Spain

SpainSpain is located to the southwest of Europe on the Iberian Peninsula. There are a number of cities which most major retailers consider as being of primary importance when analysing the Spanish market: Madrid and Barcelona of course, but also Bilbao, Seville, Valencia and Malaga.

The retail tradition in Spain is well established and there are a number of very well known Spanish retailers such as Zara (Inditex Group in general), Mango, Cortefiel group, El Corte Inglés, or Desigual. Many international retailers continue to consider Spain as a fantastic opportunity for international growth. In terms of distribution Spain is a relatively easy country to service due to the road, rail, air and sea links.

 

 

ECONOMIC SUMMARY
ECONOMIC INDICATORS*20142015F2016F2017F2018F
GDP growth 1.42.82.52.42.4
Consumer spending 2.42.82.72.41.9
Manufacturing production 1.22.44.43.12.8
Investment 3.45.13.73.83.6
Unemployment rate (%) 24.422.420.719.518.4
Inflation -0.1-0.41.11.11.4
EUR€/US$ (average) 1.31.11.11.11.1
Interest rates 3-months (%) 0.10.00.00.10.4
Interest rates 10-year (%) 1.62.02.63.13.4

NOTE:  *annual % growth rate unless otherwise indicated. E estimate F forecast
Source:  Oxford Economics Ltd. and Consensus Economics Inc – Q4 2011

ECONOMIC BREAKDOWN
Population46.6 million (2014)
GDPUS$1,358.5 billion (2013)
Public sector balance -5.9% of GDP (2014)
Public sector debt
Current account balance
Parliament Popular Party (PP) (majority)
Head of StateKing Felipe VI
Prime MinisterMariano Rajoy
Election date December 2015 (Parliamentary)
RETAIL SALES GROWTH:
% CHANGE ON PREVIOUS YEAR
SPAIN20142015F2016F2017F2018F2019F2020F
Retail Volume0.93.33.22.51.91.81.8
Retail Value0.51.43.93.43.23.33.4

Source:  Oxford Economics Ltd.

LARGEST CITIES (2012)
CITYPOPULATION
Madrid 3,165,235
Barcelona1,602,386
Valencia 786,424
Sevilla 696,676
Zaragoza666.058
Málaga566.913
Murcia439,712
Palma de Mallorca399,093
Bilbao346,574
Las Palmas de Gran Canaria205,279

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Cushman & Wakefield, Inc. - Spain: 40.463667, -3.749220

MAJOR DOMESTIC FOOD RETAILERS

Mercadona, Hipercor, Ahorramás.

MAJOR INTERNATIONAL FOOD RETAILERS

Carrefour, Alcampo, Aldi, Leclerc. Lidl, Dia.

MAJOR DOMESTIC NON-FOOD RETAILERS

El Corte Inglés, Inditex Group (Zara, Bershka, Pull & Bear, Massimo Dutti, etc…), Cortefiel group (Cortefiel, Women Secret, Springfield, Pedro del Hierro, etc), Desigual, Mango, Blanco, Decimas.

INTERNATIONAL RETAILERS IN Spain (a selection)

Fnac, Primark, Ikea, H&M, Apple, C&A, Hollister, Forever 21, Superdry, Decathlon.

FOOD & BEVERAGE OPERATORS

McDonalds, Burger King, Muerde la Pasta, 100 Montaditos, Vips, Ginos Costa Cofee
 

TYPICAL HOURS
MONDAY - SATURDAYSUNDAY - HOLIDAYS
Shopping centers 10:00 - 22:00 (Food anchor opens 9:00) High Streets 10:00 - 21:00 (varies by region) 10:00 - 21:30

Retail Scene

The Spanish retail market is quite evenly spread between high streets and shopping centres with retail parks gaining in importance. The high street market is concentrated primarily in the major provincial capitals, such as Madrid, Barcelona, Valencia, Bilbao, Palma de Mallorca, Zaragoza, Sevilla and Malaga.

Madrid, Barcelona and Valencia are the three major contributors to the Spanish retail market, although there are various specific shopping centre and retail park schemes in other strategic locations around Spain which may have less weight financially and demographically speaking but are important in the nationwide retail context.

Shopping centers: Total existing GLA in Spain is over 11,3 million sq.m. in a total of 434 schemes. Retail density per 1,000 inhabitants stands at 240 sq.m/1,000 inhabitants, still below European average. The amount of new space over the next years is currently estimated at just over 400,000 sq.m Prime rents in shopping centre in Spain have been stable over the years and stand currently at 85€/sqm/month for in town schemes and 52€/sqm/month for out of town. Shopping centers have been one of the most popular assets on the Spanish investment market.

