Occupier markets showed strong fundamentals in the first three quarters of 2019 and gross absorption metrics are signalling that year end figures will set historical highs. The fundamental factor is job creation in the service sector and for Barcelona there’s an added component coming from international talent attraction. The capital markets remain buoyant for office assets and volumes for 2019 may set a ten-year high.
Retail space demand is still strong in the main thoroughfares of Madrid and Barcelona. Rental values remain in high historical levels in the best locations given the strong interest from pure retailers and other entrant players willing to combine brand experience with omnichannel strategies. Specialised investors in high street assets are willing to acquire good product but are mindful of the high capital values the market is currently displaying. Yet, investor intentions are strong given the correct approach in pricing.
Shopping centres and retail parks are performing well in terms of occupation and space demand. The backdrop is retail sales expected to expand by 2% in 2019 and a stable but buoyant footfall. New schemes in 2019 and 2020 add up to 10 centres with more c. 410,000 sq m of added retail supply.
Warehousing and storage space keep on being critical for new the configuration of the supply chain in Spain. Operators and developers are betting boldly on new logistics premises adapted to the new era of ecommerce, multi-channeling retail and super-fast last mile distribution. In this context, the market has developed well between January and September 2019 in terms of space take-up, and new deliveries. Investor intentions are also strong, and 2019 will sustain historically high investment volumes.