COVID-19 Impacts on Spain Real Estate

Ramiro Rodriguez • 16/09/2020

While the pandemic is yet to be fully controlled, office workers and consumers are progressively returning. This has driven retail sales in August up +41% over May this year. However, most economic activities are still depressed compared to 2019. The most recent forecasts from Oxford Economics point that, under a central scenario of controlling the pandemic during mid-2021, this year’s GDP will be 90% of 2019, 2021 will be 95% and 2022 will be 99% of 2019’s GDP.  

On the property side, investment activity has maintained its momentum and the volumes recorded until August (€5.1 million) are slightly higher than the figure of the same period of 2019. This reveals a resilient investors’ appetite for Spanish property and a perspective of space demand recovery. Investors’ demand is met with core product in offices, logistics while value add product comes mainly from retail, hotels, PRS and student housing.  

Regarding logistics assets, we are witnessing strong interest in Madrid, Barcelona, Valencia, Zaragoza and other key cities. This is a response to ecommerce and logistics operators’ need for a good product.  


3 September

The holiday season is ending, and the economic activity remains subdued by the pandemic in Spain. This is still visible in hotel occupation, construction activities and shopping centres footfall that are well behind levels of 2019. Nevertheless, hotel investment was ahead of the records of H1 of 2019 signalling a positive long-term view on the performance of the sector in Spain.

Logistics assets and PRS are the most sought-after by institutional investors. Yet, prime offices in Madrid and Barcelona are within the radar of funds, REITs and private equity.

Office occupier markets are driven by some sectors such as IT, financial and health services. In the case of retail occupation, we detect space demand from sports goods retailers, sports clubs and health and beauty. 

The second half of 2020 will be a trying one for the Spanish economy and we will see an uneven recovery across different business sectors. Spanish and European institutions will back-up such recovery with a strong fiscal and monetary policy. Measures such as state-payed furloughs, to avoid mass redundancies may linger longer than initially planned.


22 July

The first half of the year ended with the economy already in the ‘New Normality’ but it is expected a sharp contraction in production and employment figures in response to the containment measures imposed by the Government to control the pandemic. Employees on furlough (ERTE) do not count as unemployment so the unemployment rate just moved from 13% to 14% during Q1-2020.  

Yet, we anticipate the unemployment rate to surge in Q3 or Q4 to 20% and start declining during 2021. Most of the output reduction comes from activities connected to the tourist sector but others are also heavily impacted such as private consumption. The resilient ones are connected to the IT sector, insurance and financial services and space demand is unsurprisingly connected to these.  

In this context, our forecast for GDP variation in 2020 ranges between 10% and 12% for the country with the central scenario of 10.6%. The recovery will be progressive with growth expected for 2021 of 6% to 7% and for 2022 of 3% to 4%. 

Investors are again active in the Spanish market and in search of opportunities, especially in logistics and PRS assets. The first is witnessing resilient space demand driven by ecommerce while the latter is seeing added demand with more proportion of households renting their homes. Prime office locations are also sought after together with sale and leaseback deals on super/hyper markets premises. Highstreet assets demand is coming mainly from local players. 


25 June

Spain has entered the 'new normal'. This means total internal mobility and no restrictions on opening times in retail, hostelry and workplace commuting. International borders have reopened most of the EU member states. 

As our consumer survey predicted, the public are visiting restaurants and proximity retailers. At the same time the tourist industry is reactivating with European tourists ready to travel to Spain for the summer season. This will progressively improve hospitality sector performance.  

The backdrop is, nevertheless, an economy, that will shrink around 9% to 10% in terms of GDP in 2020 to return to positive values in 2021 around 7% as per the consensus of the main forecast sources.

Space search is reactivating but the ‘speed’ of the demand is still slow. This means a good part of corporates, retailers and logistics operators are still in wait and see mode. We are seeing understanding between landlords and tenants assisting them with rent deferrals and, in some cases, rent bonifications. 

Capital markets are active for logistics assets, especially those connected to ecommerce and food and supermarkets. One effective transaction mode is currently sale & leaseback. All in all, investors are active in Spain ready to emit LOIs and keen to find opportunities in the market. 30% of them think the investment market will return to normality in 2021 and the other 30% think it will be in 2022.  


10 June

Half of Spain is now in the 4th and final stage of the so-called de-escalation process, while the rest of the country stays at stage 3. Spain will face its ‘new normality’ by 21 June when the final extension of the emergency measures will conclude and restrictions to mobility will ease. At this point COVID-19 related issues and guidelines will be addressed by the autonomous local governments.  

Spain meets the summer with a clearer panorama as inter regional movements will be allowed in 2 weeks’ time with better prospects for the domestic tourist sector. Furthermore, it is likely that by the beginning of July international borders will reopen for EU citizens, improving the conditions for the tourist industry in Spain for the rest of the summer. 

