Tag: consumption

Footfall in Spain’s Shopping Centres Falls by 1.7% in September after Upturn in August

9 October 2018

According to the National ShopperTrak Index, revenues generated by the beginning of the school year were unable to compensate for the fall in consumption stemming from the end of the summer holidays. So far this year, footfall in Spain’s malls has fallen in seven of the nine months analysed.

Footfall dropped once again in Spanish shopping centres. Traffic in Spain’s shopping centres fell by 1.7% in September compared to the same month last year, according to the National ShopperTrak Index. The decrease came after a rise in footfall during August of 1.4%, year-on-year.

Monthly, footfall slumped by 6.3% in September. ShopperTrak linked to retreat to the end of the summer holidays, as revenues stemming from the beginning of the school year failed to make up for the seasonal variation. The retail intelligence firm argued that abnormally high temperatures in September also led to a reduction in spending on gear for the coming colder weather.

Footfall in Spain’s shopping centres began the year with a fall of 0.3% in January. In February, footfall increased by 1%, but then fell again during five consecutive between March and July. August saw a brief upturn with year-on-year growth of 1.4%.

Original Story: EjePrime

Translation: Richard Turner

Barcelona’s Prime Office Rents Now Exceed Their 2007 Levels

20 March 2018 – Eje Prime

The rental prices of prime offices in Barcelona are returning to their pre-crisis levels. Specifically, to their 2007 figures. That is the conclusion drawn by Cat Real Estate, the real estate consultancy firm, which confirms that in the most expensive areas of the office market in the Catalan capital, demand has risen again and assets have gotten more expensive.

Specifically, the Catalan company recently closed an operation involving the sale of a 450 m2 office on Paseo de Gracia for €6,500/m2. That transaction shows that in Barcelona, “we have returned to 2007 prices in terms of the value of office purchases in the main commercial areas”, says Nacho Castella, CEO of the consultancy firm.

The buyer of that asset on Paseo de Gracia was an international fund. In this regard, Cat Real Estate explains that “the improvement in consumption has reactivated interest in domestic operations above all from international players keen to take positions on the high street once again”

“Barcelona continues to be an important location for overseas investors”, says Castella. Cat Real Estate forecasts that the real estate market will continue to rise in 2018. During the first quarter of the year, the consultancy has already brokered forty operations involving a volume of real estate assets under management of €480 million.

Original story: Eje Prime

Translation: Carmel Drake

Basque Family Office Invivas Sells Prime Retail Store in Bilbao

12 December 2017 – Eje Prime

A new operation has been signed in the heart of Bilbao. The Basque family office Invivas, which is backed by the family of Sabino Arrieta Heras, has sold a shop in the heart of the Basque city to Grupo Arenal. The purchaser is a family office specialising in investment in real estate assets and the owner of the Arenal perfume chain, according to explanations provided by the company to Eje Prime. The operation has been brokered by the real estate consultancy firm Catella.

Grupo Arenal, which did not want to disclose the amount of the operation, could have paid around €6 million for the asset. The property is located at number 3 Calle Navarra and its façade is more than 70m long. The store is located between the retail thoroughfares of Gran Vía, Rodríguez Arias and Ercilla.

It is a strategic location, which, as well as being home to the country’s major fashion retailers, such as El Corte Inglés, Inditex and Mango, is expecting to welcome a new Primark store soon; moreover, a high-speed train station is being built in the vicinity.

The space was the former main branch of Banesto in Bilbao and has a total surface area of 2,500 m2, spread over three floors. The first floor measures 777 m2, the ground floor spans 841 m2 and the basement has a surface area of 881 m2.

With this sale, Grupo Invivas, led by the former number two of the Basque Government’s Home Office (…) is divesting in the heart of Bilbao. This family office has been starring in real estate operations for several years, especially in the País Vasco, but also in the international market.

Its most recent purchases include a retail store in Miami, through Invivas Miami Real Estate, for €5.2 million (…). Four years ago, in the summer of 2013, it launched its operations in Germany with the purchase of a 1,000 m2 building in Frankfurt, used as offices and retail space, for €7 million (…).

