Madrid’s office market has changed profoundly since the pandemic. Remote working and hybrid models have not eliminated the office, but they have redefined its function. Companies are looking less for spaces designed solely to accommodate workstations and more for buildings capable of fostering collaboration, wellbeing and talent attraction.
The result is not a homogeneous recovery, but an increasingly polarised market. Well-located, efficient assets adapted to new needs are concentrating demand, while obsolete buildings or those that are difficult to upgrade face a growing risk of falling behind.
Stable demand, but highly selective
Madrid began 2026 with resilient occupier activity. According to CBRE, office take-up reached 102,000 square metres in the first quarter, just 2% less than a year earlier. This is not a figure that points to a new phase of rapid expansion, but it does suggest a normalisation of the market after several years of high uncertainty.
The key lies in how that demand is distributed. Cushman & Wakefield notes a clear preference for well-located category A and B+ buildings, modern and aligned with new efficiency and sustainability standards. The shortage of quality product in the most sought-after areas is also supporting rents for the best assets.
This movement is commonly known as flight to quality, or a shift towards quality. Some companies may reduce their total footprint, but at the same time they are looking for better locations, more services and technically more advanced buildings.
The market is divided by location and quality
Talking about “Madrid offices” as a single market can be misleading. Availability, rents and demand vary significantly between the city centre, the area around the M-30 ring road and the more peripheral zones.
The lack of suitable product is especially acute in central and well-connected areas. By contrast, other submarkets maintain higher availability, particularly when buildings do not meet current requirements for efficiency, flexibility or user experience.
That is why the value of an office increasingly depends on a combination of factors:
- location and transport connections;
- energy efficiency;
- flexible floorplate layout;
- air quality and comfort;
- common areas and services;
- technological capacity;
- and ease of adaptation to future users.
Environmental, social and governance criteria — known as ESG — have also gained importance. In offices, they translate into specific issues such as energy consumption, emissions, accessibility, occupier wellbeing and the quality of building management.
Investment is also returning selectively
The investment market has regained momentum, although figures vary depending on the scope used by each consultancy. CBRE describes a strong rebound in investment in the first quarter of 2026, partly driven by the return of capital to core assets, meaning stabilised, well-located buildings with predictable income.
Alongside this interest in consolidated properties, value-add transactions are also gaining ground. These strategies seek to acquire assets with room for improvement and increase their value through refurbishment, rent reversion, efficiency improvements or commercial repositioning.
This does not mean that every old building hides an opportunity. Value creation depends on there being a real difference between the property’s current situation and what it can achieve after intervention.
Mazarredo: a strategy based on upgrading the asset and its rents
The Mazarredo Offices project, developed by Urbanitae together with FREO Group, illustrates this type of strategy. The asset is located at Calle Mazarredo 7, in Arganzuela, within the M-30, and has around 3,967 square metres of built area. It is currently leased to Spaces, a flexible workspace operator belonging to the IWG group, until June 2027.
The opportunity does not lie solely in buying an occupied building. The current rent is below market levels. When the lease expires, the plan envisages renegotiating with the current tenant or attracting a new one at an updated rent. Maintenance and investment works are also planned, as well as obtaining an environmental certification before stabilising and selling the asset.
In other words, the expected return depends on several levers: entry price, improvement of the property, rent reversion and subsequent sale under better conditions.
This approach offers value creation potential, but it also involves risks. The cost of the works may deviate from expectations, renegotiation may not achieve the expected rent, and the period between tenants may be extended. In addition, the exit price will depend on how the office market and available financing evolve.
The risk of obsolescence is gaining importance
Market polarisation creates opportunities, but it also increases the risk of obsolescence. A building may be in a reasonable location and still lose competitiveness if it consumes too much energy, offers inflexible floorplates or requires significant investment to adapt.
This problem particularly affects assets that sit in an intermediate position: they do not have the quality needed to compete with prime product, but they also do not offer a sufficient discount to justify their transformation.
That is why it is not enough to say that offices “are back”. What is returning is demand for certain buildings. The rest will have to reposition, change use or accept a loss of appeal.
More transformation than recovery
Madrid is not returning to the office market that existed before the pandemic. It is entering a different stage, in which the office remains relevant, but its function is more closely linked to collaboration, corporate culture and employee experience.
This new phase also does not benefit all assets equally. Location, technical quality and adaptability matter more than before, while obsolescence becomes one of the main risks.
That is why, rather than speaking of a general recovery, it is more appropriate to speak of transformation. The best opportunities will be found in buildings capable of responding to the new demand, or in those that can realistically be repositioned to do so.