For the moment, less severe restrictions allow all types of retailers to open their stores, but with capacity restrictions. This means there will be a steady increase in footfall from now on in high streets, shopping centres and retail parks. 

With economic activity taking off again, some letting transactions that have been on hold since March are being completed. At the same time, the capital markets are also progressively reactivating, and we are seeing all types of capital costs willing to explore opportunities. 


3 June

With a clear date of when the State of Emergency will finish in Spain (21 June), businesses and people are planning their return to activities after the lockdown. For the moment, the main cities of the country remain in the second stage (out of four) of the reopening process. As such, Madrid and Barcelona will have to limit capacity in retail premises as well as social gatherings up to 10 people. Nevertheless, 70% of the territory is already in stage 3 and, most likely, during the second week of June all these regions will hop to stage 4. 

In the real estate field, during lockdown we surveyed the investment market and the expected new consumption habits of the Spanish public. Results show 90% of investors surveyed remain active in Spain and some 60% are ready to submit letters of intent to acquire property assets. Using the data of the survey, we estimate that the size of the ‘dry powder’ to deploy capital amounts to €40 billion, a solid figure given the long-term average investment volume of €10-12 billion.  

Our consumer habits poll reveals a clear intent to return to physical stores, mainly convenience and high street. The poll also revealed an acceleration of omni-channel retail, meaning that convergence of online purchases, click-and-collect and store visits has more momentum.  

For more information about our Investors’ Survey and Consumer Poll please contact Ramiro Rodriguez, Head of Research & Insight in Spain.  


28 May

The lockdown measures keep on easing in Spain thanks to positive results of the past weeks in terms of contagions and diseases. This means that more social and economic activities are operational again, although at low levels. For instance, retailers are able to open regardless their size (if in Phase 3 out of 4) but limiting the capacity to 40% and if smaller than 400 sq m and limiting the capacity up to 30% (if in Phase 2 out of 4). 

Good news also arrives for the hospitality industry, which is now able to open hotels to 100% of the capacity but with limitations for common areas.  

As the economy progresses to more activity, occupancy and investment respond. Investors are in a wait-and-see phase, mainly for retail and hotels, but sale and leaseback transactions may be seen during the year ahead. Capital markets are more interested in offices and PRS while investors are keen to study logistics warehouses, as activity has been less impacted by the COVID-19 crisis. 


21 May

In a positive trend, 70% of the Spanish population have entered phase 2 (of 4) as part of the plan to reopen the economy. Madrid and Barcelona remain in the first phase (named Phase 0) but with lesser restrictions on mobility and economic activity than a week ago. This translates into more retail activity and stores of up to 400 sq m can be opened, but are not to allow over 30% of their capacity. Regions in the second stage are now able to open stores larger than 400 sq m but must limit agglomerations. 

As office occupiers and retailers return to, or plan to return to activities, managers contrive new layouts, circulation flows and hygiene rules that allow employees and customers to visit their premises safely. In the new context, digital technologies will be the norm: thermal cameras, contactless cards and building management apps will be part of business as usual. 

In this context, most landlords are actively helping tenants with lease payments deferrals and in some limited cases with retailers, rent waivers are granted. The food sector, where it is seeing good performance on its properties, will most likely see sale and leaseback transactions. Logistics warehouses are also performing well and capital markets in those sectors will recover quickly. Private investors are also in search of trophy assets taking advantage of local presence and market knowledge. 


14 May


New estimates show GDP volume in 2020 will be between 10% and 7% less than in 2019. Much of the COVID-19 blow will land on the service sector, particularly on the retail and tourist business sectors. This will drive the unemployment rate near 20% so the toll on occupancy rate in the property sector will be visible.  

Until April 2020 consumer confidence plunged to half of what was seen one year ago bringing strong reductions in retail sales that for March 2020 showed a reduction of 14%.  

The last week was the lowest in terms of new contagions since the outbreak. This is driving economy reopening policies that combine central government guidelines with province-level decisions. As such, several provinces are moving from Phase 0 to Phase 1 in the so-called de-escalation; a 4-stage process. Being the most affected, Madrid and Catalonia will remain in Phase 0 but will most likely move to phase 1 next week.  

Against this backdrop occupier markets have reduced activity but office logistics space is still sought after by some corporates that are actually thriving in this crisis, such as those linked to e-commerce, IT and media, health services, food sector and insurances.


