The Office Property Telescope - Investment & Financing Keys Spain 2022 Expanded Edition
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The Office Property Telescope Investment & Financing Keys Spain 2022 Expanded Edition January 2022 Strategy and Transactions
2 4 Financing
► Vacancy Rate in Madrid (9.7%) and Barcelona (8.6%)
increasing at a higher pace due to the weak demand.
► High activity of New Supply & Refurbishments due
to the current weak demand. 500,000 sq.m recently
Activity
delivered in 2021 in Madrid and Barcelona.
The Office Property Telescope
Spain 2022
Supply & ► Take-Up in Madrid and Barcelona stands at 360,000
► Spanish banks forced to focus on business
district transactions but still flexible to compete
and 325,000 respectively.
EXECUTIVE SUMMARY Demand ► The 26 and 74 projects under construction in
under the current circumstances.
► For International banks location is not a real
Madrid and Barcelona to be delivered from 2022 to issue as long as the sponsor creditworthiness is
2023 will cause a negative impact on rents expected high and vacancy risk remains under control
to be partially compensated by high inflation.
1 Macro ► and Borrowing cost levelling off but still below
► Prime submarkets.- Net effective rents leakage than 2017.
keep on widening progressively given the higher
Overview incentives and other allowances provided by
landlords.
► Alternative capital providers eager to
structure junior / mezzanine financing tranches.
Lopsided recovery expected
3 5
after COVID impact
2021-2022 Office Properties Key Performing
► GDP expected growth: + 6.4% in 2022 Investment Market Indicators
(vs. 5.74% 2021).
► EMEA region represents 33% of the worldwide Office Key Indicators by areas in 2022
► Unemployment rate still high but
Investment volume. International investors are currently
decreases 156bps to 14.6% in 2021.
overweighting Americas and Asia against Europe Madrid Barcelona
► Exports will lead the recovery: Current
► Office Investment volume increased by 32% in Spain Rent Cap. Value Rent Cap. Value
imports coverage rate levels off at 95%
during 2021 (+€669m YoY Var.) and accounted for 27% of Max. ► 40 (5%) 15,000 (-1%) 27 (4%) 9,818 (-6%)
the total non-residential Real Estate investment, well
CBD
CBD
► Consumer confidence: Plunges 12 points Avg. ► 31 (-6%) 11,625 (-12%) 24 (-4%) 8,727 (-13%)
since October, from 97 to 85 due to the below the historical average. Min. ► 26 (-10%) 9,750 (-16%) 20 (0%) 7,273 (-9%)
new outbreaks of Covid.
► The overall high valuation of non-prime office properties is Max. ► 16 (-6%) 3,657 (-1%) 24 (0%) 7,200 (25%)
22@
DEC
► Madrid region steps up above the rest of the main reason of the lower investment activity from 2017 Avg. ► 12 (-8%) 2,743 (1%) 22 (-4%) 6,600 (20%)
the country as young people is moving to to 2020. Value Added and Opportunistic investors still on Min. ► 9 (-15%) 1,943 (-3%) 16 (0%) 4,800 (25%)
the capital due to better labour the chase of price correction to profit from the gloomy
context. Rent (€/sqm/mth) (YoY Var. %) Cap. Value (€/sqm) (YoY Var. %)
opportunities.
1 of 162
Once capital has been raised… there is a huge
pressure to be allocated
Investment allocation from pension funds is growing and growing
The Office Property Telescope
Spain 2022 Investible stock of commercial Real Avg. allocation to Real Estate
EXECUTIVE SUMMARY Estate ($trn) investments (%)
40 10
Global assets under management, ~$trn 35
12
9
30
10 25 8
8 20
6 15 7
4 10
6
2 5
0 0 5
United Europe China World Insurance Private Public
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
States company pension fund pension fund
Dry powder Allocated Capital
2000 2010 2021
2010 2021
“Dry Powder”
on the rise while investment
managers struggle to allocate
the equity efficiently
$37trn Global investible commercial stock
has quadrupled in the past 21 years
Source: Prekin, Oxford Economics, third party Real Estate international consultants 2 of 162
Despite high liquidity, office global investment
still cautious in 2021: €269bn
While rapid rental adjustment and valuation haircuts in the US due to COVID have
The Office Property Telescope attracted a bunch of avid value added and opportunistic investors. Overall
Spain 2022 sentiment is that Europe is still “overvalued”
EXECUTIVE SUMMARY EMEA
33%
Transactional volume
€88bn (-2% vs. 2020)
(40% in 2020 and 39% in
2019)
Americas
Although it is high time to refurbish 39% Transactional volume
€106bn (-42% vs. 2020)
(35% in 2020)
most of its office inventory, EMEA
region, with €88bn, seems to be loosing
momentum against other investment Asia Pacific
destinies
28% Transactional volume
€75bn (7% vs. 2020)
(25% in 2020)
Source: RCA –Real Capital Analytics 3 of 162
European CBD Offices Valuation “in the paradise”
Average Capital values in MAD and BCN are still climbing since 2013.
