ECONOMIC CONTEXT
In Q1 2025, Spain’s economy continued its positive trajectory, with GDP growing 0.6% quarter-on-quarter and annual forecasts between 2.4% and 2.7%. Retail sales growth moderated to 2.2% in January and 0.8% in February, reflecting cautious domestic consumption amid inflation and global uncertainties. The rising household savings rate has supported increased leisure and retail spending. Tourism remains robust, with international arrivals up 9% year-on-year, reinforcing retail sector resilience.
DEMAND OVERVIEW
Leasing activity on the high street remained strong in Q1 2025, with 20 leases signed in Prime and Superprime areas of Madrid and Barcelona—an 11% increase over the previous year. Fashion continues to dominate demand, accounting for 45% of high street retail space uptake since 2018. Most transactions (53%) involved units sized between 300 and 800 m². In shopping centres and retail parks, demand is consolidating amid limited space, with electronics and household goods sectors showing notable growth and health & beauty maintaining steady performance. The strategic focus of retailers is shifting towards regional diversification and location optimisation in key cities.
VACANCY TRENDS
High street vacancy rates have declined, with availability at 2.7% in Q1 2025, down from 4.1% a year earlier. This tightening is particularly evident in Madrid and Barcelona, where demand remains robust. In shopping centres and retail parks, space remains scarce, consolidating demand. The overall market is experiencing lower vacancy, putting upward pressure on rents.
RENT TRENDS
Prime high street rents have increased by 20% since 2022 and by 10% since 2023, reaching €265/m²/month in Madrid and €275/m²/month in Barcelona. Declining vacancy rates and a gradual economic recovery are driving rents towards pre-pandemic levels in some areas. Landlord concessions are not specifically noted, but the upward trend in rents reflects strong occupier demand.
CONSTRUCTION & SUPPLY PIPELINE
The report does not highlight significant new construction activity or a notable supply pipeline for Q1 2025. The market is characterised by a shortage of available space, particularly in prime high street and established shopping centre locations, contributing to the consolidation of demand and upward pressure on rents.