7 May

The ‘de-escalation’ process is taking place and is divided into four milestones, each one a minimum of two weeks long. It is being applied at the province level and the whole country is already at phase 0. The relaxation of the lockdown measures includes strong parameters of social distancing, compulsory face mask use on public transportation, re-opening of small retailers who may attend one client per employee in-store and under prior appointment. Restaurants may also re-open for deliveries and take-away. 

This is the scenario in which private economic activity is slowly returning while public direct liquidity injections will roughly amount to 1.1% of GDP. 

We have searched for evidence of investors’ interest in Spanish assets and found that of those investors with ongoing acquisition processes during March, 32% kept on, while 52% put the process on-hold and 16% of the processes were withdrawn. On the office agency side, in Madrid and Barcelona, we are seeing 50% of the letting deals started in March coming through, while 40% were put on-hold and only 12% of the processes were withdrawn.   

It is worth a mention that some of our close contact with investors and landlords signals several strategies that range mainly from core plus to value added capital, but the wait-and-see mode is currently a dominant approach. 


30 April

The heavy measures taken to contain the COVID-19 outbreak in Spain are finally yielding good results and some lockdown conditions are effectively easing. After 45 days of confinement, children can now make one-hour strolls with their parents each day.  

With some improving conditions at the public health level, businesses are planning their return to operations. Some of them are planning to do so with COVID-19-free certifications that could work well for retailers and hotel operators.   

Some leasing activity is continuing during the confinement and new contracts include rent revisions within the next 6-12 months. The lease contracts to be extended during this period are devising strategies to negotiate rents with landlords. The latter are deploying strategies ranging from keeping contract conditions as they currently are, to devising a particular contract renegotiation strategy with each tenant.  

Investors are adopting different approaches to undertake acquisitions in Spain taking advantage of liquidity pre-existent to lockdown measures. There is considerable demand for prime logistics assets while some investors are only active within their discretionary money pockets and value add and opportunistic funds. 

23 April

Some easing of the lock-down measures is expected by the end of April, as the Spanish Government announced last Saturday. This translates in certain mobility for minors, which will be able to go to public parks accompanied by one adult. The Government announced it is designing a plan for return to activity which will progressively allow people and business to return to work but so far timing and specifics have not been announced. Meanwhile, the State of Alarm declared in March will be extended by a further 15 days this week until 6 May.  

At the same time, some mobility has been seen in the job market where former workers of the retail and hospitality sectors are entering the food and health value chains. The outbreak has already impacted the office space take-up that yielded reductions both in Madrid and Barcelona. The first registered an absorption of 85,000 sqm (-40% YoY) and the latter 50,000 sqm (-50% YoY). The number of deals in both cities during March was reduced to less than 10 while the average number of letting deals for this month lays around 30 to 40.  

Investment activity in Q1 2020 overtook that of one year ago. The total investment volume in Q1 has been €2.3 billion, an annual growth of 22%.  


16 April

Spain has finished Easter with slightly less restrictions for some industry and constructions workers. This is in response to a lesser rate of contagion and fatalities during the last week. Yet, all workers able to work from home and those from non-essential business sectors must stay at home.  

In this context the Spanish Government is adding taxes deferrals for SMEs and self-employees to its already enlarged expenditure ceiling that seeks to protect the economy from the impact of the COVID-19 crisis, production and employment are being hard hit. 

At the real estate sector level on-going lease contracts and sale processes are progressively being closed while lease extensions are also being negotiated, most of them agreeing on rent revisions in the mid-term. Q1-2020 office space take-up has decreased both in Madrid and Barcelona mainly due to the impact of the COVID-19 crisis.  

Investors in business space assets keep optimistic on deploying capital in Spain after the crisis and repricing so far is being related to added uncertainty. 

If the COVID-19 crisis lasts for less than 1 or 2 quarters, there may be a swift recovery period by the second half of 2020 and early 2021 with strong activity in both occupier and capital markets. 


9 April

Spain is amongst the heaviest hit countries by the COVID-19 outbreak. The Government has effected control measures in some markets (public and private health and food supply chain) as well as closing retail shops and confining most of the population to home.  

The lockdown measures have been extended until 25 April. By early April these measures seem to have yielded some positive results with the contagion figures starting to decrease and there are plans to make staggered returns to activity during May. 

As the economy has been driven to minimal activity the impact on 2020 production and employment will be significant. Spain is expected to witness a bounce back effect driven by pent-up consumption by year end, and in 2021, resulting in shifts in GDP growth in 2021 from 1.5% expected before the outbreak to 4%.  

Since March there has been no significant activity in the occupier markets nor in capital markets. Yet, investors are signalling their readiness to deploy capital in Spain once the COVID-19 situation has been controlled. In this context, it is important for Spain, and the rest of the EU countries, to ensure strong international cooperation around the crisis at the European level. 

