RESEARCH

OFFICES 2018 AND BARCELONA

A year that will be shaped by the political backdrop, mega-deals, the technological revolution and new more- efficient workspaces focused on employee well-being.

ECONOMIC TRENDS AND MADRID: OCCUPIER MARKET BACKDROP CHALLENGES A SUPER CITY AND INVESTMENT OFFICES, 2018 RESEARCH

ECONOMIC BACKDROP RISING BUSINESS CONFIDENCE REFLECTS INCREASINGLY SOLID ECONOMIC RECOVERY

Seventy–five percent of the world’s econ- uation in Catalonia is a major challenge that opinion regarding their business’ Q4 2017 omy is contributing to the current phase of must face head on in 2018. performance, than negative. As a result, the economic growth, with activity levels going So far, the current situation has had a lim- indicator remains positive, and continues to from strength to strength. According to the ited impact on Spain’s economic growth highlight the economic drive of the Catalan IMF, in 2017 the world economy grew by forecasts, however, this could all change if economy and its importance to the Spanish 3.8%, exceeding last autumn’s forecasts by the situation is drawn out even further and a economy as a whole. However, this differ- 0.2 percentage points. The Fund has also favourable solution is not found. ence also narrowed gradually over the year, revised its 2018 and 2019 growth forecasts highlighting the effects of the political insta- up to 3.9%. This upward revision is proof of bility and the drop in tourism that is affecting the favourable financing conditions and the BUSINESS CONFIDENCE businesses. strength of demand, particularly investment AND NUMBER In parallel, the rate at which new businesses and mainly in advanced economies. OF COMPANIES are being created has also been gradually Spain closed 2017 with a growth rate of slowing since summer in Catalonia. In con- 3.1%, a figure which was higher than the Eu- The Business Confidence Indicator (BCI trast, new business creation has been grow- ing in the Madrid Region, breaking above ropean Union average. Although economic hereinafter) is compiled by INE and based the 185,000 barrier in terms of the number of activity is performing extremely well, growth on a survey which asks business owners companies registered with Social Security at will start to ease off slightly over the com- both their opinion of how their businesses the start of 2018. ing years as pent-up demand is gradually have performed in the previous quarter and placed and oil prices start to edge up. their expectations for the upcoming quar- ter. The BCI is the difference between the Against this favourable economic backdrop, percentage of favourable and unfavourable GRAPH 2 the European Central Bank has announced responses. No. Social Security registrations that it plans to gradually ease the monetary 2016 January = 100 The positive trend seen in the Indicator stimulus. In fact, it has already started to in recent years is a sign of the economy’s wind down its debt purchasing programme, solid recovery. Catalonia and Madrid usu- which - once sufficiently reduced - is ex- ally register higher values than the country 107 pected to lead to slight interest rate in- as a whole, given that they are the pow- 105.73 creases. 106 erhouses of the Spanish economy. More The uncertainty surrounding the political sit- Catalan business owners have a favourable 105 104

103 GRAPH 1 Business Confidence Index 102 Compiled using the survey completed among business owners, regarding the previous quarter’s performance. 101

100 30 SPAIN CATALONIA MADRID “ 99 20 The positive trend seen 10 98 0 in the Business Confidence -10

-20 JUL 2016 JUL 2017 JAN 2016 JAN 2017 SEP 2016 SEP 2017 NOV 2016 NOV 2017 MAY 2016 MAY 2017 MAR 2016 MAR 2017 Indicator in recent years -30

-40 is a sign of the economy’s -50 Spain Madrid Catalonia solid recovery Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Linear (Madrid) Linear (Catalonia) “ Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Source: INE Source: Ministry of Employment and Social Security

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OFFICES: A SPACE FOR LIVING, NEW TECHNICAL A SPACE IN WHICH TO GROW REQUIREMENTS SUSTAINABILITY

For several years now, more and more com- to and from work and therefore increases their ious contrasting ambiences designed to moti- Buildings designed to maximise the use panies have been incorporating new ways of level of satisfaction and their overall productiv- vate employees and offer a “look and feel” that of natural light and the sun’s natural path, working into their offices in order to increase ity; hence it is a must. Creating an environment drives their creativity. Other key characteristics artificial lighting to be used solely in the employee satisfaction, improve their productiv- in which employees want to spend time once include incorporating of recreational elements, absence of natural light, solar panels, ity and redefine their relationship with the work- they have finished their working day (areas features and furnishings that are more typically rainwater collection systems, large win- space. These new ways of working are based with multiple leisure options, parks and green associated with homes than offices, as well as on collaborative models involving: multi-discipli- spaces) is a requirement for many occupiers. wide-ranging and customised food options. dows that react to the weather in order to nary teams; more democratic decision-making maintain an optimal temperature, by either Now, in what has become known as the Fourth Offering an office space that meets employ- processes; results-based performance assess- minimising energy loss or even generat- Industrial Revolution, in which the development ees’ current expectations and allows them to ments for employees; working from home; and ing additional energy, reusable construc- greater flexibility. of robots, virtual and augmented reality and arti- develop both on a professional and personal tion materials that do not affect people’s ficial intelligence are becoming ever more com- level will be key for improving employee pro- When it comes to selecting a workspace, loca- health or the environment, as well as recy- monplace, work done by people must become ductivity and attracting and retaining talented tion is one of the most important factors for oc- cled and biodegradable products. increasingly innovative and capable of adapt- professionals. If companies want to offer their cupiers. Securing a particular location or area ing, whilst workspaces must become far more gives a company visibility and has become a employees the ideal space, they will have to be inspiring places. key factor for retaining talented professionals. prepared to pay a higher price per sqm, mean- The trend is for people’s workplaces, homes Employees have become the focal point, and ing their programmes for attracting and retain- and where they spend their leisure time to all be their well-being the number one target. To ing talent must be closely aligned with their cost within close proximity of one another. A central achieve this, spaces must offer a wide variety structures. One way of doing this is to ensure a DIGITAL TRANSFORMATION SURROUNDINGS or excellently-connected location reduces the of amenities to make employees’ lives as easy more efficient use of space and adopt systems AND ACCESSIBILITY time that employees need to spend travelling as possible. Offices must offer spaces with var- such as hot-desking. Technological progress is fast-mov- ing, and offices today must be at the Buildings surrounded by natural and green forefront of new developments both spaces, and that encourage the use of a in terms of connectivity and com- wide range of transport options by offer- munications. However, in the not too ing specific parking spaces and recharg- distant future this will no longer be ing points for electric vehicles and bicycle Flexibility enough. Within just a few years, we parking, even reducing the number of tradi- will not be talking about smart build- tional car parking spaces available. is the key ings capable of regulating overall Companies are starting to champion the FLEXIBLE SPACE FLEXIBLE TERMS energy and water consumption, but cycling option by installing showers and COMFORT rather cognitive buildings that incor- Today, more and more companies need Changing the lease length or other paying employees who travel to and from AND QUALITY to be able to temporarily increase the terms and conditions is becoming in- porate natural language and machine work on their bicycles per kilometre cycled. amount of space they occupy in order to creasingly important if companies are learning processing systems that col- Flexible spaces that can be accommodate extra employees. This flex- to adapt their office spaces to the new lect data and analyse interaction be- adapted to meet the needs of ibility is vital in companies that are either needs. Also, we will start to see shorter tween employees in a building. Data commissioned on a project by project lease terms as a result of the new IFRS any given moment, lighting that generated by sensors will be collected basis - especially if they are projects with 16 accounting standards that will come can be controlled by each em- very specific needs that require employing into force in January 2019, and which and analysed, natural language pro- ployee, climate control, all de- professionals on an ad-hoc basis - or that will classify future term certain rental cessing will allow occupiers to access signed to maximise employees’ belong to rapidly growing sectors. payments as3 part of a company’s debt. all the building’s services by merely well-being. Architecture and de- 1 speaking out loud, images and videos sign are aligned to provide ex- will be analysed and allow occupiers tensive and welcoming spaces. TECHNICAL AND to see all the building’s features and TECHNOLOGICAL FLEXIBILITY Furnishings that create a homely FLEXIBLE LAYOUT interact with them. “look and feel” and workstation Technological progress is fast-moving and layouts that ensure each em- if companies want to remain competitive Having a flexible space that allows an As well as the transformation of the in an evermore digital world, they must be office’s workstation and meeting room ployee is at most 10 metres able to incorporate new technology into their layout to be modified easily is now es- property itself, buildings will also be away from a window, no matter processes, systems and offices as a whole. sential for ensuring efficient use of space. fitted with apps that will be able to where they are working. Work- A good example is Colonial’s building, Virto, Open-plan areas that - depending on a provide occupiers with useful infor- spaces in which the materials located at Francisca Delgado 11, where arti- company’s needs at any one given time - mation regarding the availability of (wood, wool, recyclable mate- ficial intelligence has been brought to life via can be divided into several work areas or a virtual assistant that not only learns occupi- simply used as one extensive open-plan different spaces in the building and rials) and natural colours gen- ers’ habits and preferences, but also helps to space for large meetings are becoming the services and amenities offered in erate an ambience that drives reduce the 2building’s energy consumption. ever more commonplace.4 the area. productivity (biophilic design).

