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. 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. Decentralised submarkets like Campo de las Naciones and Manoteras are active, while the periphery saw a 28% drop after a strong end to 2024. The CBD led take-up for the third year in a row, with 36% of all leased space.
Vacancy Trends
Madrid’s overall office vacancy rate stands at 8.31%, trending downward. Availability is extremely tight within the M30 (below 3%) and under 2.5% for A and B+ buildings. Vacancy has dropped across all submarkets compared to 2023, though some new deliveries in the periphery have slightly increased supply.
Rent Trends
Prime rents in the CBD have hit €42/sqm/month and are expected to rise further in 2025. Rents are also increasing in submarkets with new, refurbished stock. In less dynamic areas, rents remain stable. The focus continues to be on quality and flexibility rather than landlord concessions.
Construction & Supply Pipeline
56,598 sq m of office space is currently under construction in Madrid. Over 100,000 sq m has been converted to alternative uses over the last three years. New development is focused on high-demand zones, with quality supply actively being adjusted to meet occupier needs.
