Madrid & Barcelona Renew Their Main Thoroughfares

5 September 2016 – Expansión

Total investment of €900 million / Investment in retail assets at street level doubled to reach record levels in 2015. Pontegadea’s purchase of the building located on Gran Vía, 32 for €400 million accounted for 40% of total investment. Spain is still in the Top 10 target markets for large fashion operators.

The busiest, most touristic and sought-after streets in Madrid and Barcelona, such as Gran Vía and Las Ramblas, have always been an object of desire for the major players in the restaurant and leisure sector; and, for several years now, they have also been attracting the attention of the major fashion chains, which are choosing to showcase their flagship stores on these avenues.

The high footfall rates on these central streets make them the perfect target for housing the flagship stores of major fashion and accessories brands and, in exchange, these historical avenues have renewed their offer and rejuvenated their image.

In parallel, and in line with the rise of the flagship stores, the retail sector has experienced a general increase in the sale and purchase of large premises. Specifically, more than twenty new international brands arrived in Spain in 2015, of which 60% chose Madrid to open their first store and 32% opted for Barcelona, according to a report prepared by CBRE. As such, in 2016, Spain continues to rank in the top ten target markets for major international companies.

The next major brand expected to arrive in Spain is the Japanese fashion chain Uniqlo. It will begin by opening a flagship store in Barcelona, however, the Asian group is also looking for premises in Madrid. Other firms that have expressed an interest in entering the Spanish market include the Italian brands Terranova and OVS.

Overall, investment in the high street (retail assets at street level) broke records last year, with €900 million invested, twice as much as in the previous year, largely fuelled by Pontegadea’s purchase of the building that Primark now occupies on Gran Vía, 32, for €400 million. That operation alone accounted for 40% of total investment.

In Barcelona, the lack of available supply meant that investment in the high street was not as intense and sales mainly involved mix-used buildings, with a retail component, such as Diagonal 490 and the historical Torre Muñoz, in Fontanella.

The strong demand and shortage of availability in terms of prime supply have caused yields to decrease, to around 3.5% for the best products, in both Madrid and Barcelona. Nevertheless, according to CBRE, that figure is above those reported in other European cities such as London and Paris.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

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