The Barcelona office market will start to recover later this year

For the first time in four years December 2010 saw a small decrease in the availability of office space in Barcelona. This indicator would show that the office space market is starting to head towards getting on the recuperation track.

CNA / Josep Molina

January 25, 2011 05:59 PM

Barcelona (ACN) .- The property market for offices in the Catalan capital city will start to recover later this year or during the first months of 2012, according to the head of the Catalan real estate consultancy Jones Lang LaSalle Jordi Toboso. According to his forecast, the market behavior in 2010 and during part of 2011 was marred by an oversupply of new offices and a phase of over expansion in the real estate sector. However, Toboso stressed that the fourth quarter of 2010 recorded for the first time in the last four years a decrease in the availability of offices.

In the fourth quarter of 2010, the rate of office space availability in Barcelona was 13.52%. This rate was four hundredths lower than the percentage recorded in the third quarter of 2010, when it was 13.56%. Despite the “insignificant” decline of this index, Jose Toboso feels it is important as it is the first drop registered in the last four years. For the director of this real estate consultancy in Catalonia, the fall in the rate of availability is the beginning of a return to a better balance between supply and demand of the office market in the Catalan capital.

Until now, the market in Barcelona was very exposed to an excess of supply, something that was the result of market entry of numerous real estate projects that had just completed construction. In the last three years, Barcelona saw a growth of 700,000 square feet of new offices, three times more than what was expected of 2010. Laura Caballero, head of marketing at the consultancy says that a "healthy market" or a balanced market is one that registers an availability rate of offices of between 5% and a maximum of 8%. When it is over 10% of this rate, the market is said to be 'distorted', according to Caballero.

Falling prices

This distortion of the market meant that the prices of offices in Barcelona fell by an average of 8.3% in 2010. In districts with many new offices like in the outskirts of the city, there were even larger falls with averages of 12.5%. For 2011 the forecast is that falling prices will remain at 5%.

In 2010, the offer of office space in Barcelona increased by 256,000 square meters. 60% of the offices were used for rent or retail stores and the remaining 40% for own usage. According to Toboso, in the next two years, the panorama of the future supply of offices will “change radically” and there will be an oversupply. Constructions projects for new offices will be “very rare”, says Toboso.