4 5 OFFICES: A SPACE FOR LIVING, A SPACE IN WHICH TO GROW OFFICES, 2018 RESEARCH

GRAPH 3 “ The communications network over time 5G technology will be at the heart of the new 1991-2020 economy. Incorporating 5G networks into the office market will lead to wireless buildings “that no longer require raised flooring, and that 1991 1998 2008 boast much faster connections throughout the entire communications system.

Text Text messages Text messages, internet messages and internet access access and video

2020

Text messages Internet access Ultra HD and 3D video Smart buildings

Source: CNNMoney

6 7 OFFICES: A SPACE FOR LIVING, A SPACE IN WHICH TO GROW OFFICES, 2018 RESEARCH

CASE STUDIES

With flexibility being non-negotiable for occu- UTOPIC US - COLONIAL LOOM HOUSE - MERLIN PROPERTIES piers, the most innovative companies are try- Utopic-Us ing to reduce their fixed costs by turning fixed Three workspaces that champion collaborative features rent into a long-term variable cost. Co-work- working among talented professionals in the THE ROYAL TAPESTRY FACTORY ing spaces offer an alternative occupier solu- centre of Madrid: gastrobars, REAL FÁBRICA DE TAPICES | Atocha tion and can be found in buildings either used a creative History and open-air spaces solely for this purpose or traditional multi-let kitchen and and single-let office buildings which are partly COLEGIATA | La Latina A unique space featuring gardens and open-air workstations, located 10 minutes occupied by co-working spaces that offer Technology and events catering service from Madrid’s iconic Atocha mainline railway station. occupiers all the advantages associated with • A space designed for companies, SMEs for events. • A space comprising various buildings which are surrounded by landscaped gar- such spaces. and start-ups in La Latina in the heart of dens. People can also work in the gardens, an ideal space in which to hold meet- ings or let nature inspire their work. The complex comprises several warehouses This method allows companies to adapt Madrid. offering co-working spaces, the area known as the Dryer offers permanent work- quickly when it comes to growing their busi- • Services: events and communication , stations and all their associated services, including a small age-old temple for ness or changing their business strategy co-learning, offices. special meetings and events. within very short timeframes. Moreover, com- • Specifications: 1,000 sqm, 15 independent • Services: collaborative innovation spaces, the Loom community (comunidad panies are no longer just looking to rent a offices, 1 multi-use room, 1 central space Loom), events. space, they are looking for an all-encompass- for events. ing service that covers all their requirements • Specifications: over 1,000 sqm for workstations and 300 sqm for meeting rooms. 165 permanent workstations + 25 flexible workstations. in terms of workstation installations, meeting rooms, maintenance, security and concierge DUQUE DE RIVAS | La Latina services amongst others. Creative development HUERTAS 9-11 | Centro UTOPIC US | CONDE DE CASAL In the representative Barrio de las Letras These spaces, that were initially intended to • A space designed for freelancers and start- be shared workspaces for people engaged in ups. Also located in La Latina, where the • Building in the historic city centre. Opening in June 2018. different types of work (particularly freelanc- creativity of new entrepreneurs is evident Loom House • Services: collaborative innovation spaces, the Loom community, events. ers and entrepreneurs), have become occu- from just a short walk through the neigh- bourhood’s streets. • Specifications: over 1,000 sqm for workstations and 300 sqm for meeting rooms. pier solutions for all types of companies. They will soon open 165 permanent workstations. are meeting points that provide the perfect • Services: therapeutic space, freelance new inspiring setting for professionals of different sectors area, an area with a homely “look and feel”, spaces in to network and increase their business oppor- designed to inspire. PRINCESA 5 | Plaza de España Huertas and Co-working in the heart of Madrid tunities. They are a product of the new ways • Specifications: 1,200 sqm, 120 worksta- of working and people’s redefined work-life tions, 2 meeting rooms and 1 multi-use room. Princesa. • Twisttt co-working space next to Plaza de España. Opening in June 2018. relationship. • Services: co-working, events. In fact, two of the largest office building own- CONDE DE CASAL | Retiro • Specifications: 1,100 sqm for workstations, individual offices and meeting rooms. ers in Spain, Merlin and Colonial, have also Innovation and international trends 111 permanent workstations + 35 flexible workstations. started to invest in the co-working segment in a bid to diversify their rental portfolios. Co- • A space designed by the architect Izaskun lonial acquired Utopic_US and has become Chinchilla and inspired by Tokyo and New York. Located in Calle Doctor Esquerdo. WeWork’s landlord. It will also soon open a space administered by Utopic_Us at Príncipe • Services : a modern and ergonomically de- de Vergara 112, where it will offer a service signed co-working space. for both tenants and other occupiers. Merlin • Specifications: 1,200 sqm, 100 work- acquired a stake in the company Loom House stations, 8 individual offices, 2 meeting and already has several spaces which it plans rooms, 1 multi-use room, 1 central space to open. for events. Utopic-Us cuenta con LOOM HOUSE | THE ROYAL TAPESTRY FACTORY LOOM HOUSE | THE ROYAL TAPESTRY FACTORY gastrobares, cocina

