industrial Market News: Spanish Real Estate Intelligence

24 April 2018 - El Confidencial

Aena has fired the starting gun for the largest real estate development plan in Spain, equivalent to four times Operación Chamartín or ten times the Retiro Park. It is the Real Estate Plan for the Adolfo Suárez Madrid-Barajas Airport, which will involve a combined public-private investment of €2.997 billion.

This project, which Aena has been working on since before its stock market debut, proposes the development of 562 hectares of new land, which would allow it to place a buildable surface area of 2.68 million m2 on the market over the next 40 years.

The bulk of the land will be allocated to the development of the largest logistics centre in Spain, which will link the airport’s current cargo loading area with the Corredor del Henares, one of the main logistics regions in the country.

The land allocated to this use will span 257 hectares in total and 1.48 million m2 of buildable surface area, most of which will be developed over the next eight years, and which will mean multiplying the space in the airport dedicated to this use by ten-fold.

The rapid growth of e-commerce and the need from giants such as Amazon and Correos to have large warehouses next to Spain's largest airport, and the gates of Madrid, are behind the business logic for this move, given that Aena is not planning to build any homes in the area.

In this way, this part of the development will be configured into parks with integrated logistics and transport services, as well as loading warehouses and distribution stores; its main objective will be to serve companies in the electronics, biopharma and perishable product businesses, amongst others. Over the next eight years, the second phase of the plan will begin, aimed at completing the logistics uses and, above all, building a new business centre, known as Airport City, to house the headquarters of large companies such as Aena itself and its parent company, Enaire, as well as four hotels that will add 900 rooms to the existing supply in Madrid.

The total surface area reserved for those uses is 62 hectares, with a forecast buildable surface area of 652,000 m2, 90% of which will be dedicated to offices.

These buildings will be located in an area adjacent to T4, which has already been pre-urbanised and which will have pedestrian access to the terminal, and which will also be connected by public transport (metro, suburban train and bus).

There will also be a leisure and shopping centre, covering a total surface area of 57 hectares and a total forecast buildable surface area of 341,000 m2, plus 298,000 m2 of green space.

Aena hopes to turn this leisure space into a magnet in its own right and, to this end, it plans to open a themed recreation area, a shopping centre, a gastronomic space, wellness areas, an aeronautical museum and panoramic observatories.

“It is an ambitious but realistic plan that is perfectly feasible”, said the Minister for Development, Iñigo de la Serna, during the presentation of the plan this morning, where he also pointed out that the urban planning procedures for these plots of land will be agile.

The plots that form part of this plan will be developed under a concession regime, given that Aena will continue to be the owner. All indications are that at its next meeting, the company’s Board of Directors, chaired by Jaime García-Legaz, will formally initiate this process.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

24 April 2018 - Eje Prime

Madrid and Barcelona are the kings of Spain and their crowns attest to that fact. The two largest cities in the country are surrounded by three rings that, in addition to accounting for most of the country's logistics traffic, provide clear answers to the three main questions being asked in the sector: what, how many and how are products demanded. The first ring is a testament to the strength of last mile delivery driven by e-commerce; in the second ring, a large proportion of products are stored on rotation; however,  the third ring, where the largest warehouses are located, saw the most space leased last year.

In general terms, 2017 was a record year for the logistics markets in Madrid and Barcelona. Together, both cities signed rental operations for space spanning more than 1.2 million m2, which represented an increase of 12% with respect to the figure from the previous year and the best result in the last decade, according to the Logistics – The revolution of a booming market report, compiled by the consultancy firm JLL.

The reasons for this boom in terms of transport and storage stem from the strong performance of the Spanish economy and, more specifically, the boom in e-commerce, which is starting to change the way the logistics market operates, in the knowledge that, over the next few years, demand for urban space to handle online purchases is going to double.

Madrid was the Spanish city that saw most evidence of the strong performance of the sector last year. In the county’s capital, 800,000 m2 of logistics space was leased in 2017, with 64 operations signed (21 more than in the previous year), twice as much as in 2016. This increase in the absorption of space was spread across the three rings that surround the autonomous region and the neighbouring provinces of the adjacent region of Castilla-La Mancha.

In the first ring, the M-40 and the M-50 account for most of the activity, with a high rotation of stock due to the last mile effect. In that enclave, towns such as Alcobendas, Barajas (with high demand due to its proximity to the airport), Coslada, San Sebastián de los Reyes and San Fernando de Henares all stand out. In addition, in this area, but closer to the capital, Vicálvaro and Getafe to the north and south, respectively, are also key locations.

The M-50 is in an intermediate point, which on its way out of Madrid has important places for storage and logistics distribution. With an average rotation rate, a large number of the warehouses whose markets have a regional reach are located in Fuenlabrada, Valdemoro, Alcalá de Henares and Torrejón de Ardoz, amongst other towns.

Amazon, from Toledo to the centre of Madrid

For buyers in the centre of Madrid to receive packages purchased on Amazon in a matter of hours, the second ring is fundamental. The e-commerce giant has set up shop in the Toledan town of Illescas, where it leased 103,000 m2 of space to store the immense volume of stock that it must have available for rapid distribution all over the Spanish capital.

Nevertheless, the ring that absorbs even more space of the so-called central area of the country is the third ring, accounting for 39% of the surface area leased last year. There, Leroy Merlin leased 60,000 m2 of space, after moving into the Meco Industrial Estate. At a distance of between 30km and 60km from Madrid, large warehouses serve as storage for operators who have lower stock rotation and an area of influence that normally spans the domestic sphere. In addition to Meco, in this space, towns such as Azuqueca de Henares, Seseña, Alovera and Ontígola stand out, amongst others.

The Port and El Prat: the key points in Cataluña's logistics market

In Barcelona, the epicentre of the logistics centre is divided in two: the Port and El Prat. Both are located in the first ring of the Catalan capital and serve as hubs for intermodal and high stock rotation operations, according to the report from JLL. The international consultancy firm explains that this ring is the gateway to southern Europe for goods coming from the Far East and Southeast Asia, which means covering the whole Mediterranean Arc from this point.

There, cross-docking and freight activities that facilitate last mile delivery dominate. The Zona Franca and its logistics park, the air cargo centre at El Prat, Sant Boi de Llobregat, Viladecans and Mas Blau are some of the enclaves that are home to the first ring market.

Nevertheless, and despite the e-commerce boom, it was in the second ring around Barcelona where most logistics space was leased last year. That area was home to 55% of the 460,000 m2 total surface area leased in the Catalan capital, which represented a drop of 30% with respect to 2016.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake