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Office building designed by Merlin in front of the Port of Malaga. SUR
Four major office projects may not be enough as demand continues to rocket in Malaga
Business

Four major office projects may not be enough as demand continues to rocket in Malaga

Although a 10 per cent increase in stock is expected by the end of 2026, if the current level of interest in companies wanting to locate in the city continues it will still be insufficient

Lorena Cádiz

Malaga

Monday, 27 January 2025, 14:47

Four large office projects are currently under construction in Malaga city. Two of them are being promoted by Grupo Insur: the Ágora building, located in Calle Pacífico, next to Tabacalera and the NOA building in Martiricos. A third project which is under way is by Merlin Properties, opposite the Port of Malaga and the fourth building is by AGP Málaga Socimi, located between María Zambrano train station and Calle Poeta Muñoz Rojas.

If all goes according to plan, they will all be completed progressively between the end of 2025 and the end of 2026. In addition, there will be a number of initiatives to expand and modernise the existing office stock in the Andalucía Technology Park.

All in all, the figures show that once they are up and running, the office stock in Malaga will have grown by around 10 per cent, a figure that would cover the current demand. However, if companies continue to show interest in setting up in the city, as they have done up to now, in the short and medium term the supply of office space will continue to be insufficient to meet the growth in demand, as has been the case in recent years.

"The stock of office space in Malaga at the moment is around 570,000 square metres and most of it is in the technology park, with almost 400,000 square metres, in other words, two thirds of it. What has happened is that in the last four or five years, as demand from companies has increased, many have moved into the park but others, due to their profile, are demanding availability in the city and currently this availability is below four percent," explains Pelayo Fernández, director of offices in Andalucía at the consultancy firm CBRE.

According to Fernández the demand for offices "has experienced constant growth" in recent years and that the increase in supply forecast for the coming months "will cover the current demand", but if it continues to increase as it has done so far, "more land will continue to be needed".

"In the last five or six years, given the lack of supply and the age of the office stock in a city that is constantly growing at a business and economic level and with a greater technological positioning, we have always indicated that we need more than 50,000 square metres of office space," said Aranzazu García, head of offices in Andalucía at the consultancy firm Savills.

"In light of the projects that are going to be incorporated, we will see how the new offer will be received by the demand, the interest it generates even for relocations of companies that are already established, due to the leap in quality it represents, and how the demand behaves as they are new office locations in the city", she explains.

According to García, it will probably be in 2026 "when we will be able to draw conclusions, although it is foreseeable that if Malaga continues to grow with the momentum that we have been seeing due to the interest of companies in having headquarters and growing in the city, a larger and renovated office park will continue to be necessary".

The problem is available land. "As with land in general, in other uses such as residential and logistics, the supply in urban or nearby areas is very limited and most of them require urban planning procedures and long management periods," said García.

Price per square metre rises to 23 euros

As in any other activity, the shortage of supply in the face of high demand has meant that the price of office rental has risen significantly in recent years. "Rents in the city have been increasing progressively for about five years, so that if then the price was 18 euros per square metre per month in the prime area, now it is 23 euros," according to Pelayo Fernández from the consultancy firm CBRE. With regard to the conditions of the contracts, especially in terms of the duration of the rental period, these can vary greatly depending on the type of company involved and its interests. While technology companies tend to demand shorter contracts, banks and audit firms prefer longer contracts.

"We have been working on this for some time, explaining to promoters and developers the need to generate new supply in line with demand. However, the lack of land for final use and the compatibility of use with other tertiary segments such as hotels or new living solutions, coliving or student residences, is the stumbling block to overcome in favour of new office space," he continued and gave as an example the auction of land in Torre del Río, which "allowed the development of an office building, but has finally been awarded for a flex-living, which will cover a demand for which there is also a shortage of supply in the city".

Modernity and sustainability

Another important key is the need to renovate part of the current office stock in order to meet the high standards of modernity, quality and sustainability that companies are demanding.

"In general, companies are realising that having a quality office, with a terrace, parking and other amenities, where employees can do sport or any other type of activity, makes employees want to go to the office to work. Today, for certain professional profiles it is no longer necessary, but if there is an environment where they know they can do other things, in the end the employee prefers to commute and that is important", said Pelayo Fernández, from CBRE. It is important because "this link with the office space generates a greater business culture, a greater link with the company and this in turn leads to greater profitability, it has been proven".

In addition to this, the companies that are demanding offices operate according to international quality standards and for these companies it is increasingly important that the building where they are installed has quality certifications and guarantees of sustainability.

Regarding the profile of the companies that are behind this need for offices, there is a clear profile, which is that of technology companies, but it is by no means the only one. "Among the office seekers there are also financial companies that are growing and new companies that increasingly want to be in more modern and sustainable buildings to attract the best talent", considers the CBRE expert.

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