The vacancy rate for the Madrid office market had been falling since 2015. Within the current context for the economy, where the healthcare situation is setting the pace, the trend in terms of the office vacancy rate has reversed, going from 8.7% at the close of 2019 to 9.2% by the end of September. Meanwhile, the vacancy rate for the Barcelona office market had been shrinking steadily since 2014, the point at which the Spanish economy began to once again enjoy sustained growth.
The vacancy rate in Madrid stands at 10.6% (986,000 sq m) following new market entrants recorded during the third quarter of 2020. Development activity continues space and it is estimated that the stock of logistics units will grow by some 235,000 sq m by the close of 2020 (some 4% already committed). It is anticipated that around 275,000 sq m will be delivered in 2021 (some 50% has already been pre-let).
The logistics stock of Barcelona and its catchment area amounts to 7 million square metres, of which 306,000 sq m are vacant (overall vacancy rate of 4.2%). The scarcity of available space in the prime area is well known, with only 23,000 sq m currently free (a rate of 1.8%). Operators are struggling to locate here and, consequently, a number of turnkey deals were recorded in 2019. With 138.000 sq m vacant (representing a rate of 7.8%), the third logistics ring offers the majority of the available floorspace on the market.
Capital markets have performed relatively well during the pandemic. The figure for real estate investment up to and including the third quarter stands at 5.5 billion Euro, 3 billion less than one year ago. Nevertheless, the greatest volumes since records began (1999) were recorded in 2019 and 2018 and in January 2020 we had already forecasted contraction of 15% in investment due to the reduced availability of product and a certain anticipated loss of momentum in terms of occupancy fundamentals.
The most stringent lockdown measures having been lifted at the end of the second quarter, the demand for floorspace remains focused on a number of specific business sectors, such as health and beauty, services and food and sports retailing. This currently represents the preferences of the fashion sector.
E-commerce penetration remained strong during this quarter, with improvements in reliability and ease of use. Retailers are channeling their efforts towards omni-channel strategies, with click-and-collect services on the premises. It is also likely that operators will make a number of adjustments in order to optimise their locations, freeing up space that will go on to swell the available offerings on the market, particularly in secondary areas