Spain Commercial Real Estate Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Spain Commercial Real Estate Market is segmented by Type (Offices, Retail, Industrial, Logistics, Multi-family, and Hospitality) and Key Cities (Madrid, Valencia, Barcelona, Catalonia, Malaga, and Other Cities). The report offers market size and forecasts for the Spanish commercial real estate market in value (USD billion) for all the above segments.

Market Snapshot

Spain Commercial Real Estate Market Size
Study Period: 2018-2027
Base Year: 2021
CAGR: >9 %
Spain Commercial Real Estate Market Key Players

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Market Overview

Spain's commercial real estate market is expected to register a CAGR of approximately 9% during the forecast period.

The COVID-19 pandemic has promoted e-commerce as a consumer habit, with total logistics investment volume of EUR 1,400 million in H1 2021 (led by the sale of the Montepino Portfolio), indicating a 250% year-over-year rise. The economy was already in the 'New Normality' at the end of the first half of 2020, but a substantial drop in production and employment is projected as a result of the government's pandemic containment measures. Logistics has continued to be one of the most active real estate sectors, with record levels of activity.

The hospitality industry was one of the hardest hit by the COVID-19 pandemic in 2020 and the first part of 2021, with a significant drop in liquidity. This circumstance, combined with new asset-light trends, has prompted hotel owners to contemplate selling part of their assets in order to raise cash and alter their business model. The total amount invested in Hospitality in H1 2021 was EUR 995 million, surpassing the total amount invested in FY 2020 and becoming one of the strongest half-year results in the last 15 years.

Consumer attitude and footfall grew steadily as the sanitary condition improved thanks to breakthroughs in mass vaccination, as well as a desire to socialize and pent-up demand. On the retailer side, previous trepidation over Covid-19's unclear landscape has translated into increased rental demand for strategic sites at more inexpensive rentals. Retail investors have primarily focused on premium core assets with long-term contracts, with supermarkets being the most in demand.

By the end of 2021, Spain returned to pre-Covid levels of investment. In terms of investment deals in Spain, the year ended with a total of EUR 12.1 billion, up 57% from the previous year's figure. The logistics distribution and office sectors, in particular, have seen an increase in investment.

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 the 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). 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 by key cities (Madrid, Valencia, Barcelona, Catalonia, Malaga, and Other cities). The report offers market size and forecasts for Commercial Real Estate Market in Canada in value (USD Billion) for all the above segments.

By Type
Offices
Retail
Industrial
Logistics
Multi-family
Hospitality
By Key City
Madrid
Valencia
Barcelona
Catalonia
Malaga
Other Cities

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Key Market Trends

The Logistics Property Sector Driving the Market

During the second half of 2021, e-commerce revenue increased by 13.7% year on year, reaching EUR 13.661 billion, despite the relaxation of limitations on the majority of bricks and mortar retail locations. This demonstrates that during the epidemic, customers gained significant experience purchasing things over the Internet, resulting in a portion of buying remaining online. As a result of this e-commerce push, logistics adoption continues to rise. In 2021, the demand for logistics floorspace reached new highs, with over one million square meters transacted in Madrid.

Almost all the floor space was taken up along Madrid's major logistics corridors, with 52% along the Henares Corridor (A-2 highway) and 42% along the Southern Corridor (A-4 & A-42 dual carriageways). There were 81 deals in 2021, 22 of which were signed in the months of October to December 2021. The logistics warehouse construction business is still booming, thanks to robust demand and operators focused on high-quality products.

The overall vacancy rate in Madrid stands at around 9.5% at the close of 2021. In spite of the volume of new offerings and vacant grade-A floor area, over the short term, it is anticipated that the current market dynamics will be capable of soaking up logistics floorspace such that there is no downward pressure on rents due to oversupply.

In Barcelona, in the last quarter of 2021, the average floor area per deal amounted to 11,730 sq m, this being 130% of the figure witnessed in the final quarter of 2020 and some 23% above the average for the preceding quarter (9,500 sq m). In terms of size, the most significant deal of the quarter and 2021 was the letting of a50,000 sq m warehouse in the ZAL (Zona de Actividades Logísticas).

Spain Commercial Real Estate Market Growth

Growth in the Hospitality Sector to Drive the Market

The hospitality market in Spain is experiencing a solid rebound along the summer peak thanks to higher vaccine distribution rates and restrictions lifting in most of the eurozone countries, allowing international visitors to travel. Both ADR and RevPar increased to EUR 102.9 and EUR 57.15, respectively, at the beginning of 2021. Hotel investment in Spain reached EUR 3.2 billion in 2021 (including hotels in service, properties to be converted into hotels, and land for hotel use).

In 2021, a total of 127 hotels and 22,249 rooms were transacted in Spain versus 68 hotels and 7,228 rooms in 2020. Furthermore, another 18 transactions took place for hotel development land and properties to be converted into hotels. Only in two previous years (2017 and 2018), the hotel investment figures in Spain exceeded EUR 3 billion, which highlights how extraordinary this figure is (26% higher than 2019).

Unlike prior years, when the holiday segment was the primary participant, investment in 2021 was fairly spread between the holiday and urban segments (50%- 50%). Despite the fact that investor interest has shifted to vacation properties, high-profile sales in Madrid and Barcelona have helped to balance the market.

