The return of the mega malls is upon us. In the face of the small and medium-sized complexes that have dominated (shopping centre) openings in recent years, from 2016 onwards, large and very large shopping centres are going to make a return; some will measure more than 80,000 sqm.
According to a report prepared by Aguirre Newman, during the period 2016-2017, approximately 415,000 sqm of new gross leasable area (GLA) will be incorporated into the market, as well as extensions (of existing centres) amounting to 90,000 sqm. By number, five projects are due to open in 2016, including the Sambil Outlet (pictured above) in Madrid, with a GLA of 240,857 sqm. In addition, extensions are planned to add 75,570 sqm of additional space.
According to the report, large formats are going to account for 45% of all new centre openings during the period 2016-2017 and 66% of the new GLA.
Over the longer term, from 2018 onwards, activity is expected to increase in markets such as Madrid, where the Madrid Río shopping centre is scheduled to open, amongst others, as well as in Sevilla and Valencia.
The forecasts indicate growth with respect to 2015, with improvements in employment and consumption, which will result in an increase in sales in shopping centres, according to Aguirre Newman’s report.
Similarly, the report explains that the returns on shopping centres will continue to be compressed, as they have been in previous years, although the margin for adjustment at the “golden” shopping centres – the most prestigious centres in their respective areas of influence – is becoming increasingly lower.
According to the consultancy firm, investors’ interest in the Spanish market will continue this year and, given the shortage of “golden” properties, institutional funds are having to focus on other geographical markets and centres that need managing.
The volume of investment in this market amounted to €2,100 million in 2015, a figure only surpassed in the years 2006 and 2014.
The report adds that, when the political situation in Spain stabilises and “the medium-term political and economic strategy becomes clear”, then investors will take their decisions about whether they want to keep Spain on their radars as an investment destination.
On the other hand, the financial institutions, both domestic and foreign, are willing to grant financing, although only in a environment characterised by stability.
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake
Translation/Summary: Carmel Drake