Approvals for new office construction projects in Spain have increased significantly in 2023. Every new project requires a “visados de dirección de obra nueva” from the Colleges of Architects. The projects approved from January to May increased by 39% year-on-year in terms of number of buildings and by 19% in terms of new floorspace, according to the latest data published by the Ministry of Transport, Mobility and Urban Agenda.
These project "visas" are a prerequisite to apply for building permits and are therefore a good, advanced indicator of construction activity. The surge suggests that confidence is returning after the uncertainty caused by inflation and the rising interest rates.
However, there are differences between provinces, with Madrid activity rebounding in 2023 while Barcelona is moderating following intense construction activity over the past years.
The main driver of construction activity is the need to develop buildings that are environmental, social and corporate governance-compliant.
Occupier demand is still strong for well-located sustainable buildings, which is encouraging investors to develop new buildings despite increased development costs.
Among the latest deliveries of sustainable projects so far this year, Alaba 111 in Barcelona, owned by Blackstone, stands out. Alaba 111 is a smart office building of 18,300 square metres, which is Wired Scored and has been LEED Gold certified.
In Madrid, Amundi has delivered Alcala 544, a LEED Platinum building with over 10,000 square metres.
Looking forward, some of the most relevant buildings to be delivered next year that aim to obtain LEED Platinum are Madnum, a campus, owned by the Spanish real estate investment trust Colonial, which combines housing, retail and 54,000 square metres of offices, and Sky Light, a development of 27,000 square metres developed by Benson Elliot. Both are in Madrid.
Beyond Madrid and Barcelona, Málaga stands out as a buoyant market.
Málaga is attracting international occupiers particularly from the tech sector such as Google which will open its European cybersecurity centre in the city this year. The move reinforces the province’s position as an attractive technological hub, with Málaga TechPark housing 65 international companies.
With over 245 days of sun a year, an average temperature of 18ºC, 34 international schools and 1.7 million inhabitants, Málaga offers a high quality of life at a competitive cost which is attracting companies and freelance workers.
Real estate investors are therefore tapping into the market attracted by the size of the market, the structural deficit of office stock and the growing entrepreneurial ecosystems.
After years of almost no construction activity, new projects are being developed to respond to the growing occupier demand.
The Andalucian Grupo Insur is developing Agora, a smart office building, with over 9,000 square metres with an investment of €37 million. The building aspires to obtain the Excellent BREEAM and WiredScore certification. The investor is set to start another office development in the coming months, with 10,900 square metres and an investment of over €33 million.
Merlin Properties, the largest listed real estate company in Spain, has announced it will develop an office building with 10,000 square metres which is set to be completed by 2025. This is its first project outside the core cities of Madrid and Barcelona, showing Málaga's positive outlook.