More investors are looking for opportunities in Spain’s commercial property sector.

According to a report by global real estate consultancy, Knight Frank, there was a sharp rise in the take-up of Madrid office space in the first half of 2013, up 60 per cent year-over-year.

This was boosted by some large-scale real estate transactions, most notably Vodafone’s agreement to lease approximately 540,000 square feet in a new building at Avenida de América. This deal indicates that companies are realizing now is the time to lock into lease agreements as large office space in Madrid is available for historically low rents.

“With few new office schemes in the pipeline, availability may begin to tighten and prime rents are unlikely to fall any further,” says Matthew Colbourne, an international research associate in the London office of Knight Frank.

Leasing activity in Madrid’s logistics and industrial market also improved in the first half of 2013, with take-up reaching 2 million square feet and the vacancy rate falling more than two percentage points.

However, subdued consumer spending has continued to affect the retail sector, though shopping centres have maintained high occupancy levels. While there was a lack of shopping centre investment transaction in the first half of 2013, interest in retail in secondary and tertiary cities is increasing, with investors attracted by high yields and opportunities to generate increased returns through asset management.

“There has been a definite improvement in sentiment towards Spanish commercial property over the last six months, and an increasingly diverse group of investors are now looking for opportunities in Spain,” says Humphrey White, head of commercial real estate in the Spain office of Knight Frank. “Investors that have been present in recent years – opportunistic funds and private buyers – are now facing competition from a greater variety of institutional and international investors.”