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EMPLOYEES OF THE FUTURE “Charm your employees and they will charm your clients”

As well as the workplace revolution, in which WHAT WILL EMPLOYEES OF THE FUTURE OFFER? It is a well-known fact that motivated employ- environment and workspace being one of the finding spaces capable of offering employees ees are priceless. They tend to be enthusi- most important factors. the best possible work environment has been astic, proactive, analytical and creative, they companies’ number one concern, the habits They no longer want to work in buildings that WHAT SHOULD THE IDEAL know how to work as part of a team and are WORKSPACE BE LIKE? and expectations of employees are also chang- are impressive architectural feats, they prefer renowned for being open-minded, among ing. More so than ever before, employees now to work in an area that has character and that many other qualities. All these factors shape know what they want, they have a firmly fixed offers a wide range of services and amenities. LOCATION the way in which they work and make them target and they want to feel motivated. Some They want to waste as little time as possible In buildings and neighbourhoods that offer Constructive more productive, all in all resulting in a highly real character. of the positions that have emerged and that, a Methodology travelling to and from work and would even Critical opinion satisfactory “company-employee” relation- few years ago, did not even exist are testament like the chance of being able to walk to work thinking ship for both parties. TRANSPORT LINKS to this change; roles such as Happiness Man- on a sunny day. They would like to have an Good public transport links, well-connected agers are becoming increasingly necessary if Employees are motivated via various chan- open-air space where they can eat and enjoy by road, and accessible via alternative op- companies are to charm their employees and Organisation nels; recognition and fair value for their work, the fresh air on their breaks. For them, it’s all tions, such as on bike or on foot. retain their workforce. Their aim is to attract a healthy work-life balance, flexible working about sharing, and to share, they need collab- ATTRACTIVE INTERIOR DESIGN and retain talented professionals by ensuring Multi- conditions, independence... with their work orative spaces. Different specialist areas boasting spacious that employees feel happy and at one with cultural collaborative areas that allow employees their work environment. Various strategies mindset from various departments to interact, but are employed to achieve this goal; organising Cooperation that also offer other areas that are perfect courses, reorganising spaces to create ones and solidarity for work requiring deep concentration and that are more user-friendly and comfortable, individual work. analysing each employee and associating their SUSTAINABILITY objectives with the company’s, offering thera- Committed to being environmental- peutic services such as massages and sports Emotional ly-friendly. activities are just some of the many initiatives. intelligence Positive AIR AND LIGHT QUALITY Creativity attitude Happy employees are the best allies of any Natural light and good ventilation. company, as not only do they boost results, but they also positively impact the rest of the Digital SERVICES workforce, helping to constantly generate a culture Adapted to employees’ needs: restaurants offering healthy food options, gyms with stimulating work environment. Source: Knight Frank Research wellness space etc.

Source: Knight Frank Research WHAT DO THEY WANT?

RECOGNITION AND FAIR INDEPENDENCE VALUE FOR THEIR WORK

PROFESSIONAL AND STIMULATING ENVIRONMENT PERSONAL GROWTH

COMMITMENT WORK-LIFE BALANCE AND TRANSPARENCY

Source: Knight Frank Research

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PLANNING IN THE MADRID OFFICE MARKET

MADRID ZERO EMISSIONS IN THE CITY CENTRE GDP GROWTH IN 2017 The APR (Residential Priority Area), due to be (EST.) VERSUS TOTAL launched in mid-2018, will restrict daytime + 3.4% A NEW SUPER CITY FIGURE FOR SPAIN (3.1%) traffic in the city centre to residents, electric and hybrid vehicles, taxis, public transport Spain’s capital city has become a leading light in Europe, steadily moving up in the main and motorcycles (from 10 pm to 7 am). As a city rankings year after year. However, gaining super city status is no mean feat, with cities result, offices in the area will most likely start required to meet a number of different criteria. to attract companies that are committed to Unemployment sustainability and respect the environment, or rate 334 BASIS POINTS BELOW • Feature state-of-the-art infrastructure, considered to be some of the safest in the world companies that champion innovative ideas, THE TOTAL FOR SPAIN • Be a global magnet in terms of tourism, business and residential demand - a truly vibrant city such as encouraging employees to cycle to 13.4% • Present economic growth and cultural depth work or use alternatives to driving. • Offer highly-recognised academic institutions • Focus on specialist areas • Its residents must be internationally recognised for their friendliness, warmth and vitality SUSTAINABLE AND RESPECTFUL PLANNING All eyes are on Madrid, with 2018 set to be its year to shine as a genuine super city. Some OF JOBS CREATED New refurbishment projects can not only of the main challenges facing the city are its transport options, its ability to adapt to and 16.3% IN SPAIN SINCE 2014 ensure the city benefits from the technological revolution, efficiency, access to housing and breathe new life into a property built many an office stock that makes the grade in terms of international demand. years ago, but can also comply with legislation in force. This was the case with With regard to the office market, Madrid remains a firm fixture on international investors’ Castellana 81 (BBVA Tower); an icon on radars, who still view the city as a hub of opportunity. Net take-up has been trending the Madrid skyline. Built in the 1970s, it is upwards for several years, whilst rental levels are still significantly lower than in the other now one of the city’s most cutting-edge OF DIRECT FOREIGN main European markets. properties following the refurbishment INVESTMENT IN SPAIN carried out by its owner, GMP. A pioneer in 61.1% sustainability, having obtained the prestigious IN 2017 LEED Platinum Certification.

6.7M IN 2017, international +16% Y-O-Y tourists

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12 13 FUENTE OFFICES, 2018 RESEARCH MADRID, A NEW SUPER CITY DEL FRESNO

