• Real Estate Trends: Recovery of High Street Retail

    September, 2023

With the end of the pandemic and mobility restrictions, one of the main beneficiaries has been the retail sector which has experienced a rebound in demand in certain segments such as High Street retail, to levels above pre-pandemic levels.

In this first half of the year, transactional leasing activity on High Street was 19% above the levels of the same period in 2019 and 4.5% higher than in 2022.Fashion and accessory brands are the main players, cornering more than 60% of the High Streets store openings in this first period of the year.

The main fashion, home, sports, etc. brands need to be located where they have greater exposure and visibility, that is, in the busiest streets of the main Spanish cities, such as Madrid and Barcelona. As the streets are once again full of people, investors have found this type of investment attractive again.

As a consequence of this high demand, vacancy rates have decrease to 10.8% in the case of Barcelona, and in some cases like Madrid, these have fallen to an incredible 4.5%, the lowest levels in years. On streets with higher demand and lower availability, there has been a small rebound in prime rents that already started at the end of December 2022, when the sector began to recover and demand for High Street assets began to rise, reaching €249/sq.m. /month.

Barcelona and Madrid are the cities where the demand for High Street has been most significant. In recent years, The Spanish capital has experienced the highest growth in this sector, with Gran Via being the street with the highest year-on-year growth, up to 4.4%, with rents rising from €225/sq.m. /month at the end of 2021 to €235/sq.m/month in the first quarter of 2023 and a drop in availability of up to 2.3%.

In Barcelona, the street with the highest growth in rents has been Paseo de Gracia, reaching €245/sq.m. /month, 6.5% more than in the first quarter of 2022. Registering a decrease in availability up to 3.2%, it has been the street where most international luxury brands have invested in recent years.