SPAIN SEES RAPID READJUSTMENT IN RETAIL DEVELOPMENT PIPELINE TO COUNTER MARKET SITUATION

The international real estate advisor reports that of the new development in 2009, the highest proportion at 33% comprised small shopping centres followed by retail warehouse space at 29%. A further dip in the development pipeline is anticipated in 2010 as many Spanish developers are delaying commencement of their projects as they expect a recovery in retail demand and financing facilities in 2011. Savills therefore expects to see uplift in development activity from 2011 onwards with many developers picking up on previously postponed schemes.

Luis Espadas, director of Savills retail investment in Spain, says: “The economic crisis has impacted heavily on Spain with consumer sentiment at a low level and spending significantly down. As with other countries there is now stronger pressure on rents and some of the larger retailers are using this as leverage to renegotiate current rents.

“A decline in development will help to control vacancy levels but once the market goes into recovery it should result in upward rental movement as demand puts pressure on a lack of new supply.“
Spain ranks number five in Europe, according to gross lettable area of retail per 1,000 inhabitants. Savills research puts Norway in lead position followed by Sweden, Netherlands and Austria respectively, with the UK at number six.