SAN SEBASTIÁN DE LOS REYES

ALCOBENDAS Arroyo de la Vega A-1 WHERE La Moraleja CASTELLANA NORTE | M-40 VALDEFUENTES PARACUELLOS MÉNDEZ ÁLVARO TO FIND Las Tablas DE JARAMA FOUR TOWERS | MANOTERAS LAS ROZAS Castellana The most significant office project developed in Europe in An area with development potential thanks to its excellent Norte Area Manoteras THE recent years. The Madrid, Nuevo Norte project (previously provision of services, public transport and proximity to A-6 Four Towers Operación Chamartín) is having a major impact on this area’s the city centre. Location sought after by large companies Business Area looking to develop new projects or carry out refurbish- M-30 development. Auditors, consultants and a renowned oil com- OFFICE pany have all selected the area for their main headquarters. ments in an area with strong growth potential. MAJADAHONDA Valdemarín HORTALEZA BARAJAS Puerta de Pº de la THAT Hierro Castellana Adolfo Suárez CHAMARTÍN Madrid-Barajas POZUELO Campo Airport DE ALARCÓN Aravaca de las Pº DE CASTELLANA JULIÁN CAMARILLO TORREJÓN DE Naciones WORKS M-30 AZCA CIUDAD LINEAL A-2 ARDOZ Primary business hub preferred by companies looking for Strategic hub, home to first-rate properties with a prestigious and emblematic area with stable rents. competitive rents. This area is selected by tech firms Avenida de Companies in this area include financial firms, renowned looking for a property able to reflect the values of BEST MONCLOA - América Julián ARAVACA CHAMBERÍ consultants and value-add service companies. their brand. SALAMANCA Camarillo SAN BLAS - San Fernando FOR YOU M-40 CANALEJAS COSLADA de Henares BOADILLA RETIRO DEL MONTE CITY AZCA CAMPO DE LAS NACIONES Main office areas CENTRE MORATALAZ Méndez in Madrid LATINA Álvaro The primary office hub within the M-30 ring road, and the One of the largest office developments in Madrid, M-30 VICÁLVARO office area that boasts the best transport links and services in with vast open spaces, good transport links and the whole of the city. A regenerated area, in which most prop- enough services to meet the needs of all of its occu- A-5 erties and communal areas started to be refurbished in 2012. piers. The headquarters of many top companies can The area is home to service companies, tech firms, auditors be found here in large, high-quality properties. and public authorities, among others. M-40 CARABANCHEL A-4 A-3 VILLA DE VALLECAS RIVAS VACIAMADRID A-1 HUB ALCORCÓN SALAMANCA NEIGHBOURHOOD

Right in the heart of the capital, this area offers a high The main hub on the outskirts of the city, with large level of services and emblematic properties. This area is business parks. Location often chosen by major corpo- very popular among law firms and investment banks. rations, and that benefits from great visibility and a high amount of passing traffic.

TOP COMPANIES LISTED BY AREA

CHAMARTÍN A-2 HUB | AVENIDA DE AMÉRICA | AIRPORT CAST. NORTE | FOUR PASEO DE SALAMANCA AZCA NEIGHBOURHOOD CHAMARTÍN CHAMBERÍ | ALMAGRO Area with first-rate services and excellently served by TOWERS | MANOTERAS CASTELLANA public transport. It boasts strong development potential, Unbeatable transport links with the airport. Home to given its proximity to Madrid, Nuevo Norte. Home to major the headquarters of top companies looking for visibility · KPMG · BBVA · Savills Aguirre Newman · Deloitte · Baker & McKenzie · Uría Menéndez · WPP companies, occupying highly emblematic properties. and quality properties at low rents. Demand for large · CEPSA · La Caixa · WeWork · Ernst & Young · Allen & Overy · General State Comptroller · Barclays Bank office spaces near Madrid. · PwC · Everis · A&G Banca Privada · Ahorro Corporación · Boston Consulting Group (IGAE) · Ministry of Finance · Freshfields · IATA · CNMV · Cuatrecasas · Knight Frank · HAVAS

CAMPO DE CHAMBERÍ | ALMAGRO A-6 HUB MÉNDEZ ÁLVARO JULIÁN CAMARILLO A-1 HUB A-2 HUB | AV. AMÉRICA | A-6 HUB LAS NACIONES AIRPORT One of Madrid’s real melting pots, filled with hotels, embas- An area mostly comprising business parks, and a sies, museums and iconic properties. A location popular setting rich in green open spaces. The ideal location · Mahou · Grupo CTO · Roche Farma · Telefónica · Enaire · Orange among law firms, investment banks and companies looking for large corporate headquarters, well-connected with · Amazon · Bankia · Publicis · Renault · Vodafone · Volvo for emblematic offices. the city centre. · Comunidad de Madrid · Indra Sistemas · Dentix · Bankinter · L’Oreal · Hewlett Packard · Sitel · Telefónica · Sanitas · Toyota · Aena · DIA · Repsol · El País · Coca-Cola · Indra

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MADRID, A NEW SUPER CITY OFFICES, 2018 RESEARCH For a city to attract companies, such as “ Google, that produce that all so important a wow-effect, they too must inspire and produce that very same effect “ MADRID’S URBAN POWER What makes Madrid a super city? If the ideal city were built from scratch, what would it be like?

Lifestyle. Who doesn’t want to live in a city that has its own unique character? It is often said that Madrid stands out for both its skyline and its people. Its vast offering of leisure, shopping, dining and cultural options, alongside its histori- cal neighbourhoods and new vibrant out-of-town areas - not to mention its attractive climate - make this city one of the top destinations for tourism, living, studying and working.

Super city, superbly connected. Madrid is in- credibly well-connected. Whether by air, road or public transport, its infrastructure ensures quick access to any part of the city, and short journey times between other Spanish and international destinations.

Investor appetite, economic growth. Madrid is one of Europe’s five most attractive cities for in- vestors. National and international investors are drawn by both the city’s strong economic growth and the attractive yields that can be found in various real estate markets, such as offices for example. As well as the full-scale refurbishments underway in many city centre properties, office development is also a safe investment option and a good alternative for building offices that offer the latest in market trends.

Period architecture and smart buildings, cou- pled with vast green spaces. Madrid boasts a wealth of real estate heritage that not only sur- rounds one of the city’s main green spaces, the Retiro Park, but that is also just a short distance from the Parque del Oeste and from the city’s natural green oasis, the Casa de Campo. Its smart buildings are also within striking distance of other unique green spaces, such as the Parque del Capricho in the A-2 area, and the El Pardo woodlands, a National Heritage site in the north- east of the city.

17 OFFICES, 2018 RESEARCH

CHALLENGES FACING OWNERS END-TO-END SOLUTIONS ARE THE KEY

INVESTMENT IN TECHNOLOGY OVERCOMING THE LACK OF ADMINISTRATIVE OWNER MANAGEMENT TRENDS AND HOW LONG IT WILL LAST AVAILABLE LAND CHALLENGES

Managed by the tenant Managed by the owner Owners must be able to adapt to the new The lack of space in the centre of cities such Owners must also tackle a number of admin- sustainability and innovation requirements as Madrid and Barcelona has driven up the istrative challenges. Regulations often have TRADITIONALLY 1997 - 2017 2018 + of today’s occupiers. For many occupiers, number of refurbishments and spurred the several grey areas and processes can be a property must comply with a number of development of new properties in outer pe- overcomplicated and outdated. Investors and Events management standards when it comes to sustainabil- riphery areas. owners are often faced with processes that Employee commitment / motivation ity. Obtaining certification to demonstrate are not streamlined across different town and

