Portal del l’Ángel is Still Spain’s Most Expensive High Street: €280/m2/month

19 February 2018 – Eje Prime

The retail sector strengthened its market during 2017. During the second half of the year, it saw growth in the demand for rental properties of 14%, whilst the number of premises for sale rose by 9%. Of all of the high streets across the land, Portal de l’Ángel in Barcelona retained its position as the most expensive in Spain, with an average rent of €280/m2/month, ahead of the Madrilenian street Calle Preciados, where the average price of a retail premise stands at €270/m2/month.

Last year, €4 billion was invested in the Spanish retail sector, in contrast to the crisis that the same market is currently experiencing in the USA. The reasons for the growth in Spain include, amongst other aspects, the strong economic outlook, the boom in commercial tourism and the dynamism of retail trade, according to a report from the real estate consultancy firm Forcadell.

The upward trend, which has now seen two years of increases, is encouraging demand for retail assets. Nevertheless, in cities such as Barcelona, the supply of premises for rent remains at very low levels, above all on the first and second line, which has led to a reactivation of the third line, according to the report.

This lack of commercial space has resulted in a scarcity of prime assets in the Catalan capital. Some companies have already chosen to move to less central locations or to opt for other formats to invest in retail.

Between June and December, the restaurant sector was the segment that grew by the most in the commercial sector in Barcelona, followed by the fashion operator segment, which increased its commitment to flagship stores and showrooms, and the food retail market, which is immersed in a process of positioning itself close to its customers. The profile of investors in retail in the city are Socimis and foreign investment funds.

Investments in Barcelona  

One of the most noteworthy operations closed during the second half of 2017 in Barcelona saw the opening of Uniqlo’s flagship store on Passeig de Gràcia, the Japanese firm’s first store in Barcelona, which spans a surface area of 1,800 m2.

On the same street, Adolfo Domínguez is also going to open a mega-store measuring 682 m2, whilst nearby, on Rambla de Catalunya, the French lingerie brand Etam has inaugurated a store measuring 500 m2. Finally, Leroy Merlin is finalising the opening of an establishment measuring 2,450 m2 on Calle Fontanella, near Plaça de Catalunya, scheduled for before the spring.

Original story: Eje Prime

Translation: Carmel Drake

Alibaba Signs Lease for its New HQ in Spain

14 December 2017 – Eje Prime

The Chinese giant Alibaba is shaking up the office market in Madrid as the year-end approaches. The Asian e-commerce group has been negotiating for several months to open offices in Madrid from where to lead its operations in the Spanish market. In the end, it has signed a rental agreement for its Spanish headquarters at number 4 Avenida Europa, in Alcobendas, a building owned by the real estate group Gosa. Until now, the technology firm Paypal also had its headquarters in the building (…).

Alibaba will move its Spanish team to the new offices in Alcobendas, which measure approximately 1,000 m2, in the middle of February, according to sources close to the operation. At the moment, the Asian giant’s employees are managing the firm’s Spanish operations from a co-working office. Alibaba has declined to comment on the planned move.

Alibaba’s arrival at number 4 Avenida Europa comes just months after Paypal’s departure from the same building. Currently, that US firm shares offices with Google and Intel in Torre Picasso, as revealed by Eje Prime.

The property that will house Alibaba’s new offices is also home to the headquarters of the cosmetics group Clarins and the Chinese firm Ansteel. Commscope is another company that had its headquarters located in the building until the middle of 2017, but in July it decided to move to number 19 on the same street.

Alcobendas has become one of the hubs of business excellence in Madrid. Indra, VASS, Emerson, Televent, Acciona, Bankinter, Europcar, Canon and Toyota are just some of the multinational companies that have chosen to locate their offices in the Madrilenian town.

Alibaba’s new office, which the company has been anticipating since February, has the capacity to accommodate the almost forty people that make up its Spanish workforce. The team is led by Estela Ye, who was promoted to General Manager of the company in Spain in March.

The office market in Madrid

Leasing of office space during the third quarter of the year in Madrid amounted to 93,173 m2, which represented an increase of 2% with respect to the same period in 2016, although, according to a report from Aguirre Newman, 16 fewer operations were closed (96).