The retail sector is thriving in the País Vasco  

One of the most active segments in Bilbao in recent months has been retail, as a result of the improvement in consumption. The activity in terms of new arrivals in the city has been led by domestic fashion brands, which have accounted for 44% of the new movements, followed by accessories firms (23%) and specialist brands (19%), according to a study compiled by the real estate consultancy firm CBRE (…).

The situation is similar in San Sebastián, where major groups such as Fnac and Zara have now arrived in the Mercado de San Martín; moreover, Pull&Bear, Mango and Violeta have set up shop in the former Kutxabank building (…).

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Hammerson Set to Buy Intu, Owner of Xanadú & Puerto Venecia

6 December 2017 – Expansión

The Boards of Directors of Hammerson and Intu Properties, two of Great Britain’s largest property developers, have reached an agreement regarding their merger, which will result in the creation of a group with assets worth GBP 21 billion (€23.7 billion, in euros), mostly comprising shopping centres in the United Kingdom, France and Spain. The operation will be instrumented through a public takeover bid (OPA) of Hammerson’s shares for Intu’s, valuing the share capital of that company at GBP 3.4 billion (€3.85 billion). Intu’s shareholders will receive 0.475 newly issued Hammerson shares for each current share they own.

If the deal goes ahead, it will have a significant effect on the Spanish market, as it would see a change in the owner of the country’s three largest shopping centres. Intu controls 50% of Xanadú (Madrid), Puerto Venecia (Zaragoza) and Parque Principado (Asturias). Funds from Canada and the USA are the company’s partners in those centres. Moreover, Intu has plans underway to develop other leisure and shopping complexes in Málaga, Valencia and Vigo, for a combined investment of more than €1 billion.

Hammerson, meanwhile, holds stakes in Value Retail and Via Outlets, which operate luxury brand outlet centres such as Las Rozas Village (Madrid), La Roca (Barcelona), Mallorca Fashion and Sevilla Fashion.

According to a statement from Hammerson issued today when it announced the purchase “the incorporation of Intu’s portfolio in Spain fits with our strategy of placing our focus on consumer growth markets as it involves adding three of the country’s largest shopping centres. It will also allow our commercial partners to have exposure to a new European market”.

This British company is committed to developing Intu’s projects in Spain. It says that the group resulting from the merger “will be in the best position” to undertake those investments. Following the integration, the group plans to sell some of its centres in the United Kingdom for around GBP 2 billion, which will give it “the financial flexibility it needs to invest in more profitable opportunities in Spain and Ireland, as well as in the outlet centre segment”. The combined debt of the new Hammerson group will amount to GBP 8.2 billion.

The property developer hopes to generate annual savings of GBP 25 million as a result of joining forces with Intu.

Intu’s share price on the London Stock Exchange rose by 20% (after the deal was announced), taking the company’s market capitalisation to GBP 3.2 billion, whilst Hammerson’s share price fell by 2%, taking its market capitalisation to GBP 4.15 billion.

Analysts are interpreting the operation as a defensive move by the two companies to protect themselves from the possible impact of Brexit, which is slowing down consumption in the United Kingdom and which may harm the value of their shopping centres. “The merger represents a coalition of two weak businesses, which will result in an amalgam of assets without any great possibilities for generating incremental profits”, argues Mike Prew, from Jefferies. “The interesting areas of growth are Intu’s Spanish business and Hammerson’s outlet centres”.

The merger still needs to be approved by the shareholders of the two companies and by the British competition authorities, which means that it could take a year to complete. Peel Holding, the investment company owned by John Whittaker, which is Intu’s largest shareholder, has already agreed to approve the takeover. Following the operation, it will hold a 15% stake in the resulting group.