The Office Property Telescope
Spain 2022 10 Year
Bond
EXECUTIVE SUMMARY (31st Dec. 2021) 0.1% 0.9% (0.3%) 0.4% (0.3%) (0.3%) 0.1% (0.2%) 0.4% 0.1% (0.0%) 1.0% - 0.3%
Cap. Values
Yield 2021 – Dif. 10
year bond
244 bps 263 bps 300 bps 285 bps 310 bps 280 bps 387 bps 301 bps 265 bps 344 bps 304 bps 209 bps n.a. 340 bps
(€/sqm)
Spread var. 20-21 65 bps 62 bps 33 bps 70 bps 48 bps 68 bps 40 bps 43 bps 65 bps 85 bps 113 bps 63 bps n.a. 155 bps
European Yield Chart (04-22E; %) 2021 Capital Values
(€/sqm)
36,800 42,042 18,667 10,182 18,214 18,480 16,150 15,789 13,161 9,000 10,200 19,355 17,829 7,520
7% €50k
7.1%
Cap. Values Growth (%)
.
.
12.4% .
6% 10.3
4.2% 9.7%
2.4% 0.0% 3.5% 16.5%
2020 - 2021
(0.3%)
5% 1.8% 2.0%
11.4% 13.1%
€10k
4%
France Germany €0k
London
Lisbon
Munich
Dublin
Madrid
Frankfurt
Berlin
Amster.
Brussels
Milan
Paris
Luxemb.
Vienna
Barcelona
3% Spain UK
8%
Italy
2%
7%
2005
2013
2004
2006
2007
2008
2009
2010
2011
2012
2014
2015
2016
2017
2018
2019
2020
2021
2022E
6%
5%
Europe has experienced an
overall yield 4%
compression, that has 3%
resulted in a considerable
increase in Capital 2%
Values, while rents are
1% Min. 2007 Max. 2009 2021 Prime Yield (%) 2022 Prime Yield (%)
wearing out
Source: EY, Bloomberg 4 of 162
Are office prices in Spain leveling-off?
Investors are still discriminating those who set the new trends against
the trailers
The Office Property Telescope
Pandemic
Spain 2022
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
EXECUTIVE SUMMARY
Bear Market Bull Market Level - off
Real Comps < Theoretical Real Comps > Theoretical Cap. Values Real Comps =
Cap. Values Theoretical Cap. Values
2021 CRE Investment
Breakdown: 15 Rental
14 decrease
Logistics 13
29% 12
11
Hotels
Retail 10
23%
13% €k/sqm 9
8
7
6
5
4
Office
Alternative 3
27% 2
8% 2 Years 8 Years 2 Years
1
0
Spanish Office Investment
Sede de McKinsey
Pinar
Leattad
Torre Sabadell
Project Sea
Recoletos 3
Recoletos
Genova 17
Palacio de Miraflores
Castellana, 19
Castellana, 91
Veazquez 123
Sede BNP Paribas
Plaza de la Lealtad 2
Serrano, 67
Velazquez, 34
Av. Burgos
Paseo Recoletos
Castellana 55
Torre Cepes
Movistar Centre
Oquendo 23
Principe Vergara
Aborro Corporacion
Fernando el Santo, 15
Velázquez, 108
Claudio Coello, 123
Paseo de la Habana, 3
Recoletos 33
Recoletos 22
Monte Esquinza
Sede de Castrecas
Rios Rosas, 24
Tanger 73
P Castellana 42
General Lacy, 23
Francisco de Gervas, 10
Urla Menendes next Mq
Fernando el Santo,20
Manues de Falla 7
Edificio Edison
Torre Espacio
Serrano 85
Sede del Deutsche Bank
Serrano 240
Torre Picasso
Fernando de Santo
Edificio de CaixaBank
Market in 2021 started to
show high volatility in
transaction values where
only super prime ¾ of this
transaction
assets where able to s in BCN
keep up Top 5 annual Real Comps (€/sqm) Theoretical Capital Value (€/sqm)
5 of 162
European Investment Office Market:
Transactions in Spain have not been material in Europe in 2021.
