The sharp rise in property prices in Madrid is already directly impacting the work of regional authorities. The Generalitat of Catalonia now faces a situation where renting an office in the capital costs the budget almost 65,000 euros per month, while an attempt to purchase its own premises for 33 million euros ended in failure. This case clearly illustrates how a shortage of supply and soaring prices in the city center have become obstacles even for government bodies.
Loss of a historic residence
At the end of 2025, the Catalonia delegation was forced to leave its iconic residence at Alcalá Street, 44, next to Banco de España. The building, owned by Zurich, was sold to Mexican investors who decided to turn it into a luxury hotel. After twenty years of operating at this location, the office moved to the less prestigious Tetuán district, on Orense Street. The new rent now costs the budget 64,945.95 euros per month, according to El País.
Attempting to solve the problem by purchasing a new building in central Madrid yielded no results. The Generalitat announced a tender for an office space of 2,500 square meters in prestigious districts, but the proposed sum of 33 million euros was not enough. Property prices in the capital’s central neighborhoods continue to rise, while owners prefer deals with investors or converting buildings for residential and hotel use.
A market without compromise
According to experts, demand for office and hotel space in Madrid remains consistently high, while supply is limited. Property owners in central districts are in no hurry to sell buildings at a fixed price, preferring more flexible and profitable options. In addition, the Generalitat’s tender conditions excluded intermediaries from participating, further narrowing the circle of potential sellers. Uncertainty over the regional budget also played a role, reducing owners’ interest in making deals.
Requirements for the future residence were quite strict: it needed office space, a cultural center with a 150-seat hall, six parking spaces, and a separate residential area of up to 105 square meters. However, there are hardly any suitable buildings on the market—according to specialists, new properties become available for sale in central Madrid only once every few years, and competition for them is intense.
Shortage and rising prices
The situation is aggravated by the fact that many office buildings in central Madrid are being converted into residential or hotel properties, while some spaces are taken over by the education sector. As a result, the vacancy rate for office space in the city’s business districts has dropped below 3%. Rental rates have stabilized at 40–50 euros per square meter per month, which automatically drives up the sale price of properties.
The Generalitat of Catalonia is now considering alternative options, such as purchasing a less expensive building followed by large-scale renovation. However, time is running out: the lease on the current office on Orense Street expires in March 2029.
Context and similar cases
In recent years, Madrid’s real estate market has sparked several headline-grabbing stories. For example, several major international companies have also faced difficulties buying or renting offices in the city center due to intense competition and rising prices. Other government bodies face similar challenges, often forced either to pay higher rents or to search for space on the outskirts. According to russpain.com, the trend of converting office space to residential and hotel use continues, only adding pressure to the market and driving up costs for all parties involved.