The banks Deutsche Bank, JPMorgan and Lazard have advised Hammerson. Meanwhile, Intu’s managers have engaged the services of Bank of America Merrill Lynch, Rothschild and UBS.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake

Amazon’s Rise Boosts Logistics Leasing In Madrid

12 July 2017 – Cinco Días

Amazon has become the indisputable star of the new wave of expansion being seen in the logistics real estate sector in Spain. By way of example, in the last six months, the US e-commerce giant has starred in two of the largest operations in the sector. The first, involving a warehouse measuring 34,000 m2 in Martorelles (Barcelona) and the second, the largest during H1, in Getafe (Madrid), where it has leased 58,125 m2 of space in total (…).

According to the consultancy firm JLL, the volume of space leased in Madrid, including this deal, has doubled in one year in terms of square metres, to exceed 380,000 m2. Meanwhile, Barcelona continues at the same high rate seen in 2015 and 2016.

“In Madrid, a significant amount of demand has been contained in the market – it was forecast in previous years and has now flourished”, explained Pere Morcillo, Director of Industrial and Logistics at JLL. “All of the large users of logistics space were aware that their warehouses had very high occupancy rates and that the need for new space was imminent”, he added. Another reason is the economic dynamism in the country, after the hard years of crisis, together with the new models of consumption.

“The record level is due to the growth of the Spanish economy, which is based on the growth of exports and domestic consumption, as well as on imports and the growth of online businesses”, said Luis Lázaro, Director of Logistics at the Socimi Merlin Properties.

It is precisely these listed real estate investment companies (Socimi), created from 2014 onwards, and international funds, that have provided the sector with the necessary investment to undertake new projects to construct logistics warehouses. (…). According to the head of JLL: “We have seen Socimis such as Lar and Axiare, and in particular, Merlin, enter the market to buy land. Their logistics investment objectives are so ambitious that they are having to create the stock that didn’t exist before to be able to incorporate it into their portfolios”.

Besides the Socimis, funds such as P3 Logistics Parks, Rockspring, GreenOak, Logicor (sold by Blackstone to China Investment) have starred in the majority of the transactions and new developments seen in Spain in recent months.

Indeed, P3 Logistics will be responsible for Amazon’s macro turn-key project in Illescas (Toledo), a plan that should see the light within the next few weeks with the award of the work tender.

Data from the consultancy firm Cushman & Wakefield (C&W) also reflects the record investment in Madrid. “Logistics operators are responding to a general climate of major activity in consumption and industrial production”, says the report issued by the consultancy. “The new lease contracts are focusing on the first and third rings (around Madrid). Parcel distributors are active in the first ring, primarily in Getafe and San Fernando. Meanwhile, in the third ring, operators are looking for large spaces (spanning more than 20,000 m2) with good locations for high volume logistics. In this segment of the market, the rental price plays a key role”.

This ring contains several key sites, such as Cabanillas del Campo, on the A-2 motorway close to Guadalajara. Similarly, Illescas, on the A-42, which is starting to establish itself through the Amazon project and other warehouses, such as those leased to Toyota and Michelin. In Cataluña, C&W highlights the sites at Camp de Tarragona and Vallès Oriental, which account for two-thirds of the space leased in Barcelona’s area of influence.

In terms of forecasts, the director at Merlin believes that the trend in the logistics sector will continue to be positive. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

CBRE: RE Inv’t Rose By 38% To €6,100M In H1 2017

4 July 2017 – El Confidencial

Investor appetite for the Spanish real estate sector is continuing to rise and our country is getting ready to close yet another historical year in terms of investment volumes. For the time being, the first half of the year has seen record investment figures, with an investment volume of €6,100 million during the six months to June, up by 38% compared to the same period last year, according to data from CBRE.

There are five mega-operations behind this result, which have determined the strong start to the year: the purchase of the Madrid Xanadú shopping centre by Intu Properties, which paid €530 million for the property; the acquisition of the Buffalo portfolio, worth €300 million, by Blackstone; the sale of Edificio España to Riu for €272 million; the sale by GreenOak of the Acero logistics portfolio to GIC for €243.3 million; and the purchase of the Nueva Condomina shopping centre by Klépierre for €233 million.