In Madrid, the latest major land transaction Analysis of employee activity that certain standards have been met in city councils and that are sometimes extremely was Colonial’s acquisition of two plots of land terms of sustainability and energy efficiency slow-moving. Meeting room reservations (Méndez Álvaro Campus). With construction (BREEAM, LEED amongst others), as well as Internal repairs / maintenance in terms of well-being and comfort (Well cer- set to begin later this year, this is the largest There are also a number of new laws which tification), will be a deal-breaker in the very office-use land transaction to be completed must be taken into account, such as the afore- Wi-Fi near future. in the city since the Four Towers plot of land mentioned IFRS 16, which allows owners to Reporting internal maintenance failures was sold. Colonial, who acquired the land for enter leases on their balance sheets, except for Fiber optic connection Investment in new technology and building €180 million, plans to build an office building low value properties or those with lease terms improvements reduces the time required to that will come onto the market in either 2020 of less than a year. Access control market a property and means that tenants or 2021, and may designate part of the prop- Internal cleaning will be more likely to pay for a particular erty as residential space. The area is already In addition, meeting the requirements to ob- “ Building maintenance space. However, such investment also re- home to the offices of multinationals such as tain the above-mentioned sustainability and quires in-depth analysis to identify what type Amazon, Repsol and Ericsson, and Colonial well-being certifications requires planning and External repairs / maintenance of technology should be installed, how long it has not ruled out the possibility of another top preliminary studies, as well as sound resource will be before the technology becomes obso- company headquarters occupying the larger management to ensure regulations are met and lete, and the likelihood of achieving a return of the two plots. the desired results are achieved. on the investment. Another aspect that tech- nology undoubtedly improves is security, a key factor for both tenants and owners. THE IMPORTANCE OF LOCATION Owners will provide solutions for the various ADAPTING TO NEW DEMANDS 14 markets, offering their space as a service via Location versus modern spaces. As we have 13 Today’s work models, such as co-working, already highlighted, location and transport 12 apps, data analysis, insights and improvements working from home and the gig economy links are musts for occupiers. In fact, many 11 10 (temporary employment based on individual investors only consider a property acces- 09 skills) are becoming increasingly common sible via metro if the nearest station is less 08 than a ten-minute walk from its entrance. on the market; systems that can adapt to the 07 performance and personal circumstances Mixed-use projects have become the per- 06 Same space, different marketing approaches of each individual. Owners are aware of just 05 fect example of just how important location TRADITIONAL LETTINGS how quickly these new models are advanc- 04 “ is. A mixed-use complex must be situated ing and of the professional benefits that they in an extremely well-connected location provide for both employees and companies. and receive enough footfall to make use 03 FLEXIBLE SPACE This is why, in order to cater for a wider pub- of the on-site services offered (restaurants, 02 lic, they are now incorporating co-working accommodation, etc.). In contrast, office spaces into some of their traditional office-let buildings located in considerably less-es- 01 properties, offering occupiers the opportunity tablished areas must meet its occupier de- CO-WORKING SPACE G to benefit from multipurpose rooms, where mand with the retail services available in the OPERATED BY THIRD PARTIES LG the services of external suppliers are at their area, such as restaurants and pharmacies, SERVICE PROVIDER fingertips. among others.

Example of an ideal flexible property

18 19 CHALLENGES FACING OWNERS OFFICES, 2018 RESEARCH

INTERVIEW WITH Real estate professional since 1997, and Chief Investment Officer of Colonial’s Management Com- JUAN MANUEL mittee since December 2014. He holds a Bachelors Degree in Business Management and Ad- ministration from the Universidad ORTEGA MORENO Autónoma de Madrid and is a member of the Royal Institution of Chartered Surveyors (MRICS). CHIEF INVESTMENT OFFICER, GRUPO COLONIAL

Companies

“ went from tenants to

clients, and are now becoming “ guests

20 21 21 CHALLENGES FACING OWNERS OFFICES, 2018 RESEARCH

INTERVIEW WITH JUAN MANUEL ORTEGA MORENO Chief Investment Officer, Grupo Colonial occupiers: floor size, space efficiency, free co-working firm Utopic_Us, Colonial has es- “ EDIFICIO CASTELLANA 43 height, lighting, occupancy rates and sus- tablished itself as a pioneer of this business Flexibility has become a must DISCOVERY BUILDING The LEED GOLD certified tainability, amongst others. If these specifi- model in Spain. In your view, what is the main for companies and this is a MADRID WeWork Headquarters cations cannot be achieved via a full-scale advantages offered by this way of working in Madrid refurbishment of the property, then we con- compared to the traditional method? trend that we cannot ignore sider the demolition option. We are fully aware of the rapid transforma- The current portfolio that the company man- tion taking place in how businesses occupy ages comprises properties in the prime mar- workspaces. Flexibility has become a must kets of Madrid, Barcelona and . What for companies and is a trend that we can- are the main competitive advantages of each not ignore, especially when the so-called Colonial recently made the largest office-use projects under development comprised a total of these markets? Does your Business Plan traditional method often does not make the land acquisition seen in Madrid in recent years buildable area of more than 180,000 sqm in include expanding to other locations in the grade. Our core business is based on offer- “ (in the Méndez Álvaro area); the first land Spain alone. This year we are due to complete next few years? ing occupiers spaces that work for them, transaction that the Group has completed in the Príncipe de Vergara building and the 22@ hence, our portfolio will continually adapt to the city. Do you think that its merger with Ax- Without doubt, the company boasts an ex- meet different occupier strategies. Tower, comprising 24,500 sqm, and we have ceptional prime portfolio in Paris, one which iare could lead it to specialise further in this also just completed the Discovery Building, offers great stability and liquidity, with de- Do you plan to implement this work model in type of transaction? located in Madrid’s Castellana North hub. mand and rental values performing extremely any of your office properties? If so, how will positively in recent years, contrary to mar- you go about it? In recent years, Colonial’s investment policy ket forecasts. Equally, the prime and qual- has been clearly driven by the goal to gener- ity component of our property portfolios in Definitely. In fact, we are already rolling this ate value-add. Our acquisition of Axiare meets Madrid and Barcelona is allowing us to take out. Our project at Príncipe de Vergara 112, that objective both in terms of organic and in- EDITING AND WRITING: advantage of rising Grade-A property rents. due to open very soon, is set to include a organic growth. Prior to the deal, Colonial’s KNIGHT FRANK RESEARCH With regard to a possible expansion beyond space managed by Utopic_Us that will serve the above-mentioned markets, we are not both the property’s clients and third parties. limited to a strict or set policy. In this respect, And this is obviously not the only project of any expansion would be assessed on the po- this nature in our property portfolio. tential to create value for our shareholders and the risk-return reward. Your tried and tested track record in the sec- tor allows you to detect shifts in demand. In terms of Corporate Social Responsibility, What are the main differences between oc- your properties meet the very highest stand- cupiers now and a few years ago? How have ards of quality and sustainability, with most their priorities changed? of your portfolio LEED and BREEAM certi- fied. What are your next targets in this area? Companies have gone from tenants to clients Grupo Colonial is one of Spain’s leading real and are now becoming guests. Nowadays, estate firms, and one that has become syn- We are extremely proud of the progress we companies no longer base their letting de- onymous with quality thanks to its impressive have made in this area, one in which we are cisions solely on costs as they did several property portfolio. What do you look for in head and shoulders above the market aver- years ago. In many cases, companies now properties when assessing whether they are age. Even so, we are concerned with more understand that their cultural transformation a fit for your portfolio or not? than just being able to display the certificates is very closely linked to the workspace that in our properties. We are currently working they offer their employees. There is an un- Our current strategy is clearly based on prop- towards minimising our energy costs, with derlying concern about retaining talent and erties that we can add value to by applying our goal being zero emissions. creating spaces that boost creativity, cor- our expertise. Location and accessibility via porate responsibility is now taken firmly into both public and private transport are crucial One of your properties, Castellana 43, has account, and the degree to which disruptive factors. We also look for properties that will become the Madrid headquarters of We- technology could alter the way in which the SIMULATION OF THE FUTURE MÉNDEZ ÁLVARO CAMPUS | MADRID be able to deliver in terms of the specifica- Work, specialists in creating collaborative work environments are used is constantly Computer generated image tions required by the most exacting office workspaces. In addition, by purchasing under review.

