Driven by appetite for big box formats and urban delivery operations, Q1 take-up in Madrid was 346,000 sq m over 22 deals. This was almost three times the space let in 2020 and 12 more transactions than the same period last year.

In the Catalan market, there was 275,000 sq m of take-up across 17 deals. This was double the number recorded in 2020.

Vacancy in Madrid stands at 8%, while half of the one million square metres due to be added to the market over the rest of the year is already committed.

There are similar supply constraints in Catalonia, where vacancy rates have decreased to 3%. Only 4,500 sq m of space was added to the market during Q1. In addition, almost 60% of the 434,000 sq m of new logistics property due to come to the market in 2021 is pre-let.

Aitor Alvarez, head of operations and logistics, Madrid, at Savills Aguirre Newman, said: “The Spanish logistics market’s good performance has continued in 2021, with a lot of activity in big box formats of more than 20,000 sq m. Ecommerce is the main driver of logistics absorption for urban delivery operations.”

“If we continue with this trend for the next two quarters, we forecast the market will see another record year of leasing deals close to one million square meters,” he added. 

The prime rent for logistics warehouses in Madrid’s best locations stands at €5.75 per sq m per month, a year-on-year increase of 4.5%.

In Catalonia, the highest rent recorded was €7.25 per sq m per month in a leasing deal in ZAL - a logistics area in the Port of Barcelona.

Investment activity across Spain is being driven by international buyers, who accounted for 97% of the volume transacted during the first three months of the year.

Although the total investment of €251m was half the amount transacted in the same period last year, there is enormous buying pressure in the market. Savills reports of a generalised product shortage throughout the market – but particularly in the main centres of Madrid and Catalonia.

Antonio Montero, head of logistics, Savills Aguirre Newman, said: “The increasing importance of areas with high retail activity, where there is pressure to expand storage capacity, drives the activity in the occupier market. This then acts as a catalyst in the investment market.”

Yields across Spain remained stable in Q1 due to low market activity. However liquidity and buying pressure, along with scarcity of product and the slow rental growth, indicates further compression in the coming quarters, says Savills.

Prime product yield remains at 4.75%, with secondary at 5.75%.

There is growing interest in last mile logistics hubs in the periphery of large cities, with the aim of speeding up the delivery of online orders, according to the international real estate advisor. It says time reduction is a major challenge and a key component of improving the shopping experience.