And all indications are that between now and Christmas, there will be another similar run of operations, an expectation that allows experts to predict that investment will exceed the €10,000 million threshold for the third year in a row.

Some of the operations called to collaborate in the record-breaking figures are on course, such as Hispania’s sale of its office portfolio, for which the Socimi has received half a dozen offers for around €500 million; the sale of Parque Corredor by Sareb; and several portfolios that the banks are bringing onto the market; whilst others are well underway, such as the purchase of nine retail parks and properties that the South African fund Vukile Property has just agreed – it will acquire a portfolio of retail properties from the joint venture between Redevco and Ares for €193 million.

More appetite, lower returns

The main driver of investment during the first half of the year was the retail segment, which accounted for one-third of total investment (€1,900 million), boosted by the recovery in consumption. The other side of the coin corresponded to the residential segment, which saw a decrease of 20% with respect to the first half of last year, whereas the hotel sector continued to benefit from the boom in tourism and accounted for 29% of the total (€1,750 million).

Nevertheless, all of this buyer appetite means that returns are now at minimum levels…and they are still falling. The logistics and hotel sectors are the only markets capable of offering attractive yields, with average returns of 5.85% and 5.75%, respectively, although those numbers fall well below the figures achieved just two years ago (7% and 8%).

Yields on shopping centres have decreased to 4.25%; office returns have fallen to 4%, whilst the profitability of high-street premises barely reaches 3.5%. Despite this narrowing, international funds, which have been backing our country for a while and other new funds, which are just arriving, have Spain at the centre of their targets and are starring in these record figures.

In this way, whilst last year, the Socimis were the undisputable investment leaders, accounting for 43% of the total, this year, they represent just 14%; meanwhile, investment funds account for 34% of the total, with the US, British and French funds leading the ranking of overseas investors.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Gesvalt: Madrid’s Logistics Sector Grows For First Time Since 2009

13 February 2017 – Observatorio Inmobiliario

The leasing of industrial warehouses in the Community of Madrid increased in 2016 for the first time in eight years following a recession in the logistics sector. The evolution of the market in the region last year confirms the positive forecasts that experts predicted at the end of 2015. Nevertheless, it is worth noting that this increase in the volume of space leased in the logistics sector was mild and gradual over the whole period, according to the conclusions of the latest report from Gesvalt, a consultancy and asset valuation company.

Sandra Daza, Director General at Gesvalt, considers that “these are noteworthy figures because they are evidence of the reactivation of the sector, which will also undergo more changes over the next few years, due to the reactivation of consumption and the evolution of e-commerce”. In this sense, Daza forecasts that “we are going to see an increase in the supply of these types of industrial warehouses, especially in Madrid and Barcelona”.

In the province of Madrid, which has 43 industrial estate areas, the distribution of industrial space is divided as follows: 32% production, 22% storage, 12% logistics, 7% commercial and 27% business parks.

The extractive and manufacturing sectors are giving way to the drive from the storage and distribution sectors. Large firms dedicated to this activity are moving into the region and are demanding large surface areas, close to large populations and with access to fast roads. Nowadays, these types of assets are the star product in the logistics and industrial sector in Madrid. By contrast, investors have lost interest in smaller warehouses on old industrial estates and the few operations that are taking place are being closed at almost cost prices.

In 2017, the aforementioned change is expected to be consolidated, with slight increases in rents. Returns could reach 7% and a minimal increase is expected in the volume of operations.

Almost 50% of the investors that are operating in the industrial market in the region are domestic and international institutions, whilst the other half comprise Socimis and family offices. By contrast, large financial institutions are the main vendors of these types of products.

80% of the operations in the Community of Madrid in 2016 were located in the Corredor del Henares, although the volume of surface area leased was still low (150,000 m2).

The interest in the market for rental over sale, the scarcity of land in really attractive areas and the relative low rates of return (6%) confirm that although the recovery of the sector is underway, it still has a long way to go.