The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY
Spain accounted for 3% of
the Total Office Investment €1.400m
in Europe
€1.026m
Germany
United €677m €739m €765m
Kingdom
24%
22%
Media Works 30 Fenchurch ABN AMRO HQ High Tech Campus Four Frankfurt
France Munich Street Eindhoven (Tower 1)
14% Office Office Office Office Office
Other
21%
Norway Sweden
3% 8%
Netherlands Spain
5% 3%
BUYER BUYER BUYER BUYER BUYER
Union Investment, Brookfield AM VolkerWessels, GIC, Oaktree Allianz RE
Hines Victory Advisors,
VENDOR
G&S Vastgoed VENDOR
VENDOR Delancey, M. Safra VENDOR
& CO Ramphastos Gross & Partner
VENDOR
Pentagon Officefirst
ABN AMRO Investment
Portfolio
(#21 in European 95,998 sqm 51,095 sqm 67,998 sqm 272,993 sqm 83,158 sqm
Deals Ranking)
Source: EY, RCA – Real Capital Analytics 6 of 162
European Investment Office Market:
Spain (€2,773m) accounted for 3% of total European Office
Investment in 2021.
The Office Property Telescope
Purchase
Spain 2022 # Country Asset GLA (Sqm)
Price (€m)
Buyer Vendor
EXECUTIVE SUMMARY
1 Germany Four Frankfurt (Tower 1) 83,158 1,400 Allianz RE Germany, BVK Gross & Partner
2 Netherlands High Tech Campus Eindhoven 272,993 1,026 GIC, Oaktree Ramphastos Investments
VolkerWessels, Victory Advisors, G&S
3 Netherlands ABN AMRO HQ 67,998 765 ABN AMRO
Vastgoed
4 UK 30 Fenchurch Street 51,095 739 Brookfield AM Delancey, M. Safra & Co
European Initial Yields 2021 5 Germany Media Works Munich 95,998 677 Union Investment, Hines OfficeFirst
Epargne Fonciere, Primonial REIM, La
6 France Shift 45,999 626 Unibail-Rodamco-Westfield
Prime Yield Maximum Francaise, EDF Energy
Country 7 Germany Pandion Officehome (Soul) 44,699 600 Union Investment Pandion
2021 last 10 years
8 Switzerland Crown 37,999 566 Deka Immobilien Pictet Group
France 2.50% 4.75%
9 Germany Skyper 53,899 550 HDI Versicherung Allianz RE Germany
Germany 2.90% 5.15%
10 UK One Braham 30,193 538 Union Investment KHI Holdings, Aldgate Developments
UK 3.25% 5.50% 11 UK Times Square 34,466 533 Generali Group Blackstone
Spain 3.00% 6.80% 12 UK 2-3 Bankside 35,116 511 Omnicom grundbesitz europa (DWS)
Italy 3.00% 6.50% 13 France Window 44,199 505 Primonial REIM, Societe Generale SA Oxford Properties Group, Hines
Ilmarinen, Immobilien Europa Direkt,
For further information, please see 14 Germany Victoriastadt Lofts 68,498 425 Signa Group
Schroder RE Invt Trust
Chapter 3 (Key Investments and Financing 15 UK Minster Building 27,406 411 Suntec REIT FREO Group, Ivanhoe Cambridge
Drivers) in the full report Samsung SRA, SCPI Primopierre,
16 France Influence 32,780 332 Tishman Speyer
Primonial REIM, EDF Energy
17 Italy Libeskind Tower 33,499 320 ENPAIA Generali Immobiliare Italy
18 France Les Portes d Arcueil 44,734 300 SCPI PF Grand Paris - Perial Gecina
Top 5 deals occurred in 19 France Keiko 25,999 300 Macif AXA IM - Real Assets
2021 amounted to 20 UK Athene Place 13,775 300 Great Eagle Hldg Ltd Henderson Park,Endurance Land Ltd
€4,607m, being the most 21 Spain Pentagon Portfolio 50,218 280 KanAM Axa
relevant in terms of 36 Spain Hermanos Revilla 121,131 189 Realia Business Hermanos Revilla
Purchase Price the 40 Spain Project Sea - Everis HQ 27,000 180 Allianz Meridia
acquisition of 1 of the 78 Spain One Parc Central 21,000 120 DWS Group Varde Partners
Four Frankfurt Tower 79 Spain Plaza de les Glories 21,499 120 IBA Capital Partners Hispania SA (Blackstone)
