Savills: Spanish retail warehouse market sees investment volumes increase but lack of stock for sale (ES)

According to international real estate advisor Savills, levels transacted in Spain's retail warehouse market are moving towards the 10-year average of €95 million with €83 million purchased in 2010 – treble the year before.

The research states that the key factor restraining further investment in the market is a lack of assets for sale. The firm reports that lot sizes have on average decreased by approximately 28%, and average gross yields have held at circa 7% - 25 basis points below 2009. This stability in yield performance is, Savills suggests, due to a lack of transactions. Data shows that the market, which is largely dominated by internationals, has seen an unusual increase in activity in the domestic market in the last year. However, the firm says, this has largely been due to a lack of prime product in the market and accounts for a drop in foreign capital invested from 80% in 2009 to 65% of overall volumes in 2010.

Luis Espadas, Head of Capital Markets at Savills Spain, says: "Rental stability, tenant solvency, low vacancy rates, easy development and management, as well as low supply per capita, has meant that by their very nature prime retail parks are very attractive for developers and investors, however at the same time the ideal product is scarce."

2011 will see 40% of total estimated new retail warehouse space (170,000 m²) come onto the Spanish lettings market, according to Savills research. Savills data suggests the figure represents a 12% increase on new GLA since 2010 and whilst new companies are not expected to enter the sector, Savills suggests existing operators will take the opportunity to expand. Demand, it states, will largely be driven by low cost stores including fashion and accessories, DIY, furniture and electrical appliances, sport and food sectors, which have seen consumption rocket. Recent significant lettings have been to supermarket Alcampo, electrical retailer Worten, fashion retailer Kiabi, sports store Sprinter and DIY operator Bricor, amongst others.

Retail park supply now represents over 10% of Spain's retail market with Andalusia accounting for nearly 30% of the market. Rental stability is anticipated to remain at €16-€18/m²/month for a second consecutive year, compared to a peak of €20-22/m²/month at the peak of the market. With rents in retail parks comparatively low to the average of €90/m²/month for shopping centers with favorable sales and turnover volumes, discounts are not a frequent occurrence in this sector.

Source: Savills

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