22 23 “

OFFICES, 2018 RESEARCH Year-end figures for 2017 suggest the market is on course for a record 2018 OCCUPIER“ MARKET

TRANSACTIONS H2 2017 2017 it was Finance and Insurance compa- Lettings between 1,000 and 5,000 sqm The standout players, however, were the nies that signed the most, with Government accounted for the highest percentage of Public Authorities, who let more than 80,000 GRAPH 6 GRAPH 7 Take-up by sector Take-up by area Bodies/Public Authorities topping the table in take-up; 42.6% of the total area let. sqm in H2 2017. During H2 2017, office take-up exceeded 2017 H2 2017 H2. However, all sectors are currently fully en- 320,000 sqm, up 43.5% y-o-y. This increase gaged in a digital transformation and in incor- In 2016 more office space was taken in areas The Ministry of Finance’s lettings at Calle Ma- is mainly due to the increase in the average Finance and Other Business Public CBD Secondary Centre M-30 East porating ICT into their production processes, Insurance Authorities deal size as opposed to deal count. outside of the M-30, given the lack of avail- nuel Cortina 2 (recently purchased by GMP) Services a shift that is changing business models and ability of good quality large-scale offices in Industry, Energy, Cons. Services, Legal M-30 North M-30 West M-30 South and Calle Mateo Inurria 15 particularly stand Transport, Food Retail, Health Advisory opening the door to new ways of working. more central areas. In 2017, take-up for space out. Elsewhere in the Secondary Centre, the and Manufacturing and Education At YE 2017, gross take-up in Madrid stood at M-40 North A1 A2 A5 A6 located within the M-30 ring road continued Region of Madrid let almost 15,000 sqm at Engineering, Technology Consultancy East 570,000 sqm, up 23% y-o-y, and above the Real Estate and With regard to the distribution of take-up to gradually trend upwards, with office space historical average of 500,000 sqm. The re- Calle Ramírez de Prado 5, in the Méndez Ál- Construction and the number of transactions per space located in this area accounting for 55% of the newal of Madrid’s office stock, mainly thanks varo area. The largest transaction in terms of bracket, the number of deals signed for of- year’s total take-up figure and for circa 60% to the investments and refurbishments com- floor space was signed outside of the M-30 fices comprising <500 sqm and between 500 of the H2 figure. pleted, has largely contributed to these record ring road in the Julián Camarillo area, at Calle 40.3% sqm and 1,000 sqm remained on a par with take-up levels. Albarracín 31 (owned by Acciona), where the (CBD) 2016. However, the number of deals for of- In the second half of the year, 13 deals were Region of Madrid plans to house its Criminal % fice space comprising over 5,000 sqm gained signed for office space > 5,000 sqm, seven 19.4 320,000 sqm Whilst technology firms have taken the lion’s Courts. Enaire, a subsidiary of the Spanish pace and increased their weighting in terms of of which were located in the CBD, two in the share of office space in previous years, in Development Ministry, let over 7,500 sqm in total take-up to over 30%. Secondary Centre sub-market and just four the Las Mercedes Business Park (Campezo outside of the M-30 ring road. The co-work- 1), in the A-2 area. ing firm WeWork let two office buildings in the GRAPH 4 CBD - Castellana 43 (5,500 sqm) and Castel- Quarterly take-up performance In addition to the aforementioned transac- lana 77 (6,500 sqm). Both buildings have been Source: Knight Frank Research Source: Knight Frank Research 2013-2017 (sqm) refurbished and are LEED certified (Castellana tions, we would also highlight that outside of 77 has been pre-certified). the M-30, Banco Sabadell’s insurance firm relocated its head offices from Sant Cugat del RAMÍREZ DE PRADO 5 Q1 Q2 Q3 Q4 Vallés in Barcelona to the Castellana Norte Savills’ acquisition of the consultancy firm Building managed by Axa and 700,000 building at Isabel Colbrand 22 in Las Tablas Aguirre Newman led to another of the year’s let by the Ministry of Economy, major deals; the letting of over 6,000 sqm at and Publicis to Partenon 12, where they let Employment and Taxes (a Region over 10,000 sqm of office space. of Madrid Authority) 600,000 refurbished Castellana 81.

Baker & McKenzie’s relocation to Edificio Be- GRAPH 5 500,000 atriz from Castellana 92 freed up space for Take-up by size of lettings A&G Private Bank to move into the Azca area 2015-2017 (%) and accommodate its expanding workforce 400,000 that had begun to outgrow its property on % sqm 2015 % sqm 2016 % sqm 2017 Joaquín Costa. 60% 300,000 IE Business School will add more than 6,300 50%

sqm to its technology campus at Campus 40% 200,000 Velázquez (Calle Velázquez 130), where they have access to cutting edge technology and 30%

100,000 plan to develop technological immersion pro- 20% grammes for digital transformation training. 10% MAPFRE will also take up 6,500 sqm in its 0 newly refurbished property at Calle Sor An- 0%

2013 2014 2015 2016 2017 gela de la Cruz 6. <500 sqm 500-1,000 sqm 1,000-5,000 sqm >5,000 sqm

Source: Knight Frank Research Source: Knight Frank Research

24 25 “ OFFICES, 2018 RESEARCH OCCUPIER MARKET

Rising demand and increasingly less available quality space INVESTMENT MARKET are expected to continue driving up prime rents in 2018

