Investment in Spanish offices rose 19% in 2025 to €2.5bn, driven by a return-to-office rebound and a “flight-to-quality” into prime, sustainable assets, says EY.
Investment in Spain’s office market returned to pre-pandemic levels in 2025, driven by renewed tenant demand and a shift among institutional investors toward high-quality, well-located space, according to EY’s Office Property Telescope report.
Key numbers from the report underline the recovery: total office investment climbed 19% year‑on‑year to €2.5 billion — the highest level since 2020 — and 61 buildings changed hands. Notably, 52 of those 61 buildings will keep their office use rather than being converted to residential or alternative formats.
Why investors are coming back
EY attributes the renewed interest to a 13% rebound in workspace hiring as companies normalized return-to-office policies after the pandemic. That rebound, combined with significant valuation adjustments in offices over the past five years, has made prime office assets comparatively attractive versus residential properties, where valuations have surged.
Local contrasts are stark: since 2019 residential values in Madrid have risen roughly 60% while office valuations fell about 5%. In Barcelona, residential is up ~25% versus an ~8% correction for offices. These shifts, together with yield movements, have widened the income spread: prime office yields are about 200 basis points higher than residential yields, giving offices a clearer margin in a high‑rate environment.
Rents and yields
Between 2019 and 2025 residential rents in Madrid and Barcelona rose sharply (+30% to +50% cumulatively depending on area), while prime office rents increased more modestly (+5% to +10%). That dynamic has compressed gross yields on housing — to around 4.7% in Madrid and 5.8% in Barcelona — versus approximate office yields of 6.9% and 7.6% respectively. With the 10‑year Spanish bond near 3.2%, office yields (roughly 7%) still offer a stronger spread for yield‑seeking investors.
Stock transformation and remaining risks
The market is also undergoing significant physical transformation. Since 2024 some 260,000 m² of office stock has been withdrawn in Madrid and Barcelona as buildings are repurposed for residential, flexible workspace or hotel uses. In 2025 investors allocated about €410 million to buy nine buildings specifically for conversion, underscoring the scale of change.
Despite the recovery, EY cautions that the adjustment between supply and demand is not complete. The divestment pipeline has decreased from €5.7bn to €5.17bn, but 61% of assets placed on the market remain unsold after two years. The main risk lies in secondary office assets — those facing higher vacancy, obsolescence or misfit with hybrid working models — while demand for prime, sustainable, well‑located space remains solid.
What this means for investors
EY’s conclusion is clear: a selective, quality‑focused strategy is now favoured. The market is seeing a “flight‑to‑quality” as investors increase exposure to sustainable, centrally located prime offices and reduce relative weight in residential assets, where valuations are higher and returns lower.
For landlords, developers and investors, the takeaway is to focus on repositioning or upgrading assets in strong locations, while being mindful that peripheral and obsolete offices will continue to face conversion or value pressure.