Within the Community of Madrid, the municipality with the greatest volume of industrial activity is Fuenlabrada, which accounts for 25% of the total and is home to 21 industrial estate areas.

The large Mercamadrid industrial estate, located in the industrial area of Villa de Vallecas, is the largest in the Community of Madrid (1,8000,000/2,000,0000 m²), followed by the Vicálvaro industrial estate, which is as big as the Cobo Calleja de Fuenlabrada estate (1,750,000/1,800,000 m²). (…).

Original story: Observatorio Inmobiliario

Translation: Carmel Drake

Interview With Rupert Lea, Partner & Retail Director At C&W

3 February 2017 – Eje Prime

Rupert Lea, Partner and Retail Director at Cushman & Wakefield, analyses the evolution of the retail sector over the last year. “There has been an increase in high street operations, but the deals involving shopping centres have really taken the lead and are positioning themselves as a trend for the next two years”, he said, in an interview with Eje Prime.

Question: Now that 2016 is over, what assessment would you make of last year in terms of retail operations?

Answer: In terms of the volume of transactions, it was somewhat better than 2015. But now, the great trend that we are seeing are shopping centres. We have seen more operations involving shopping centres and retail parks: between 2009 and 2013, there was minimal rotation; investment volumes decreased until 2012. (…). Now, investment is growing at a rate of 50%, driven primarily by the capital markets.

Q: What will 2017 be like?

A: The retail market is a wave: it rises and it falls. Demand will continue to be constant and will have the same strength for the next two years. What sets the tone is the availability of supply, something which fluctuates a lot more in the case of shopping centres and centres that are not prime. (…).

Q: In 2017, several important operations that were closed years ago will bear fruit, for example, Uniqlo, H&M…Is the pace of operations still active?

A: Yes. We negotiate with operators from all sectors who are interested in Spain, including those who want to continue to grow brands that already operate in the country. There is still scope for more flagships to be opened in Spain in very profitable locations for operators, but they have to be experienced stores. That is another trend that is growing strongly. (…).

Q: Can we say that the sector has recovered its pre-crisis rhythm?

A: Any references to pre-crisis are complicated, because periods cannot be compared. What we can say is that some values have now reached higher figures (than pre-crisis), and some other values have not. Monetary policy and investor spirit have changed.

Q: What is the thing that interests operators the most in Spain?

A: Appropriate area of influence, robust consumption, suitable locations and suitable store sizes. The latter is the most difficult to achieve, because there are stores on prime streets that do not fulfil the requirements. Spain has a culture that involves a lot of socialising on the street and that generates a lot of opportunities for retail businesses. The success of tourism is also important for operators to take into account; millions of people visit the country each year and that is like the icing on the cake for retailers. (…).

Q: Do you think that the boom in e-commerce will put an end to the development of retail?

A: E-commerce is a complement. We see e-commerce as an ally: it was born as a challenge for high street traders, but we are seeing successful cross-market formulae. We have online operators who are looking for locations so that users on the street can observe their presence. We also have inverse cross-market formulae: customers want to return in store goods that they purchase online. This is the era of omnichannels, and e-commerce is clearly a complement. (…).

Original story: Eje Prime

Translation: Carmel Drake

BNP: Inv’t In Logistics Assets Reached €662M In 2015

8 June 2016 – Mis Naves

According to the real estate consultancy firm, BNP Paribas, “2015 was an exceptional year” for the logistics sector in Spain, with total investment amounting to €662 million, whereby exceeding the figure recorded in the previous year to register the highest investment volume in the last eleven years.

The data available for 2016, corresponding to the first quarter, confirms this rising trend, with total investment exceeding €320 million between January and March 2016 – this figure essentially relates to three large portfolios: Metrovacesa, Zaphir and Prologis.

For the analysts at BNP Paribas Real Estate, the good performance of consumption and industrial output, which began three years ago, has continued to boost the logistics market in 2015 and so far in 2016. Moreover, the shortage of high quality products has led to a slight increase in income and above all, to a stabilisation of prices. Thanks to the availability of land, new developments may go on the market at these rental prices. For this reason, the consultancy considers that 2016 offers good opportunities for buying and selling logistics assets.

