Spanish commercial property “begins to revive”
The agent’s latest report shows that confidence in the country’s commercial property improved in the first half of 2013.
Madrid offices saw a sharp take-up of 197,000 square metres - 60 per cent higher than the first six months of 2012. The rise was driven by large-scale transactions, particularly Vodafone’s deal for 50,000 square metres as a new headquarters.
“These transactions have provided evidence that companies are increasingly prepared to make large space commitments and to take advantage of opportunities to lease office space at historically low rents,” comments Matthew Colbourne, Associate, Commercial Research.
Indeed, prime office rents in the Spanish capital have plummeted more than 40 per cent from the market peak of 2008. Now, they may be stable, supported by a decline in vacancy rates following a steady increase since 2007.
Sentiment in the office investment market has also improved, although transaction volumes have remained “relatively modest”. Increased numbers of investors are seeking opportunities in Spain, attracted by relatively high yields compared with other European markets, improved prospects for an economic recovery and reduced fears of a Eurozone break-up.
Investors that have been active in the Spanish market in recent years, such as opportunistic funds and private buyers, are now being joined by a greater variety of institutional and international investors, including the German funds and Latin American buyers.
In the retail sector, activity remains affected by subdued consumer spending, but the best performing shopping centres have proved to be resilient and have maintained high occupancy levels.
Leasing activity in the Madrid logistics and industrial market improved in H1 2013 as well, with take-up reaching 190,000 sq m and the vacancy rate falling by more than two percentage points to 13.8%. However, Knight Frank adds, investors remain cautious and demand continues to be focused on prime assets let to secure tenants on long leases.