One of the most active areas in the capital was the Other Business District (RDN), which accounted for 31% of the total space leased. Nevertheless, the report highlights that leasing in the Central Business District (27% of the total) and in the OUT area (23%), saw the most significant increases, more than doubling their figures with respect to the same period in 2016.

In terms of rents, the maximum recorded during Q3 was €36/m2/month, whilst the average rent in the CBD area was €28.96/m2/month. In the Decentralised area, the average rent amounted to €12.71/m2/month.

Original story: Eje Prime (by A. Pijuán)

Translation: Carmel Drake

Aguirre Newman: Inv’t in Offices Exceeded €1.7bn in YTD Sept

1 December 2017 – Eje Prime

The office sector in Spain is stable. During the first nine months of the year, the sector accounted for investment amounting to €1.7 billion, in line with the investment level recorded during the same period in 2016, according to the Office Market Report compiled by the real estate consultancy firm Aguirre Newman.

“The main indicators of the office market (the availability rate, the uptake rate, rental prices and the evolution of stock) have continued their positive behaviour previously observed in recent years”, explain sources at the consultancy firm.

“The high level of economic activity in Spain, combined with the strong economic performance of the main countries in our environment, are having a clear impact on our two main office markets”, they say.

Focusing on Madrid, the gross leasing of office space during the third quarter of the year amounted to 93,173 m2, which represents an increase of 2% with respect to the same period in 2016, although, according to Aguirre Newman’s report, 16 fewer operations were closed in 2017 (down to 96).

One of the most active areas in the capital was the Other Business Districts segment (RDN), which accounted for 31% of the total area leased. Nevertheless, the report highlights that the leasing of space in the Central Business District (CBD), with 27% of the total and the OUT area, with 23% of the total, showed significant increases, more than doubling the figure recorded during the same period in 2016 in absolute terms.

Regarding rents, the maximum recorded during that period was €36/m2/month, whilst the average rent in the CBD area was €28.96/m2/month. In the Decentralised area, the average rent amounted to €12.71/m2/month.

In Barcelona, during the third quarter of 2017, 57,000 m2 of office space was leased, which represented a decrease of 32% with respect to the same period in 2016. Nevertheless, the cumulative figure for the year increased by 8% with respect to the first three quarters of 2016, to reach 265,000 m2.

During the period, 103 operations were closed, with an average surface area of 562 m2, in line with the situation observed in previous periods. The most significant operation by size was the deal closed by WeWork, which leased more than 6,500 m2 of office space in the 22@ district.

“In terms of rents, the upwards trend is continuing both in terms of maximum levels, as well as averages”, explain sources at the consultancy firm. The maximum rent recorded during the period was €23/m2/month, whilst the average rent in the CBD was €18.25/m2/month. In the Decentralised area, the average rent reached €14.01/m2/month.

Original story: Eje Prime

Translation: Carmel

Zara Vacates Redevco’s 2,300m2 Store On c/Goya

30 November 2017 – Eje Prime

Redevco ends the year with another store up for rent. The fund that specialises in retail has terminated its contract with Zara, the main brand of the Galician giant Inditex, after it closed one of its flagship stores in Madrid, located at number 47 Calle Goya. The store in question has been owned by Redevco for seven years, according to sources at the group, and has a retail surface area of 2,300 m2.

The Pan-European investment fund acquired the premises in June 2010 for €27 million. At the time, it signed a long-term lease contract with Zara, which had operated in the store since 2005. The fashion chain, which closed its doors on 27 November, will continue to operate in the area from its stores located at number 23 Calle Serrano and number 16 Calle Conde de Peñalver.

Inditex’s main chain has great penetration in the Spanish market. Currently, the chain operates more than 2,236 stores all over the world, of which 434 are located in Spain, as at the end of the first half of 2017.

Zara’s departure from the premises will allow Redevco to renegotiate the rent with a new operator. Currently, the average rental price for a store on this shopping street is €120/m2/month, with maximum rents reaching €170/m2/month. Calle Goya has almost 100 shops and an average return of 4.8%.

Redevco manages almost 50 real estate assets in Spain and Portugal, worth €800 million. The company, led in Spain by Israel Casanova, who sits on the fund’s management board, and Jordi Soriano, Director of the asset portfolio, employs a team of 17 professionals.

