New office supply in Madrid and Barcelona plunged in 2025 as teleworking curbs development, deliveries fell to ~320,000 m² and prime rents rose, says EY.
The pipeline of new office space in Spain’s two main business hubs shrank sharply in 2025 as lingering doubts about the future of work and the rise of teleworking continued to weigh on developers and investors, according to EY’s The Property Office Telescope.
Last year only around 320,000 square metres of office space were delivered across Madrid and Barcelona — a 15% drop from 2024. Madrid saw eight new office buildings come to market (191,000 m²), while Barcelona added nine projects (about 127,000 m²). Those totals mark a meaningful decline from the pre-Covid development cycle: Barcelona’s annual deliveries are down roughly 44% from 2022 (226,000 → 127,000 m²), while Madrid’s fell about 12% over the same period (218,000 → 191,000 m²).
Why supply is falling
EY attributes the slowdown to prolonged uncertainty over how often and where people will work post-pandemic. With demand forecasts unclear, investors and banks have largely paused financing for large-scale new office developments, curbing the construction of modern, Grade A stock. That restraint has translated into fewer completions in 2025 and a much smaller development pipeline for the immediate future.
Outlook: 2026–2028
EY expects the reduced pace to continue. For 2026, new deliveries are estimated at roughly 126,000 m² in Madrid and 41,300 m² in Barcelona. Over the next two years the two capitals are projected to add about 230,000 m² in one year and some 460,000 m² in two years — figures that would be significantly lower if the large public City of Justice complex in Valdebebas (Madrid) is excluded. By 2028, projected completions reach approximately 462,000 m², much of it driven by that single macro-project.
Notable projects and refurbishments
Barcelona’s pipeline includes 23 projects for 2026–2027 amounting to roughly 277,000 m², with highlights this year such as Bilbao 122 (25,000 m²), KKH at Pamplona 60 (5,000 m²) and the Paseo de Gracia 56 renovation by Pontegadea. Madrid’s expected new-builds are fewer but significant: the Once headquarters (50,000 m² on a 24,000 m² plot), Alcalá 11–13–15 (12,261 m² for lease) and Eleven (9,800 m²). Several refurbishments and conversions are also in the works: Mapfre’s 10,000 m² Azca coworking space in Moda Shopping, plus projects by Azora, Generali (the future EY Campus) and Inbest (ING at Castellana 2).
Stock destruction and conversions
Compounding the supply squeeze, about 260,000 m² of office space in Madrid and Barcelona was taken out of the stock in the last two years as obsolete central offices have been converted into residential and tourist uses — a trend stronger in Madrid due to more permissive local regulations. These conversions reduce available office supply and re-shape central urban property markets.
Impact on rents and tenants
With supply constrained and higher-quality stock limited, prime rents have begun to rise. Madrid prime office rents are approximately €38/m² per month (up from €36), while Barcelona prime rents have topped €30/m² per month for the first time. EY notes that shrinking supply and stock loss may push some tenants to look for space beyond Madrid’s M30 ring as competition for central offices increases.
A global pattern
Spain’s market reflects a broader European movement: projected office completions in Europe for 2026 stand around 3.1 million m² — the lowest annual volume since 2017 and well below the decade average. EY concludes that the market is cyclical: the current slowdown in new investment, driven in part by teleworking uncertainty, may ultimately support rent recovery in the best-located and best-quality office assets.