Source: EY, RCA – Real Capital Analytics 7 of 162
Europe: Permanent capital “helping” private
equity to make their investment returns
Despite the pandemic headwinds, investors’ appetite prevails with several
The Office Property Telescope mega-deals
Spain 2022
EXECUTIVE SUMMARY 2021 2021 Single Asset
Most Active Submarkets Top Deals
Volume Var. 21-20 Allianz RE
European Top Buyers and Sellers acquired
Last 24 months London € 8,272m -22.7%
Four Frankfurt (Tower 1)
Top 5 Buyers Acq (€m) Props. Paris € 7,631m -51.7% €1,400m 83,200 sqm in Frankfurt
Union Investment € 5,007 39
DekaBank € 4,594 34 Munich € 4,242m -34.3%
GIC, Oaktree
Allianz € 3,691 15 Frankfurt am Main € 3,671m -25.7% acquired
Corem Prop. Group € 3,582 132 High Tech Campus
SBB i Norden € 3,379 252 Berlin-Brandenburg € 3,019m -27.5%
Eindhoven
€1,026m
Stockholm € 1,713m +14.2% 272,993 sqm in Eindhoven
Top 5 Sellers Acq (€m) Props.
Blackstone € 5,365 69 VolkerWessels, Victory Adv.
Klovern AB € 3,592 133 & G&S Vastgoed
BNP Paribas € 3,343 27 acquired
TLG Immobilien AG € 3,259 301 €765m ABN AMRO HQ
Hemfosa Fastigheter € 2,627 210 67,998 sqm in Netherland
Source: RCA – Real Capital Analytics
Brookfield AM
acquired
€739m 30 Fenchurch St.
Investment activity in European Office 51,095 sqm in London
Properties was cut down to €89bn in
2020 (-35% compared to 2019) mostly Union Investment, Hines
driven by the high uncertainty resulting acquired
from Covid-19 Media Works Munich
€677m
95,998 sqm in Munich
8 of 162
2021 Spanish investment “on decade average”
Investment volume in Office segment increased by +32% YoY due to the
partial pandemic recovery suffered during the year.
The Office Property Telescope
Spain 2022
Total Office Investment Volume by Location (€bn)
EXECUTIVE SUMMARY
4.3
4%
2021 CRE Investment Other
Breakdown:
3.5 +32%
3.4
Logistics Barcelona 4%
8% 42%
29% 3.0 17%
Hotels 2.8
Retail 12% 2.7
23% Madrid 25%
13% 4% 7%
2.4
4% 24%
30% 2.1
6%
35%
27% 59%
Office
27% Alternative 79%
8% 1.2
67% 54%
29% 0.8 72%
A total office pipeline investment volume of 0.7 58%
43% 61% 67%
€4,274m expected to be transacted in 24%
34%
24% 71%
Spain
2,105 664 4,274 52% 57%
1,506
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Short Medium Long Term TOTAL
Term Term Source: EY 9 of 162Who is playing the “office” game in Spain:
More room for value added strategies in 2022?
The Office Property Telescope
Spain 2022 Equity Out Equity In
EXECUTIVE SUMMARY
Investment by typology in 2021:
Madrid Barcelona
30% 35% 36%
47%
35% 17%
€m €m
Core 324 Core 774
Core+ 324 Core+ 275
Value Add 282 Value Add 585
Core Core+ Value Add
Financing shortage has
dragged higher risk
Debt
transactions (Value Add /
Opportunistic),
representing less than 40%
of total transacted
volume
10 of 162Ownership understanding
How to grow? There is a huge opportunity to take advantage of the
obsolete stock as long as prices adjust
The Office Property Telescope
Spain 2022 (18%)
EXECUTIVE SUMMARY
Madrid & Barcelona office inventory
(m sqm)
Barcelona
Market Share
Madrid
18 19 19 19 19 19 19
20 20 21 16.5 M sqm 3.7M sqm
18 18 18
15
16 17 (78%)
Total Inventory
20.2 M sqm
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Spanish office market is Other landlords IBA Capital Starwood Capital
Colonial Pontegadea Zambal Socimi
highly fragmented, key
Merlin Properties Mutua Madrileña Tristan Capital Partners
players own 18% of GLA of
the total inventory.