SUPPLY Q4 2017 back onto the market after undergoing refurbish- Despite an exceptional first half of the year, DEMAND AND 11-13; AEW Europe’s purchase of Francisco GRAPH 9 the YE 2017 investment volume in Madrid Silvela 106 for a similar sum; and the sale of “ ment works continued to put upward pressure on Vacancy rate TRANSACTIONS the Isla Chamartín business park to Tristan prime rents, which rose to €30.50 per sqm/month 2017 and Barcelona came in at circa €2,160 mil- Availability in the CBD fell sharply in H2 2017, Capital and Zaphir Asset Management for by YE 2017. lion, 22% down y-o-y. The political instability dropping to 6.2%. In 2017, investment funds were the most €103 million, a deal that was brokered by generated by the Catalan independence pro- The highest rental price achieved in the second VACANT SPACE OCCUPIED STOCK active players in both the Madrid and Bar- Knight Frank. In Barcelona, the following cess caused several players to put some in- Unlike 2017, when large-scale refurbishments celona office investment markets. In Madrid deals stand out: the sale&leaseback of Man- half of the year was signed for a space compris- in Azca accounted for most of the market’s vestment decisions on hold, whilst the lack of they accounted for over 40% of the year’s go’s offices and design centre in Palau de ing less than 350 sqm at Castellana 41 (€38 per new supply, new-build projects in other mega-deals involving the acquisition of prop- office investment total and, along with Soci- Plegamans for €100 million; the acquisition of areas will start to emerge this year. More than sqm/month). Castellana 31, owned by Mutua mis, stole the limelight from other investors 1,620,000 sqm erties such as , or the former Government of Catalonia’s head- 70,000 sqm is expected to come onto the Madrileña, and Torre Serrano, owned by In- Adequa Business Park – all sold over the last during the second half of the year. In Barce- quarters at Fontanella 8 by a Korean investor market in 2018. Almost 50,000 sqm of this will finorsa, also achieved some of the highest rents two years - prevented the forecast invest- lona, investment funds accounted for circa via CBRE Global Investors for €64.7 million; be new-build, whilst the remainder will com- 37% of the 2017 investment figure and were and the private equity manager AKM’s acqui- seen in H2 2017, at around the €36 per sqm/ ment figure being reached in 2017. prise refurbishments and renovations. month mark. particularly active in the second half of the sition of Joan d’Austria, 39. 10.7% year, accounting for almost half of the office One of the projects due to come onto the Office rents also increased somewhat in the Sec- investment total. SOCIMIs also accounted for a considerable market inside the M-30 is the 1,827 sqm ondary Centre sub-market, where the very best 1.0 % (grade A buildings) GRAPH 11 share of Madrid and Barcelona’s investment property at Calle Francisco Gervás 13 in the buildings achieved rents of around €19 per sqm/ Investment volume In terms of deals completed by investment activity, although they were far more active in 9.7% (other buildings) 2006-2017 (€ million) Cuzco area, which the Socimi Saint Croix month. Outside of the M-30, closing rents in the funds in Madrid, of particular note are: Remer the former than the latter. Of particular note decided to refurbish following its acquisition very best buildings remained close to the €15 per Investment’s acquisition of the Palacio de in H2 2017 were: the more than €100 million back at the start of 2017. Additionally, Q3 is Miraflores at Carrera de San Jerónimo, 15 that Zambal SOCIMI invested in Albarracín sqm/month registered in the first half of the year. 13,530,000 sqm MADRID BARCELONA also expected to see construction completed for €60 million; the Los Cubos building that 25, Santiago de Compostela 96 and Lérida In quality buildings slightly further afield, rents on Colonial’s 11,300 sqm property at Calle Henderson Park and Therus Invest acquired 44; the €32.5 million invested by Colonial in Príncipe de Vergara, 112, which is already also edged marginally upwards, reaching €11.5 for €52 million; the €30 million that LaSalle acquiring Arturo Soria 336 and the Josefa Val- being marketed. per sqm/month. Source: Knight Frank Research Investment Management paid for Acanto cárcel 40 project from Metrovacesa; and Onix

However, the real revival in the next few years is due to take place in the northern area. Half GRAPH 8 GRAPH 10 LOS CUBOS BUILDING of the 70,000 sqm due to come onto the Variation in prime rents New supply by property location Acquired by Henderson market in 2018 is located in the M-30 North 2006-2019 (€/sqm/month) 2018-2020 (sqm) Park and Therus Invest area, the natural extension of the city’s office

market. Additional office space in the pipeline CBD M-30 EAST M-40 for 2018 includes the following: 14,000 sqm SECONDARY M-30 NORTH NORTH EAST CENTRE in the Oxxeo building, 17,000 sqm within Isla A1 A2 Chamartin and 6,000 sqm at the newly refur-

bished Costa Brava 12 building. 300,000

33.00 1,861 2,506 By year-end, Colonial will have completed 250,000 2,533 3,057 1,215 the refurbishment of VIRTO, which will add 1,324 2,318 an additional 14,500 sqm of available space 30.50 32.00 200,000 to the Arroyo de la Vega area. Colonial will also have finished building 8,652 sqm of 150,000 734 596

space located at Josefa Valcarcel 40 Bis, in 1,012 1,018

100,000 565

the M-30 East area. 403 684 640 783 835 50,000 257 457 555 426 271 266 66 RENTS 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 The spike in demand for large-scale office 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 space and the fact that good quality offices in the most sought-after areas have now come Source: Knight Frank Research Source: Knight Frank Research Source: Knight Frank Research

26 27 INVESTMENT MARKET OFFICES, 2018 RESEARCH

SOCIMIs, who have previously barely fea- In the second half of the year, two deals GRAPH 12 tured in the supply analysis, are expected to closed at over €10,000 per sqm particularly GRAPH 14 Investor country of origin Type of investor be one of the most active players in 2018 due stand out: in Barcelona the acquisition of Di- H2 2017 vs. 2017 total 6% H2 2017 vs 2017 1% to both the property rotation criteria which agonal 444 by Emesa and in Madrid, Infinor- 3% they are legally obliged to fulfil and the trend sa’s acquisition of Torre Serrano. However, INSTITUTIONAL REAL ESTATE COMPANY to further specialise expected over the com- neither of these two equalled the year’s high- INVESTMENT FUNDS SOCIMIs ing years. est average price per sqm, which was signed PRIVATE INVESTOR CORPORATE

10% in Madrid in H1 in the Barclays headquarters 100% SPAIN 12% A supply analysis by country of origin at YE at Colón 1, which CBRE GI acquired from 1% 90% 2017 highlights that Spain accounted for Barclays for €14,000 per sqm. 6% 80% U.S.A. more than 75% of the total volume, followed by the UK (8%) and the US (6.75%). 70% Yields remain tight in the region of 3.75% in 60%

REST OF EUROPE Madrid and 4% in Barcelona. In Madrid, this 50% % can be attributed to three main factors: the 40% 16% 63 PRICES AND YIELDS ASIA low yields on financial and alternative invest- 30% ments; the increasing trend for rents that are 20% Average prices in Madrid and Barcelona’s sustainable in the medium term; and the lack SOUTH AMERICA 10% CBDs continues to trend upwards as in re- of investment product. The Catalan markets, % 0% 4% 62 cent years. Prices broke above the €8,000 which had been registering solid perfor- 16% BCN BCN MAD MAD OTHERS per sqm barrier in Madrid, whilst in Barcelona mances, will stabilise as soon as the political H2 2017 2017 H2 2017 2017 the €6,900 per sqm mark was reached. situation stabilises. Source: Knight Frank Research

GRAPH 13 Prime yields MANOTERAS 12 2006-2017 Property purchased by Onix Capital. 2017 H2 2017 Deal brokered by MADRID BARCELONA Knight Frank.