In recent months, the group has strengthened its team in Spain. In March, the company appointed José Carlos Torres, formerly of Aguirre Newman, as the new Head of Investments for the group to lead the fund’s acquisitions team in Spain and Portugal (…).

The fund, which manages more than 173 rental contracts across the Iberian Peninsula, has more than 300,000 m2 of retail space under management. Redevco is clearly focused on the acquisition of commercial opportunities and on the administration and management of assets for third parties (…).

Around the world, Redevco manages a portfolio of more than 400 assets located in the main shopping areas of Germany, Austria, Belgium, Spain, France, Hungary, Luxembourg, The Netherlands, Portugal, the UK and Switzerland (…).

Original story: Eje Prime (by Custodio Pareja and Pilar Riaño)

Translation: Carmel Drake

Price Rises Continue To Rock Spain’s Rental Home Sector

6 June 2017 – El Mundo

The housing market is trembling and not, like in the past, because of the high degree of sale and purchase activity. The residential sector in Spain is facing an unprecedented phenomenon: a boom (not a bubble) in the rental sector. In a short space of time, this residential regime has gone from being almost residual to accounting for more than 20% of the housing market. And that figure is rising. This leap is driving up prices, significantly. Above all in Madrid and Barcelona.

According to the experts, a change in the mentality of young people and employment mobility are the main factors driving this formula for accessing a home. (…).

Not since the 1960s has the percentage of rental properties been so high in Spain, but, despite the increase, the figure is still well below the levels seen in other European countries – which reach 50% in some places – although it is moving closer to the Eurozone average – 30%. (…).

The cornerstone of this growth in rental properties has been the spectacular boom in demand, which has come up against an unprofessionalised sector, with minimal supply owned, primarily, by individuals. The real estate portal Fotocasa now registers more searches for property rentals than it does for property purchases. The result of this imbalance? An earthquake in terms of prices. How long will this earthquake last? Where are its epicentres? What intensity will it reach? What measures should be taken to soften its effects? (…).

The latest evidence of the rental earthquake has come in the form of the Fotocasa’s price statistics for April, which show that the average rent in Spain rose by 10.2% in one year, to €8.04/m2/month. That cost takes the market back to its 2011 levels but it is still well below (-20.7%) the peaks of 2007 (€10.12/m2/month). (…).

“It is a question of supply and demand”, said Economist and Director of the Masters in Real Estate Development and Management Advisory at the Universidad de Barcelona (UB), Gonzalo Bernardos. “Demand is increasing due to the recovery. There are more jobs and, therefore, more families and young people as potential tenants. By contrast, the supply is decreasing (…)”. In his opinion, this situation will change when the banks start lending again en masse to families who earn less than €2,500/month. “From then on, maybe from 2018 onwards, the rental sector will suffer, as demand will transfer to the purchase market”, he said. (…).

Fotocasa has prepared a seismic map of the rental market. It reveals the evolution of rental prices by autonomous region. Prices decreased in YoY terms in Galicia only (in April) (by -0.7%), whilst they rose in all of the other regions, with marked rises in Cataluña (17%), Madrid and the Balearic Islands (12.1% in both). Together with the Canary Islands (11.9%), these regions are undoubtedly the large epicentres of the increase in rental prices.

“The increase in rental prices is happening across the whole country, but the strong average increase is due to Cataluña and Madrid”, said Beatriz Toribio, Head of Research at Fotocasa. “According to our Real Estate Index report for 2016-2017, these two regions account for 43% of the activity relating to demand”, she said.

In absolute terms, the most expensive rental prices are also in Cataluña, where the price per m2 stands at €11.96/month. In other words, a typical apartment measuring 90 m2 costs around €1,075/month. Next in the ranking, and still in the double digits, are Madrid (€11.36/m2/month), País Vasco (€10.59/m2/month) and Baleares (€10.05/m2/month). These values are even higher in the main municipalities.

Barcelona – the great tip of the iceberg

(…). In the city of Barcelona, the average rental price amounts to €15.14/m2/month. That amount is higher than the figures registered in Sant Cugat del Vallés (€13.61/m2/month) and Castelldefels (€13.58/m2/month), the next two most expensive towns for rental properties in Spain. In Madrid and San Sebastian, rental prices stand at €12.81/m2/month and €11.96/m2/month, respectively. (…).