If the COVID-19 crisis lasts for less than 1 or 2 quarters, there may be a swift recovery period by the second half of 2020 and early 2021 with strong activity in both occupier markets and capital markets. 


2 April

COVID-19 has had a deep impact on Spanish society. Currently Spain is second only to Italy in fatalities as a result of the deadly virus. There have been over 100,000 cases so far confirmed in the country, but some hope is being felt as the rate of infection continues to decline.  
Spain has been in lockdown for more than two weeks and stricter restrictions have been in place for the past 72 hours. The areas of Catalonia and Madrid have been the worst hit and medical resources in both locations are stretched with healthcare professionals doing everything possible to mitigate the impact of the virus.  

There have been a series of Royal Decrees passed in the last two weeks. Each focused on safeguarding contracts, avoiding collective terminations enacted in order to sustain business activity and the exemption of social security contributions. There has also, in line with many other European countries, the suspension of all but a very restricted list of retail activity.  

The property market is, of course, quiet and people and business are taking a wait and see approach to the current situation. The fundamentals of the real estate market remain strong and the availability of desirable assets in key locations remains limited.

EMEA Covid (image)
Insights • Economy

COVID-19 Impacts for EMEA Real Estate

As the global pandemic progresses across borders and within countries our EMEA local market research colleagues will share what they are seeing on the ground in their countries.
Andrew Phipps • 16/09/2020
New Perspectives (image)
Research • Economy

New Perspective: From Pandemic to Performance

As a global leader in the commercial real estate (CRE) industry, Cushman & Wakefield offers clients a new perspective on COVID-19’s impact on CRE and beyond, preparing them for what’s next.
couple with face masks on Milan street
Insights • Economy

COVID-19 Impacts on Italy Real Estate

A brief weekly update on the impacts of COVID-19 pandemic on commercial real estate in Italy.
Carlo Vanini • 17/09/2020
red steel building

COVID-19: UK Real Estate Perspectives

As the COVID-19 pandemic envelops the globe, we are committed to providing our clients with up to the minute intelligence and commentary as to what is happening in the real estate markets.
Digby Flower • 29/07/2020
Insights • Economy

COVID-19 Impacts on Spain Real Estate

A brief weekly update on the impacts of COVID-19 pandemic on commercial real estate in Spain.
Ramiro Rodriguez • 16/09/2020
Debt and Structured Finance
Insights • Economy

Lenders brace themselves

The Debt & Structured Finance team at Cushman & Wakefield is in frequent contact with over 50 lenders and has inquired what the impact of Covid-19 developments is or is expected to be on lending activity.
Maud Visschedijk • 20/03/2020
Brussels Office Marketbeat
Insights • Economy

COVID-19 Impacts Belgium Real Estate

A brief weekly update on the impacts of COVID-19 pandemic on commercial real estate in Belgium.
Cédric Van Meerbeeck • 09/04/2020


Insights • Economy

COVID-19 Impacts on Poland Real Estate

A brief weekly update on the impacts of COVID-19 pandemic on commercial real estate in Poland.
Katarzyna Lipka • 16/09/2020
Bratislava, Slovakia
Insights • Economy

COVID-19 Impacts on Slovakia Real Estate

A brief weekly update on the impacts of COVID-19 pandemic on commercial real estate in Slovakia.
Juraj Bronček • 16/09/2020
Looking out over Buda castle, Budapest
Insights • Economy

COVID-19 Impacts on Hungary Real Estate

A brief weekly update on the impacts of COVID-19 pandemic on commercial real estate in Hungary.
Orsolya Hegedűs • 16/09/2020
Rue Sainte-Catherine, Bordeaux, France
Insights • Economy

COVID-19 Impacts on French Real Estate

A brief weekly update on the impacts of COVID-19 pandemic on commercial real estate in France.
Magali Marton • 03/09/2020

Research Relacionado

/Stories/Back up PNGs - Generic/corporate-angle-750x456
Article • Insights

Investment Insight 2019

Con fundamentales de ocupación positivos, el mercado de inversión inmobiliario ha dejado un 2018 muy potente en volúmenes y está preparado para un buen rendimiento en los próximos años. España continúa su tendencia como un atractivo mercado de inversión inmobiliaria y se espera que el apetito inversor se mantenga sólido en 2019 y 2020.

Ramiro Rodriguez • 06/03/2019

Marketshot Retail Goya

Ramiro Rodriguez • 28/02/2019
MarketBeat • Insights

Spain MarketBeat

Los informes de Marketbeat de Cushman & Wakefield analizan la actividad trimestral de la propiedad comercial en España en los sectores de oficinas, inversión, retail  e industrial.
Ramiro Rodriguez • 24/08/2020


Ponte en contacto con uno de nuestros profesionales.