7.00% Source: Knight Frank Research

6.50%

Capital Partners’ acquisition of Manoteras 12, 10% of Madrid and Barcelona’s total invest- during the second half of the year (account- 6.00% a deal brokered by Knight Frank. ment figure in H2. ing for over 60% the investment total in H2) 5.50% owing to the political uncertainty. Private investors were fairly inactive in 2017. Whilst institutional investors kept a lower 5.00% profile in Madrid’s office market in H2 2017, This said, during the second half of the year, they accounted for almost 23% of Barcelo- in Madrid we would highlight José Lladó’s SUPPLY 4.50% na’s total investment volume thanks to Cat- acquisition of Fernando el Santo 15, home alana Occidente’s €90 million acquisition of to the Argentinean Embassy, whilst in Barce- Institutional players were joined by corpo- 4.00% the Luxa complex, home to Amazon’s head- lona we would note Emilio Cuatrecasas’ pur- rate owners as the market leaders in terms quarters. chase of numbers 444 and 632 on Avenida of supply, together accounting for more than 3.50% Diagonal, along with the 31,000 sqm ac- 45% of the total sales volume. The top two deals completed by real estate quired as part of Project Finestrelles. 3.00% companies during the second half of the year These were followed by developers and real were Infinorsa’s acquisition of 40% of Torre After companies headquartered in the US in- estate companies who accounted for a total 2.50% Serrano in Madrid, and Grupo Metropolis’ jected the most capital into the market during of 15%, and who came in marginally ahead acquisition of the Can Ametller Business the first half of the year, Spanish investors of private owners and family offices (14%) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Computer generated image Park in Sant Cugat del Vallés, representing moved back to the top of the leader board and investment funds (13.5%). Source: Knight Frank Research

28 29

THE TRANSFORMATION OFFICES, 2018 RESEARCH

IN IMAGES As people change, so too does their work philosophy, “ the way in which they work, and the tools needed to successfully adapt to these changes.

Understanding this shift is key to achieving professional success across all levels. 30 “ 31 COMMERCIAL BRIEFING For the latest news, views and analysis of the commercial property market, visit knightfrankblog.com/commercial-briefing/

OFFICES RESEARCH Raúl Vicente Associate Head of Office Agency [email protected] +34 600 919 023

Teresa Taberna Manager Capital Markets [email protected] +34 600 919 154

Rosa Uriol Head of Research [email protected] +34 600 919 114

Vanesa Marcos Research Consultant [email protected] +34 600 919 130

Knight Frank Research offers strategic advisory services, consultancy services and Important notice forecasts to a wide range of clients across the globe, including private investors, © Knight Frank LLP 2018 – This report developers, institutional investors, corporate institutions and the public sector. All our is published for general information only clients recognise the need for their company to receive independent expert advice and is not to be relied upon in any way. Although high standards have been used tailored to meet their specific needs. in the preparation of the information, analysis, views and projections presented RECENT REPORTS in this report, no responsibility or liability whatsoever can be accepted by Knight Frank España, S.A.U. for any loss or damage

RESEARCH resultant from any use of, reliance or reference to the contents of this document. EUROPEAN SNAPSHOT OFICINAS 1er TRIMESTRE 2018 QUARTERLY THE 2018 REPORT As a general report, this material does not MERCADO DE GRÁFICO 1 GRÁFICO 2 COMMERCIAL PROPERTY OUTLOOK Evolución de las rentas prime Tasa de disponibilidad USUARIOS MADRID T1 2018 T1 2018 Q4 2017

▪ La absorción del primer trimestre de 2018 1.630.000 m² ha alcanzado los 119.000 m², un 19% 30,50 más que el mismo periodo del año anterior. La buena marcha de la necessarily represent the view of Knight economía pronostica otro año de 10,7% contratación récord. 33,00 edificios 1,0% grado A ▪ La zona M-30 Norte ha concentrado la resto de 29,50 24,25 32,00 mayor parte de la contratación, el 36%, y 9,7% edificios donde ha tenido lugar la mayor operación del trimestre, Everis en la antigua sede de Axa, en Fuente de la Mora 1. 13.540.000 m² Frank España, S.A.U. in relation to a THE FUTURE ▪ La tasa de disponibilidad se mantiene en STOCK OCUPADO SUPERFICIE DISPONIBLE en 10,7%, el 1% en edificios de grado A y el 9,7% en el resto. Fuente: Knight Frank Research Fuente: Knight Frank Research OF REAL ESTATE THE TRENDS SHAPING ▪ Las rentas prime se mantienen en GRÁFICO 3 GRÁFICO 4 30,5 €/m²/mes, esperando que a final Evolución de la absorción trimestral Ranking absorción m² y renta 40 LEADING CITIES 2013 - 2018 máxima por zonas*. T1 2018 de año se alcancen los 32 €/m²/mes. particular property or project. Reproduction * Excluidas operaciones no representativas. T1 T2 T3 T4 GRÁFICO 5 TOP3 | transacciones de ocupación POR ORDEN DE RENTA T1 2018 M² ABSORBIDOS MÁX (T4) 700 EVERIS SPAIN M-30 Norte 13,80 600 FUENTE DE LA MORA 1 | M-30 NORTE CBD 34,00 500 ELON of this report in whole or part is not 210 C. Secundario 25,00 187 400 27.280 m² 136 M-40 Noreste 17,00 117 300 104 110,4 A-1 14,50 ‘000 m² 116 87 AVORIS REINVENTING TRAVEL 53 74 200 M-30 Este 14,00 55 79 153 ABSORCIÓN M² POR VIA DE LOS POBLADOS | M-40 NORESTE 88 117 MUSK M-30 Sur 11,00 100 158 139 TRAINS, ROCKETS 100 103 100 119 A-2 12,00 m² 0 permitted without prior written approval 9.300 2013 2014 2015 2016 2017 2018 A-6 15,00 & SOLAR ENERGY

ALL FUNDS BANK Fuente: Knight Frank Research Fuente: Knight Frank Research PADRES DOMINICOS 7 | M-30 NORTE EVOLUCIÓN ABSORCIÓN MADRID | T1 OCCUPIER TRENDS INVESTMENT TRENDS MARKET OUTLOOK 4th Edition 6.150 m² 2016 T1: 103.000 m² 2017 T1: 100.000 m² 2018 T1: 119.000 m² of Knight Frank España S.A.U. to the form and content within which it appears. Knight Offices Snapshot European Quarterly Gobal Cities Frank España is a limited liability partnership Spain | Q1 2018 Q4 2017 2018 registered in the Mercantile Register of Madrid with Tax ID No. (CIF) A-79122552. Knight Frank Market reports are available at Our registered office is located at Suero de www.knightfrank.es/investigacion-de-mercados and www.knightfrank.com/research Quiñones 34, 28002. Madrid.