In its latest research report Savills finds that 70,000 sq m of retail warehouse space is due to be delivered in Spain during 2013. The sector accounts for 40% of the country’s commercial real estate development pipeline this year, compared with 13% in 2012, which represents a return to pre 2009 development levels.
In its latest research report Savills finds that 70,000 sq m of retail warehouse space is due to be delivered in Spain during 2013. The sector accounts for 40% of the country’s commercial real estate development pipeline this year, compared with 13% in 2012, which represents a return to pre 2009 development levels. Furthermore, an additional 305,000 sq m of space is due to be delivered in this market in 2014 and 2015 according to Savills data, however the firm notes that these projects are dependent on financing. Overall the total volume of retail warehouse space in Spain, including retail parks and stand-alone retail warehouse units, reached 4.15 million sq m in June 2013, representing a 4% year-on-year rise.
Gema de la Fuente, head of research at Savills Spain, explains: “We have seen a slight rise in retail warehouse development in recent months due to several viable projects in good locations getting the green light, although we are yet to see this establishing itself as a new trend in the market. It is important to note that it is mainly low risk projects that can obtain financing and these must be the right size with a good tenant mix, in a suitable location and at least 60% pre-let.”
The international real estate advisor highlights that large retailers, including global brands, continue to expand and take retail warehouse space in Spain. The most significant market movement in 2013 so far has been the decision by American wholesaler Costco Wholesale Corporation to choose Spain for its first outlet in continental Europe. The company is opening a 13,500 sq m store in the Ciudad de la Imagen Park in Seville, which is due to be completed by the end of 2013 and is looking for a further 30,000 sq m site in one of Spain’s key cities such as Madrid or Barcelona to build a 13,000 to 14,000 sq m store. German retailer Deko Palace also acquired 2,150 sq m of existing space in Plaza Imperial, Zaragoza, in December 2012 as its first store in Spain and Ikea continues to expand with a new warehouse in the Community of Valencia scheduled to be completed in the summer of 2014. The Swedish retailer opened Spain’s biggest shop, the 40,000 sq m outlet in Sabadell, at the end of 2012 and plans to have 27 stores and eight shopping centres in Spain by 2020.
Luis Espadas, head of investment at Savills Spain, says: “Large retail operators continue to push ahead with expansion plans in Spain to boost their sales but investment turnover in this sector remains limited, reaching a volume of just €40m in 2012. However, the perception of Spanish real estate has improved in recent months which is attracting international buyers to the market and we believe these investors will gradually push up investment turnover.”
According to Savills research prime retail warehouse rents have remained stable for the past five years at approximately €16 sq m per month, having dropped almost 30% from the peak levels between 2007 to 2008. Average secondary rents stand at €10 sq m per month representing a year-on-year fall of 17%. DIY, household and sports occupiers dominate the retail warehouse market in Spain, accounting for 31%, 29% and 16% of occupied space and in terms of location almost half of Spain’s retail warehouse space is situated in Andalusia, Madrid and the Community of Valencia.