The international real estate advisor suggests that the increase of vendors during 2011 will be led by banks disinvesting, in addition to local developers and traditional investors. Circa €700-800 million is expected to be transacted but with some investment opportunities totaling €100 million alone, a larger total could be achieved.

Gross yields for prime centers should remain at 6.5% on average, with parks at 7% and secondary product at 7.5%.

Luis Espadas, Head of Capital Markets at Savills Spain, says: “It has been a relatively slow start to the year with €165 million transacted but we are confident that with the increasing supply of centers coming onto the market, combined with international appetite, we could see a higher sales volume achieved in 2011. The economy remains a concern but with a controlled development pipeline and attractive rents, occupancy rates are at a healthy 95% in new prime centers.”

The research shows that prime new centers continue to lead occupancy rates. Las Arenas in Barcelona, Marineda City in La Coruna, Arambol in Palencia and Seville Este in Seville, have all opened with high occupancy levels, Seville Este and Arambol both achieved up to 100%.

Savills says this small vacancy reflects a trend of recent arrivals or veterans re-entering the market and accessing top-end centers in prime areas due to a fall in rents over recent years. Retailers such as expanding DIY traders have a significant presence in new schemes including AKI, Bricor and Bricoking but also Decathlon and Sonae’s brands, who are appearing in shopping centers alongside the low cost fashion brands of Zippy Merkal and Primark, as well as H&M and C&A.

In terms of rents, new contracts in prime centers remain stable at €90/m²/month, discounts are still obtainable with rent reviews occurring every three to six months to monitor sales changes in relation to discounts. Despite expansion plans, closing of retail units remain a reality in the market with Brico House and MIRO both closing stores. In the electronics sector, there has been a move towards control by a small number of companies and Media Markt is dominating.

Gema de la Fuente of Savills research adds: “Development control has had a truly positive impact on a challenging market – figures for 2011 are at 416,000 m². This figure is likely to be adjusted by the end of the year as delays to developments are quite usual due to the difficulties in securing finance.

“Of the stock developed, a move towards sustainable construction has seen two centers in La Coruna being awarded BREEAM – another positive step for the market in attracting international investors and tenants. In addition Zielo shopping center in Pozuelo is the first shopping center in Europe to gain LEED certification.”

Development levels stand at 1999 figures with little more than 335,000 m² (including extensions) opened in 2010, 35% less than 2009, and 416,000 m² forecast to open in 2011. This compares to over one million m² at the peak of the market in 2008. Retail warehouse parks continue to increase in importance, stock exceeds 1.5 million m² across the country, which represents 11% of the total retail stock.

Source: Savills