Source: EY 11 of 162Madrid´s most of vacant space is located
between A1 and A2
The Office Property Telescope
Spain 2022 A-1
Most vacant VACANT
space location SPACE
EXECUTIVE SUMMARY
CBD
Vacant space in Madrid (k sqm) M-40
RBD
Total Vacant Vacancy RC
Zone Castellana
stock space rate % M-40
A-6
Within DEC
5,439 321 5.9%
Calle – 30
A-2
OUT
Outside
8,635 1,016 11.8%
Calle – 30 M-30
TOTAL 14,074 1,338 9.5% New Inventory + Refurbishments
in 2023 – 2024
New Projects New Projects
R-3 in 2023 in 2024
A-5 254,541 sqm 132,631 sqm
New Inventory trend 2009 – 2024 (sqm)* of potential GLA of potential GLA
M-30
*Excluding refurbishments
400k
A-3
+
300k
200k
100k
0k
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022F
2023F
2024F
Source: EY 12 of 162Madrid Letting Deals: Histogram 2017-2021
Number of letting deals according to the Rental Price interval
The Office Property Telescope
Spain 2022 Analysis letting deals in CBD and RBD by rental ranges (%)
EXECUTIVE SUMMARY 60%
53%
50%
40%
32% 30%
30%
20%
20%
10%
0%
22-25 25-28 28-32 >32
2017 2018 2019 2020 2021
Analysis letting deals in CBD and RBD
Low Range Medium Range High Range
30%
MODE: -7% MODE: -7%
25% Growth YoY Growth YoY
20%
During 2021, prime 15%
rents (>32) have 10%
been the top
5%
beneficiaries
representing 20% of 0%
22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
total letting deals
2017 2018 2019 2020 2021
Source: EY Analysis 13 of 162Madrid CBD Leakage Analysis: 2018 vs 2021
ERV vs. Passing Effective Rents “GAP” has significantly expanded from
2018 to 2021 as landlords are struggling to defend occupancy
The Office Property Telescope
Spain 2022 Avg.
Median
EXECUTIVE SUMMARY Mode rent effective ERV Leakage
rent
rent
ERV vs. average passing effective
rents GAP has increased from: -8%
2018
in 2018 to -18% in 2020 and -20% in 2021 24.6 30.0 28.2 30.5 -8%
35
€/sqm/month €/sqm/month €/sqm/month €/sqm/month
30
-8% -18%
-20%
2020
25
26.0 24.0 26.9 33.0 -18%
20 €/sqm/month €/sqm/month €/sqm/month €/sqm/month
2018 2020 2021
ERV Avg effective rent 2021
c. 81% of the current passing rent
will optioned to break before 2024 26.0 24.5 24.8 31.0 -20%
€8.6m
€6.1m €31.9m €/sqm/month €/sqm/month €/sqm/month €/sqm/month
€17.3m
2022 2023 2024 Total Sample Size: 202 Observations ----- 314,197 sqm
c. 81%
Source: EY Analysis 14 of 162Madrid Vacancy – Chronic vacant inventory to
be repositioned (even with positive net take up)
The Office Property Telescope
Spain 2022 In the Base Case, the office space in Madrid would be
occupied in 5.6 years (if considering 60% of net take-up). On Number of Years
EXECUTIVE SUMMARY the other hand, in the Base Case, Madrid office Market would Required to take-up the
need 16.7 years to take-up the vacant space, considering as total vacant space*
Madrid take-up evolution (sqm): net, the 20% of the total take-up space.
700.000
Madrid Take Up (sqm) 450.000
600.000
Best Case=Max.Take-up
5.0 7.4 14.9
500.000 1.337.600
400.000
300.000 400.000
Base Case=Avg. Take-up 5.6 8.4 16.7
200.000 1.337.600
100.000
0 360.000
Worst Case=Min. Take-up 6.2 9.3 18.6
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
1.337.600
*
60% 40% 20%
Take-up (sqm) Vacant Space (sqm)
Current vacancy in Madrid Conversion ratio from gross
stands at c. 1.3m sqm, Take-up to net Take-up
which would take between 6 *Years that Market would need to occupy
the total vacant space according to the
and 17 years to absorb take-up in the best, worst and average case
at an average take-up rate of the last years, considering 60%, 40% and
20% of Net Take-Up
Source: EY Analysis 15 of 162The arrival of hybrid worker is here… to stay?
