Madrid’s office market is showing strength. The last quarter of the year closed with over 540,000 m² leased in 2022, nearly 30% more than in 2020. This reflects a pre-pandemic recovery trend that is now looking to the future: over 70% of the office supply in 2023 will focus on refurbishment, adapting existing assets to meet sustainability and environmental standards.
At the macroeconomic level, Madrid’s economy remains resilient. Despite uncertainty caused by the broader socio-economic context, the country not only avoided a recession but also recorded one of the strongest growth rates in the European Union—nearly 5%, which is double the EU average.
The flex needs to emerge
As a result, stability and large transactions are becoming hallmarks of the office leasing market. With an average of 130,000 m² per quarter, Madrid closed 2022 with two major transactions (>10,000 m²) and an average deal size of around 1,000 m². In fact, transactions above 3,000 m² are gaining relevance, already accounting for 7.5% of total deals. However, as in Barcelona, contracts for 500 m² still represent the majority, comprising 52% of all transactions.
A key factor in the office real estate market is the availability of assets aligned with sustainability criteria. It is no coincidence that almost half of Madrid’s office leases involve Grade A properties (48%), with a slight price increase driven by high demand compared to the previous year. In terms of location, the city center continues to attract interest, with over half of all transactions (53%) taking place within the M-30 ring.
Despite the healthy leasing pace, flex space is lagging. Unlike Barcelona, the flex market share remains modest in Madrid. Flex offices represent just 1.5% of the city’s total office stock. In fact, many flex operations stem from Barcelona-based companies expanding into the capital.
Looking ahead, Madrid is expected to reach a vacancy rate of 9% in 2023, particularly affecting the city’s outskirts. Vacancy continues to rise in key areas such as Las Rozas, which is why significant stock growth through refurbishment is anticipated. In 2023 alone, refurbishment projects are expected to contribute over 200,000 m², accounting for nearly 70% of the total projected supply (around 300,000 m²). Adapting buildings to new sustainability criteria—while enhancing comfort—will define the roadmap for the year ahead.
