The retail warehouse market comprised 4.4 million sq m at the end of 2014 (including retail parks and freestanding retail warehouse units) , which equates to y-o-y growth of 4%.
In terms of the distribution of space by property type, freestanding units continue to account for the highest amount of market share compared to retail parks, with 59% and 41% respectively. However as this segment consolidates the market is steadily moving towards the development of retail complexes, which is pushing the number of freestanding units down in comparison to retail parks.
30% of new retail projects in the pipeline over the next 24 months fall in to the retail park category, , corresponding to a total of 185,000 sq m. Adherence to handover dates, as has been the case over recent years, will depend, amongst other aspects, on the letting rate.
The achievable rental level for prime properties remains stable at around €16 per sq m/month, due to the low vacancy rate.
The retail warehouse segment is an attractive niche area with potential upside. There is growing interest from specialist international players from other European markets for this alternative investment product, but the specific traits of the Spanish market, coupled with the lack of product on the market are making it difficult to complete transactions.
The imbalance between supply and demand of investment product, which follows suit with the remainder of the commercial property market, has driven prime yields to harden further, which could stand at between 6% - 6.5% (100 basis points below the same figure registered in 2013).
Source : Savills