It is still to be seen how offices sill challenge the current context
The Office Property Telescope
Spain 2022
US, after covid-19, how often would you like to have paid workdays at home?
EXECUTIVE SUMMARY
Five Four Three Two One Rarely
Citizens
31% 9% 14% 15% 11% 20%
Investors Companies
Less than 3 days at home
Workers
People prefer going back to the office.
The coworking spaces are too
expensive for both the average
+45% of workers
Spanish “mileurista” freelance individual and also Spanish
companies. prefer office
employee has not already
succeeded as a “worker” Therefore, there is a real market for
from home companies that cannot afford an
average CBD rental payment
16 of 162What can be done with the high vacancy?
Its time to think out of the box
The Office Property Telescope
Spain 2022
1,338k vacant sqm
in Madrid
EXECUTIVE SUMMARY
US, investors-owned laboratories, total
inventory (Q3 2021, ksqm and vacancy rate)
Total inventory ksqm Vacancy rate %
Boston 2,769 5
San Francisco 2,155 7
Raleigh-Durham 1,514 8
San Diego 1,245 3
Washington DC 975 3
New York 790 29
Denver-Boulder 539 20
Philadelphia 520 7
Seattle 372 8
Los Angeles 204 20
Source: JLL and EY Analysis
$87bn lab industry
investment will not
take Real Estate for
granted VACANT OFFICE STOCK
17 of 162It is high time to open Madrid beyond Calle 30
Madrid Nuevo Norte
The Office Property Telescope
Cuatro Torres
Spain 2022
EXECUTIVE SUMMARY
Zoom out of Madrid city centre
DEC Santiago Bernabeu
OUT
Azca
Colón
Cibeles square
Atocha Railway Station
The challenge is to Retiro Park
make the most of Méndez Álvaro
Calle 30 and M-40
synergies
21 of 162The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY
22 of 162New opportunity for mixed uses in the
southeast of Madrid
The Office Property Telescope
Atocha Amazon Repsol Campus
Spain 2022 Railway Station offices offices Méndez Álvaro
EXECUTIVE SUMMARY
Méndez Álvaro Location
A mixed-use concept with an
excellent connection to take
an outdated area to the
next level. Residential
Tertiary use
Commercial
Cultural facilities
Railway infrastructure
Sports facilities
Green spaces
23 of 162The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY
24 of 162Campus Méndez Álvaro: the new “neighbourhood“
Méndez Álvaro axis has become one of the fastest growing areas in recent years, adding value
both for companies looking for new headquarters, and for those citizens looking for easy
access by car or public transport.
The Office Property Telescope
Campus Campus
Spain 2022 Cultural and New Méndez Álvaro Méndez Álvaro
sports facilities connections Residential area Offices area
EXECUTIVE SUMMARY
Campus Méndez Álvaro main floor
Residential Offices
The project, has been designed by
Estudio Lamela following
sustainability criteria and the
implementation of industrialized
solutions and processes.
25 of 162Madrid will host the most relevant mixed used
project in southern Europe
The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY
Madrid Nuevo Norte Location
1.2
Millions of sqm
81% 19%
Offices Residential
of buildability
The project which had
been delayed for 30
years is gathering
momentum
26 of 162Madrid Nuevo Norte first building
will be delivered in 2027
The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY Definitive approval 1 Implementation initiative
• Participation of more than
of the modification 50% of the owners
of the General Plan
of Madrid
• Preparatory acts for future
Compensation Boards 3 Urbanization
infrastructures 5 First building
delivered
Main objectives
❖ Strategic location 2020 2021 2022 2023 2024 2027
❖ Big scale of the project (5.6km)
❖ Variety of uses
❖ Best connections by railway and Framework
public transport agreement
signed
2 Urban project and
Compensation Boards 4 Construction works
❖ Extend green areas and public
facilities
❖ New Central Business District
INVESTMENT AND RETURNS UNTIL 2040
€169m + €320m + €306m €795m
€ 4.592/sqm
Acquisition Land + infrastructure Construction Total cost
A unique
mixed-use Yield on costs 7.25%
hub in Europe
27 of 162The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY
28 of 162New 5.6 km from north to south that represent
a great opportunity for Madrid
The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY
Distribution of uses Residential Offices Facilities
23.44% 76.56%
Private use Public use
11%
34% 11%
Total area
2,357k sqm 13%
19% 13%
The project opts for mixed uses Residential
Commercial
and aims to create a city that is Green spaces
bursting with life. The variety of uses Sports facilities
Social, sanitary, educational facilities
will complement each other creating Private facilities
a 24/7 activity. This will prevent it Other facilities
Railway infrastructure
from becoming a commuter town.