The analyst at Fotocasa thinks that rental prices will regulate themselves over time. “We are still well below the peaks. The market is normalising”, she concludes. Meanwhile, Bernardos predicts that the rate of growth in rental prices will gradually calm down in Barcelona and Madrid. He forecasts price rises of 12%, 9% and 5%-6% over the next three years in the capital and of 8%, 5% and 3%-4% in Barcelona. (…).

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

Mitula: Rental Prices Soar In Spain’s Large Cities

25 January 2017 – El Mundo

The residential rental market is riding high at the moment and this good situation is reflected in rental prices, which are soaring in most of Spain’s major cities, according to a study by the home finder Mitula. Specifically, rental prices have increased by more than 60% in Barcelona over the last five years, whilst in Madrid, they have risen by almost 20% during the same period.

In this way, average rental prices in the Spanish capital amounted to around €1,048 per month in 2012, a figure that has grown in a sustained way over the last five years. By January 2017, the average rent in Madrid stood at €1,256, which represents an increase of 19.85%.

Other cities such as Barcelona and Palma have also seen their residential rental prices soar, but to an even greater extent. In the case of the Catalan capital, for example, the average rent has risen from €892 in January 2012 to €1,478 in January 2017, which represents an increase of 65.70%.

Palma has also seen its rental prices move upwards. A rental home in the capital of the Balearic Islands used to cost around €700 per month on average in 2012. Nowadays, the same property costs around €1,000 (€986), up by 40%, according to Mitula.

This upwards trend is being repeated in most of Spain’s major capitals, but there is one exception: Santander. The capital of Cantabria is one of the few cities where rental prices have remained practically frozen. At the moment, a rental home costs €649 per month, on average, which is 2.84% less than five years ago, when the figure stood at around €668/per month.

Original story: El Mundo

Translation: Carmel Drake

Logistics Space: Demand Rose In Madrid & Barcelona In 2016

16 January 2017 – Inmodiario

Barcelona is breaking records in terms of the volume of space being leased; Madrid is improving its absorption rates compared to 2015; and both Madrid and Barcelona are resuming activity involving higher risk developments. Both cities are benefitting from the economic recovery.

410,000 m2 of logistics space was leased out in Madrid in 2016, whereby exceeding the volume leased out in 2015 (385,000 m2). This trend reflects the context of improving retail sales and internal consumption.

Demand in the capital centred around the A-2 and A-4 motorways – the latter stood out the most during the fourth quarter as it accounted for three quarters of the absorption seen during that quarter (126,000 m2), which in turn accounted for a third of the space leased during the year (410,000 m2).

39 new lease contracts were signed during the year, of which 6 were major operations covering a surface area of more than 15,000 m2. The trend was similar to that seen in 2015, in terms of both the total number as well as the size of operations. This confirms that the major operators and logistics users are concentrating their activity in the large logistics hubs.

We also highlight the new higher risk developments, in other words, those that do not have pre-agreed tenants, given the lack of available quality and the obsolescence of existing warehouses. In recent years, operators have been leasing the highest quality warehouses, which means that those left available do not fulfil minimum requirements.

(…) Almost 350,000 m2 of new build logistics space is expected to be constructed in 2017, with almost 100,000 m2 as turn-key or pre-lease projects.

Prime rents amounted to around €5/m2/month in Madrid in 2016 and are expected to rise, given the shortage of available modern space and the added values that the warehouses that are going to be opened in 2017 are expected to offer. (…).

The leasing of logistics space in Barcelona exceeded the record set in the previous year, to reach 645,000 m2.

That figure represents a YoY increase of 17% if we compare it with data at the end of the previous year (…).

The main operations included in this figure are: the new logistics centre that Amazon plans to inaugurate at the end of 2017 in El Prat de Llobregat, which will have a surface area of more than 63,000 m2. It also includes Mango’s leasing of space in Lliçà covering a surface area of 119,000 m2. (…).

Prime rents in Barcelona now stand at €6/m2/month, whereby returning to 2009 levels, having increased by 9% in 2016, due to the lack of Triple A product and the increase in demand from the main operators. (…).

Original story: Inmodiario

Translation: Carmel Drake