evident and this is demonstrated by the take up figures. Rents continued to fall thanks to the high vacancy rate and continuing weakness of demand, reflected by lacklustre take-up until Januray 2010. Still, the quickening of demand and the good levels of take-up in the quarter suggest that prices will stabilise near current levels, depending on the zone. The greater availability of space in the New Business Areas and Periphery means that rents there may still have some way to fall. Some smaller sized lettings were closed during the first quarter in CBD buildings with rents higher than those in the prime zone, but these were too few and small to enable us to determine that Prime rents are higher than 20.50 €/sq.m/month in Barcelona. Maximum rents are down about 25% from their 2007 peak of €27 sq.m /month. GRAPH 3 – PRIME ZONE RENTS AND OVERALL VACANCY RATE TRENDS 30 15% 28 14% 26 13% 24 12% 22 11% 20 10% 18 9% 16 8% 14 7% 12 6% 10 5% 8 4% 6 3% 4 2% 2 1% 0 0% 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010 L’Hospitalet - Plaça d'Europa - Torre Inbisa Prime Rents Vacancy Rate Source: Cushman & Wakefield 3
  4. 4. BARCELONA OFFICES APRIL 2010 THE INVESTMENT MARKET The improvement in take up volume and gradual stabilization in rents have helped to restore investor interest in the office market. In the last quarter, investor activity has been greater than in the final months of last year. The market remains cautious due to the lack of liquidity and this is also reflected by the market for changes of use from offices into residential or hotel uses where no deals have been seen in recent years. In terms of investment volume, the first quarter witnessed only one investment transaction with the sale of Torre Diagonal Litoral B2 by Iberdrola Inmobiliaria to a private investor for the sum of €60 million. Investment yields have remained stable over the last quarter and it appears that the upward movements registered last year have come to end particularly for Prime product where yields currently stand at 6.00%. Investors continue to reject product offering greater risk, be that due to deal structure, location or type of building, focussing on properties offering income security based on good locations, long lease contracts and high occupancy levels. Hospitalet - Plaça d'Europa - Torre Realia BCN GRAPH 4 – PRIME YIELDS 12,00% 11,50% 11,00% 10,50% 10,00% 9,50% 9,00% 8,50% 8,00% 7,50% 7,00% 6,50% 6,00% 5,50% 5,00% For more information, please contact: 4,50% Research Department 4,00% Dolores Martínez – dolores.martinez@eur.cushwake.com 3,50% Research Manager, SPAIN 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010 Marta Esclapés – marta.esclapes@eur.cushwake.com Research Barcelona Source: Cushman & Wakefield Cushman & Wakefield This document contains general information and has been used by Cushman & Wakefield on the assumption that it is José Ortega and Gasset, 29 - Planta 6ª accurate. Cushman & Wakefield declines responsibility if this is not the case. No explicit or explicit guarantee is made of 28006 Madrid the accuracy of the information contained in this document, which may contain errors, omissions, sale or rental prices that Tel.: +34 91 781 00 10 have since changed, or information that has been withdrawn without advance notification or at the behest of our clients. Fax: +34 91 781 80 50 To access the best and most up-to-date information about the real estate sector, visit the Cushman & Wakefield Passeig de Gràcia, 56 - Planta 7ª Knowledge Centre: cushmanwakefield.com/knowledge 08007 Barcelona Tel.: +34 934 881 881 © 2010 Cushman & Wakefield. All rights reserved. Fax: +34 932 152 950