29 of 162Madrid Nuevo Norte is being built through a
social engagement framework
The Office Property Telescope
Spain 2022 WHY? HOW?
EXECUTIVE SUMMARY The main goals pursued by this area are: The Social Engagement Area allows to exploit the
potential of the project in two ways:
Four domains 1 To integrate the neighbourhoods adjacent to
the Madrid Nuevo Norte project appropriately.
1 To implement a strategy to adapt to social
changes.
2 To generate added social value for the
neighbourhoods connected to the project and To minimise the negative consequences of
for the entire city of Madrid 2 uncertainty.
SOCIAL ENGAGEMENT AREA PURPOSES
Green areas
WHAT? WHO?
The five pillars underpinning Social Engagement DCN (Distrito Castellana Norte) is the first Spanish
Area action are: company to create a Social Engagement Area to
capitalise on inclusive and participatory urban
1 Becoming familiar with understanding the
social dynamics of the neighbourhoods.
planning. The Social Engagement is an area:
2 Creating permanent two-way channels of 1 Structured.
communication.
Skyline including Madrid Nuevo Norte towers
3 Enhancing the involvement of residents. 2 Coherent
4 Finding common values. 3 Permanent.
Incorporating the real need of the
5 neighbourhoods into the Madrid Nuevo Norte 4 Integrated in the company.
project.
31 of 162The Office Property Telescope
Spain 2020
WHAT IS
NEXT?The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY
Offices 5.0
The office market incoming trends have created the term Office
5.0 which consider all the following points:
COVID PUSHING
TRANSFORMATION
The surge of Covid-19 has accelerated OPENNESS
digitalization of the office environment in
order to adapt to: INCUSIVENESS
Working from home SUSTAINABLE
Virtual meetings DIGITAL
E-commerce PRO - MOBILITY
CYBER SECURE
The increasing reliance HYBRID
on “apps” and other
technological platforms AUTONOMOUS CARS
in office buildings present a
potential gateway for
cybersecurity breaches
33 of 162Cybersecurity:
One building, two networks: IT and OT, two different environments
The Office Property Telescope
Spain 2022
EXECUTIVE SUMMARY
Key cybersecurity trends
High-speed
internet Who manages building Lightning
1 Smart building data
analytics Wireless cybersecurity?
Elevators
Secure remote
What isolation controls
are in place?
2 workers’
connections Guest 24/7 monitor
access What cybersecurity HVAC sensors
Cloud data
VPN policies are there?
3 protection
IP Technology Who oversees BMS
operations?
Worldwide 5G Access
5G 4 Fire
implementation
Interactive
When were security
Media measures last validated?
The increase of cyber attacks in recent Audio and Video Has there been a
years has led companies to pay more Conferencing building risk assessment?
Video
attention to the cybersecurity, with Surveillance
a special focus on those unsecure Digital Energy
connections used by their Signage Management
employees on and off side their HQs.
34 of 162For further information…
Request the Expanded Edition
Contents (+150 pages):
1. Macro economic overview related to the office
segment
2. European office market performance
3. Spanish office market understanding
4. Madrid / Barcelona supply and demand analysis
• New supply
• Vacancy
The Office Property •
•
Rents
Take-up
5. Office investment share and transactions pipeline in
Telescope Spain
6. Office financing market main drivers
Investment & Financing Keys 7. Detail of most active players and key financial
Spain 2022 terms offered
8. Emerging trends within the office segment
#TheOfficePropertyTelescope 9. Office key investment factors
To request the expanded edition, please contact Javier García-Mateo, email: Javier.Garcia-Mateo.Morales@es.ey.com, telephone number: +34 659 900 215
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