It is worth highlighting two key milestones that are shaping the evolution of the logistics real estate sector and boosting the strong outlook for this sector.

On the one hand, 2014 and 2015 were the years when the highest ever investments were made in logistics warehouses. More than 50% of the high quality logistics warehouses changed hands during that period. The market saw a generational change in owners, with the disappearance of some and the appearance of others. The latter group includes international investors, which have been positioning themselves in the market, including several specialists, such as Prologis, which have strengthened their positioning; and the Socimis, which have secured capital overseas and invested it in this segment to create significant portfolios of logistics warehouses. During the first quarter of 2016, the main Socimis and funds interested in logistics assets invested around €320 million.

On the other hand, consumer habits have changed with the crisis, which has led to a very significant increase in the volume of purchases made online, to the detriment of in-store shopping. In this vein, e-commerce is growing at an average rate of 20% p.a.. To the extent that the volume of purchases made online increases, so too does demand for logistics spaces designed to provide support for these types of businesses. In 2015, around 17,000 sqm of logistics space was leased for e-commerce use. Even so, in Spain, online shopping accounts for just 3% of overall consumption, which reflects the potential for growth in the country, above all if we compare it with other markets such as Germany and the UK, where e-commerce accounts for 10% and 13.5% of all shopping, respectively. (…).

During 2016, consumption is expected to continue to grow with the same energy, along with the leasing of logistics space. Income will continue to increase and yields will continue to decrease due to the shortage of high quality logistics products. The e-commerce business will grow and so too will demand for cross-docking and XXL warehouses. The main Socimis and funds will continue to expand their portfolios with logistics assets. (…).

Original story: Mis Naves

Translation: Carmel Drake

Deloitte: Inv’t In Shopping Centres Exceeded €1,500M In 2015

26 January 2016 – Expansión

Shopping centres are once again the most desirable assets for real estate investors, together with offices. The decrease in the price of all assets in general and the outlook for the recovery in consumption have placed shopping centres at the top of the list for funds and Socimis once again.

Although the final operations from last year have not been formalised yet, Deloitte calculates that investment in shopping centres amounted to €1,500 million in 2015, a figure than may increase by a further €100 million as a result of the transactions currently being closed, according to a study by its Financial Advisory team.

“29 operations were closed in 2015 and two or three more deals may be added to the list, once the final numbers have been formalised, which would increase total investment by around €130 million”, says Javier García-Mateo, Partner in the Financial Advisory team at Deloitte.

During the 10 months to October, investment in shopping centres in Spain amounted to €1,196 million, which fell below the figure recorded during the same period in 2014 (€2,247 million), but was higher than the amount spent in 2013 (in €867 million). Over the last three years, purchases of shopping centres accounted for around 25% of total investment volumes.

Highlights in this segment in 2015 include: the acquisition of the Plenilunio shopping centre in Madrid, for which the French group Klépierre paid the fund Orion €375 million. Lar España’s purchase of the Megapark in Bilbao, which also came in above the €100 million mark – the Socimi paid €170 million for that shopping centre. “The types of investor are very varied. Socimis and private equity funds are dominating the stage, but private investors are also making sizeable acquisitions in light of the ever lower yields being offered in the market for high street premises”, says García-Mateo.

Revaluations

The progressive increase in the interest for shopping centres has resulted in a decrease in the yield on these operations, which has fallen by 100 points in the last year, to reach 4.75%. As such it is now in line with the yields seen in other large European real estate markets such as Belgium (4.75%) and the UK (4.5%).

Another consequence has been the revaluation of this type of property. In less than two years, some shopping centres have experienced revaluations of more than 20%, says Deloitte.

Another key is the return of bank financing for the purchase of these assets. “The Spanish banks are positioning themselves strongly as financing sources against the funds of debt that have been financing shopping centre purchases until now”, added García-Mateo.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake