7 January 2020 – Eje Prime
There are an increasing number of large, vacant stores on the high streets of Madrid and Barcelona. Preciados 13, Sol 9, Paseo de Gracia 9, and Paseo de Gracia 77, to name just a few.
After several years of high demand for flagship stores in the two cities, when larger spaces become available, they are now standing empty. Operations have come to a standstill and real estate consultants are forecasting a decrease in rents.
Domestic and international retailers alike, particularly those in the fashion industry, such as Inditex, Mango, H&M and Primark, have taken the high street by storm in recent years, in their efforts to offer consumers a comprehensive experience.
In that context, demand has exceeded supply, and large premises have become the most sought-after. As such, prices have been rising and the family offices, which had traditionally owned the properties in the retail sector, were joined by large funds.
But now, the situation has changed. E-commerce is growing rapidly and most of the major operators have now opened flagship stores. With an excess supply in the market and fewer operators demanding large spaces, prices will have to decrease. Real estate investors are proving to be more flexible than opportunistic funds in terms of agreeing reasonable rental prices. Rental prices have not fallen yet, however, according to several sources, it is only a matter of time.
Meanwhile, a few months ago, H&M sent a letter to several of the owners of the premises it occupies in Spain (e.g. on Portal de l’Àngel in Barcelona and Gran Vía in Madrid) terminating their contracts. According to sources in the sector, “they sent those letters knowing that they would be able to stay in the premises paying half the rent”.
Original story: Eje Prime (Pilar Riaño)
Translation/Summary: Carmel Drake