Retail Parks Total existing GLA in Spain is over 2.8 million sq.m It is now a mature market in Spain, but the number of major players in terms of both developers and retailers is limited. Prime rents are currently at 22.50€/sqm/month in Madrid and 18€/sqm/month in Barcelona.

High Streets, the availability of prime space in major Spanish cities is scarce, but over the last years there has been an increase in availability in secondary locations, which are providing opportunities for some of those retailers that are expanding to enter the market.

TOP SHOPPING CENTERS BY SIZE
NAMECITYSIZE (GLA SQM) YEAR OPENED
ParquesurLeganés, Madrid151,2001989
Marineda CityA Coruña146,0002011
Puerto VeneciaZaragoza123.4752012
Parque CorredorTorrejón, Madrid123,3801995
Nuevo CentroValencia112,0001982
Las ArenasLas Palmas de Gran Canaria92,3721993
IslazulMadrid90,7002008
Diagonal MarBarcelona87,0852001
La VaguadaMadrid85,5001983
El Boulevard de VitoriaVitoria84,6382003


NEW ENTRANTS TO THE MARKET

Brandy & MelvillePhilipp Plein7 For All MankindFranck MüllerVioleta by Mango
Urban OutfittersDinh VanSports Direct

KEY FEATURES OF LEASE
ITEMCOMMENT
Lease TermsStandard Leases: Shopping centres: The standard lease term is 5 years but it could be increased up to 10 years. High street: from 10 to 15 years For Retail High Street Rents are quoted on as an overall monthly rent, rather than a price per sqm. As per break options: Shopping centres: In long term leases of more than 5 years usually there is a break option for the tenant at the end of the 5th year. High street: 3 years are usually compulsory. Break options at the 5th or 10th year with a 6 months notice
Rental PaymentRent is paid monthly in advance. A security deposit of 2 months rent is required by law. Premiums are normally used. Additional bank guarantees are also often required (6 to 12 months rent including service charges + VAT).Premium/Key Money is quite common in high street. The new tenant needs to pay for occupying the retail unit but it is compulsory to sign a new contract. Also in super prime Shopping Centres.
Rent ReviewFor shopping centres: Annually (CPI) and at the end of fifth year (extraordinary rent review agreed upon by both the landlord and tenant) or market rent review. Retail rents are indexed to CPI annually and it is common to update/increase rent to open market rent every 5/10 years in Barcelona. In Madrid for high streets rents are indexed to CPI annually and it is common to add on a further increment of 3 to 5 points every 5 years. Indexation: The rent is usually indexed annually to the Consumer Price Index (IPC). If a low initial rent is agreed sometimes the following year’s calculation is based on CPI+1.
Service Charges, Repairs and Insurance Service Charges: Tenant: Internal repairs and maintenance Landlord: External repairs and maintenance. Insurance: Tenant: Contents insurance. Landlord: Building insurance. Service Charges are usually calculated on a separate basis from the monthly rent.
Property Taxes and other costs Central government (the home office) publishes a ‘Dirección General Catastral’, which sets out the rules and guidelines upon which the property tax ‘Impuesto Sobre Bienes Inmuebles (IBI) is calculated. The local town hall enforces the tax. The calculation of IBI is based on the value of the land plus the value of constructing the building; if the property has undertaken major works it will be revalue. The tax varies from building to building and from area to area. Properties have different % for different use classes. The amount of tax varies. The tax is charged to the landlord annually, who then recovers it from the tenant usually within the service charge. VAT on Rent i 21%. For High Street Retail when the tenant or the landlord is not a company there is a reduction on the 17% on the Personal Income Tax.
Disposal of a LeaseAssignment and subletting: The law gives the tenant the right to assign or sublet the lease but the landlord is entitled to an increased rent (10% on partial subletting and 20% on assignment or total subletting). However, it is usual practice to include in the contract a clause stating that the tenant is not allowed to subletting and assignment rights and at any case, the landlord’s consent is required. Forbidden in shopping centres unless there is special permission from the landlord. No tenant liability, but often tenants purchase public liability insurance. Early termination is allowed only by break clause or when tenant assumes the penalty.
Valuation MethodsHigh street retail units are generally valued using a percentage weighting system, whereby the ground floor will be classed as 100% and other levels will be allocated a percentage of this value depending on their use (i.e. Sales or ancillary).
LegislationRelating to Lease Contracts: The Royal Decree 2 of 30th April 1985 (popularly known as the "Boyer Law") amended the former Urban Leasing Law, permitting contracts of finite duration. More recently, this law has changed to gradually phase out indefinite pre-1985 leases. Leases granted after this date offer greater protection to the landlord. Retail: Over the next 10 to 20 years, the market will change due to the new legislation. ‘Premiums’ will disappear and old rents will be gradually phased out, to bring rents up to market levels. All lease contracts without an expiry date will be derogated in 2014.