Key Takeaways
- Spain's economy continues to outperform the Eurozone, with GDP growth forecasts for 2025 above 2.0% and inflation stabilizing, supporting robust real estate fundamentals.
- Office leasing in Madrid and Barcelona remains dynamic, with strong demand for high-quality, flexible spaces, especially within prime areas, and a growing trend of relocations and expansions by major occupiers.
- Industrial and logistics sectors in both Madrid and Barcelona are experiencing historically high take-up, driven by e-commerce, retail, and food sectors, with prime rents continuing to rise amid low vacancy rates.
- Retail sector benefits from resilient consumer spending, a surge in tourism, and a notable increase in prime high street rents, particularly in Madrid and Barcelona.
- Investment volumes are recovering, with prime yields showing signs of compression in both office and industrial assets, and private investors playing an increasingly significant role, especially in retail.
- New construction activity remains robust across all sectors, with significant pipelines in offices, logistics, and living segments, reflecting sustained investor and occupier confidence.
Economic Context
Spain’s economic outlook remains positive, with GDP growth for 2025 projected above 2.0%, outpacing the Eurozone average. Inflation has stabilized, and the ECB’s ongoing interest rate cuts are expected to further stimulate activity. Unemployment continues to decline, with Madrid and Barcelona reporting some of the lowest rates in the country. Consumer sentiment is buoyed by rising household savings and a strong rebound in tourism, which reached 26 million international visitors in the first four months of 2025, up 9% year-on-year. Despite global uncertainties, Spain is positioned as one of Europe’s most resilient economies, supporting continued momentum in its real estate markets.
Demand Overview
Offices: Leasing activity in Madrid and Barcelona remains robust, with Madrid recording 117,000 m² of take-up in Q1 2025 across 125 deals, maintaining momentum from late 2024. Demand is concentrated in prime and high-quality buildings, with sectors such as technology, consulting, and education leading expansions and relocations. Notable transactions include Salesforce and Accenture in Madrid’s CBD, and Factorial and Sage in Barcelona’s New Business Areas. The trend toward flexible, ESG-compliant spaces is accelerating, and the education sector is increasingly active in both cities.
Industrial & Logistics: Both Madrid and Barcelona posted strong take-up in Q1 2025 (225,000 m² and 150,400 m², respectively), with demand driven by e-commerce, retail, and food sectors. Large-scale deals in Madrid’s third ring (e.g., TXT and Truck&Wheel) and Barcelona’s AP-7 corridor (e.g., Action Retail Spain) highlight the preference for modern, high-quality logistics platforms. The majority of new leases are for Grade A assets, reflecting occupiers’ focus on efficiency and sustainability.
Retail: Retail leasing is buoyant, especially in prime high street locations in Madrid and Barcelona, where availability has dropped to 2.7%. Fashion accounts for 45% of demand, and most deals are for units between 300 and 800 m². Shopping centres and retail parks are experiencing stable demand, though footfall and sales in shopping centres dipped slightly in March due to calendar effects (Easter timing).
Vacancy Trends
Offices: Madrid’s overall office vacancy rate stands at 8.31%, with prime CBD availability at just 2.65%. Class A/B+ buildings have sub-2.5% vacancy within the M-30 ring, while peripheral and decentralized submarkets report higher rates (over 13%). In Barcelona, the overall vacancy rate is 11.36%, with the CBD at 5.77% and New Business Areas at 20.39%. The ongoing conversion of obsolete office stock to residential/living uses is further tightening supply in prime locations.
Industrial & Logistics: Madrid’s industrial vacancy is stable at 9.58%, despite over 1 million m² of new supply in the past year. Barcelona’s vacancy rate has declined to 5.7%, even as the logistics stock surpasses 9.5 million m², underscoring strong demand and limited new availability in prime zones.
Retail: High street retail availability in Madrid and Barcelona is at historic lows (2.7%), down 140 bps from a year ago, reflecting sustained occupier demand and limited new supply.
Rent Trends
Offices: Prime office rents in Madrid’s CBD reached €42.00/m²/month in Q1 2025, with continued upward pressure due to low availability. Rents in other submarkets are stable or rising modestly, especially for newly refurbished or high-quality assets. In Barcelona, prime rents are at €30.00/m²/month in the CBD, with New Business Areas at €22.00/m²/month.
Industrial & Logistics: Prime rents in Madrid are at €6.75/m²/month in the most sought-after locations, while Barcelona’s prime rents have climbed to €8.50/m²/month, up nearly 8% year-on-year. Rent growth is driven by demand for Grade A space and limited supply in core areas.
Retail: Prime high street rents have increased by 20% since 2022 and 10% year-on-year, reaching €265/m²/month in Madrid and €275/m²/month in Barcelona. The decline in availability and economic recovery are generating upward pressure, with some locations expected to reach pre-pandemic rent levels in 2025.
Construction & Supply Pipeline
Offices: Madrid has 56,598 m² of office space under construction, with the majority in decentralized and city centre submarkets. Barcelona’s pipeline is larger, with 137,369 m² under construction, primarily in New Business Areas. The focus is on high-quality, ESG-compliant developments.
Industrial & Logistics: Over 1 million m² of new logistics space was delivered in Madrid in the past year, pushing the total stock above 14 million m². Barcelona added more than 800,000 m², with the total stock now exceeding 9.5 million m². Construction activity remains strong, with a focus on large-scale, modern facilities in outer rings and key logistics corridors.
Retail: New retail development is limited, with most activity focused on refurbishments and repositioning of existing assets. Investment in shopping centres and retail parks is increasing, supported by a robust pipeline of transactions and ongoing upgrades to meet evolving consumer and retailer requirements.
