Spain Commercial Real Estate Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

Market Overview

Spain's commercial real estate market is expected to register a CAGR of approximately 9% during the forecast period. Spain is one of the larger Western European countries, with a population of nearly 46 million. Furthermore, the population is expected to grow around 1.2% in the upcoming years, which is likely to increase the demand for commercial floorspaces in the country.

Before the coronavirus outbreak, the financial situation of Spanish households and companies in the industry was generally healthier than it was 12 years ago. In addition, the number of new properties being built is not excessive compared to demographic trends. The economic impact of COVID-19 will affect the labor market. During the state of emergency, construction activities were directly hit, but as restrictions were lifted, construction activities resumed relatively quickly. Nevertheless, due to climatic uncertainty, the start of new construction projects is likely to slow down significantly.

The institutional market of Spain is majorly dominated by investments in the office and retail markets, which make up 40% and 44%, respectively, of the Spanish IPD index. The large market players are eyeing cities, like Barcelona, for office spaces, which is one of the best cities for start-ups, innovations, and technologies in Europe.

Scope of the Report

Commercial real estate is a property that is used exclusively for business-related purposes or to provide a workspace rather than as a living space, which would instead constitute residential real estate. Most often, commercial real estate is leased to tenants to conduct income-generating activities. In general, it includes buildings that are used for commercial purposes and include office buildings, warehouses, and retail buildings (e.g., convenience stores, 'big box stores, and shopping malls). This report aims to provide a detailed analysis of the Spanish commercial real estate market. It focuses on the market dynamics, technological trends, insights, government initiatives taken in the commercial real estate sector, and COVID-19 impact on the market. Also, it analyzes the key players present in the market and the competitive landscape in the Spanish commercial real estate market.

The Spanish commercial real estate market is segmented by type (offices, retail, industrial, logistics, multi-family, and hospitality) and key city (Madrid, Valencia, Barcelona, and Catalonia).

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Key Market Trends

Office Space Take-up and Demand in Spain

Q4 2020 ended with an office space gross take-up volume of almost 85,500 square meters (sq. m.). In contrast with the first three quarters, no megadeals (greater than or equal to 10,000 sq. m.) were recorded, and, even excluding the four deals of more than 10,000 sq. m. between January 2020 and September 2020, there has been a steady growth in office space take-up since Q2 2020. The annual total for 2020 stood at just over 355,000 meters, 43% down year-on-year and 29% below the average annual volume in the historical series (close to 500,000 sq. m.). It is important to note that the annual total space take-up value slightly exceeded the closing forecast of Q3 2020 (at which point the accumulated total was 270,000 sq.m.) when the annual volume was predicted to be between 335,000 sq. m. and 350,000 sq. m.

However, the full impact of the current COVID-19 outbreak has yet to be realized. Many experts believe that the toll of this pandemic upon businesses will be quite severe. This may lead to decreased office space demand and higher vacancy rates than would be observed within a normal economic climate.

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