In 2021 Barcelona and Madrid were once again the leading urban destinations with EUR 754 and EUR 468 million, respectively, accounting for almost 38% of the total (EUR 1.2 billion) for the second consecutive year. In the holiday segment, the Canary Islands and the Balearic Islands were the main destinations, totalling EUR 633 million and EUR 541 million, respectively, representing 37% of the total investment. The pandemic has clearly shown to be a window of opportunity to acquire assets that would not have been exchanged in a different market situation rather than a chance to get big discounts. Prime assets have demonstrated great liquidity and little susceptibility to market uncertainty in terms of rates.

Spain Commercial Real Estate Market Analysis

Competitive Landscape

The commercial real estate market in Spain is fragmented, with the presence of both local and international players. Some of the major players operating in the commercial real estate sector in the country include Merlin Properties, Via Celere, Kronos Investment Group, and Klapierre. The country is also witnessing an increase in international investors, as its economy is rebounding, with some of the international investors from countries like the United States, France, and Germany.

Major Players

  1. Merlin Properties

  2. Via Celere

  3. Kronos Investment Group

  4. Klepierre

  5. Quabit Immobilaria

Merlin Properties, Via Celere, Kronos Investment Group, Klepierre, Quabit Immobilaria

Recent Developments

July 2021: Millenium Hotels Real Estate, a publicly-traded real estate investment business specializing in luxury hotel properties in Spain and Portugal, agreed to sell up to 49.9% of its shares to Castlelake. Castlelake became the company's principal stakeholder and will have three seats on its board of directors as a result of the deal. Castlelake's acquisition of MHRE adds to the firm's long history of investing in Europe, where it has acquired over 7,000 assets in 12 European nations since its foundation in 2005. Following the global financial crisis, Castlelake acquired fully permitted land and then founded Aedas Homes, which is currently one of the major Spanish housebuilders with approximately 2,000 units produced in FY21. The Millenium portfolio is comprised of 10 hospitality assets across the main tourism destinations of Madrid, Alicante, Sevilla, Bilbao, Cordoba, Alcaidesa, and San Sabastian, which Millenium has stated to be valued at approximately EUR 500 million once fully redeveloped.

September 2021: Realty Income, structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,700 real estate properties owned under long-term lease agreements with the commercial clients. The company announced that it has closed on a EUR 93 million sale-leaseback transaction in Spain, consisting of seven properties under long-term net lease agreements with Carrefour and its real estate subsidiary Carrefour Property. This transaction represents Realty Income's debut real estate acquisition in Continental Europe.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

    1. 2.1 Analysis Methodology

    2. 2.2 Research Phases

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Current Economic Scenario and Consumer Sentiment

    2. 4.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights

    3. 4.3 Government Initiatives and Regulatory Aspects for the Commercial Real Estate Sector

    4. 4.4 Insights into Existing and Upcoming Projects

    5. 4.5 Insights into Interest Rate Regime for General Economy and Real Estate Lending

    6. 4.6 Insights into Rental Yields in Commercial Real Estate Segment

    7. 4.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate

    8. 4.8 Insights into Public-private Partnerships in Commercial Real Estate

    9. 4.9 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broker, Social Media, Facility Management, and Property Management)

    10. 4.10 Impact of COVID-19 on the Market

  5. 5. MARKET DYNAMICS

    1. 5.1 Drivers

    2. 5.2 Restraints

    3. 5.3 Opportunities

    4. 5.4 Porter's Five Forces Analysis

      1. 5.4.1 Bargaining Power of Suppliers

      2. 5.4.2 Bargaining Power of Consumers/Buyers

      3. 5.4.3 Threat of New Entrants

      4. 5.4.4 Threat of Substitute Products

      5. 5.4.5 Intensity of Competitive Rivalry

  6. 6. MARKET SEGMENTATION

    1. 6.1 By Type

      1. 6.1.1 Offices

      2. 6.1.2 Retail

      3. 6.1.3 Industrial

      4. 6.1.4 Logistics

      5. 6.1.5 Multi-family

      6. 6.1.6 Hospitality

    2. 6.2 By Key City

      1. 6.2.1 Madrid

      2. 6.2.2 Valencia

      3. 6.2.3 Barcelona

      4. 6.2.4 Catalonia

      5. 6.2.5 Malaga

      6. 6.2.6 Other Cities

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Overview

    2. 7.2 Company Profiles

      1. 7.2.1 Developers

        1. 7.2.1.1 Merlin Properties

        2. 7.2.1.2 Via Celere

        3. 7.2.1.3 Kronos Investment Group

        4. 7.2.1.4 Klepierre

        5. 7.2.1.5 Quabit Immobilaria

        6. 7.2.1.6 Finques Garvi

        7. 7.2.1.7 Lusa Realty

        8. 7.2.1.8 INVERTICA-IRELS

        9. 7.2.1.9 POLIGONS DE BARCELONA

        10. 7.2.1.10 Directo de Propietario*

    3. *List Not Exhaustive
  8. 8. FUTURE OF THE TRENDS

**Subject to Availability
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Frequently Asked Questions

The Spain Commercial Real Estate Market market is studied from 2018 - 2027.

The Spain Commercial Real Estate Market is growing at a CAGR of >9% over the next 5 years.

Merlin Properties, Via Celere, Kronos Investment Group, Klepierre, Quabit Immobilaria are the major companies operating in Spain Commercial Real Estate Market.

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