The office vacancy rate in the Catalan capital increased by 117,000 sf during the second quarter of 2001 to stand at 945,000 sf, but this is still 20% below that available this time last year. And at just 2.21%, the overall vacancy rate is still uncomfortably low.

According to CB Richard Ellis, this lack of supply is helping to restrict take-up, since the few buildings available do not always meet tenants' requirement. Around 650,000 sf was leased during the second quarter of 2001. And despite the withdrawal of technology companies from the market, CB Richard Ellis is forecasting that demand from traditional occupies will increase during the second half of the year, which could drive the vacancy rate lower again.

If this happens, a further 8% increase in prime rents to Pts 4,750 per sq m per month ($28 per sf per annum) is not out of the question. At this level, Barcelona office rents would finally have made up all the lost ground and regained their previous peak level last seen in mid-1991. But the effect of inflation over the intervening decade means that in real terms rents are still only half as expensive as they were in 1991.