Real Estate Trends: Retail Parks
Despite the decline in investment volume in the Retail sector (-66% vs. H1 2022), the only sub-sector that has grown compared to the previous year is retail parks, which has experienced a growth of +17% to about €145 million. This is a continuous trend that has been gaining force since 2002 and the end of the pandemic. In 2022 the total investment volume was €311 million (+140% y-o-y), the highest results of the last 5 years.
Retail parks are large warehouses for the sale of products located on the outskirts of cities, with a high occupancy rate and where the €/sq.m. is cheaper. The main characteristic of retail parks is that this niche segment has been characterized by low vacancy rates and low management costs. For this reason, it has attracted a lot of interest from large investors as demand grows exponentially. In Spain, the main investors within this sector are French, since in France this type of investment is relatively well established, whereas in Spain it is still in a growth phase.
During the first half of the year, investment in retail parks accounted for 46.8% of the total within the retail sector. The main cities which have previously attracted investment are Madrid and Barcelona, which account for 60% of total investment in the H1 2023. In spite of this, 85% of retail parks to open in Spain in 2024 will be located outside these two cities. In the second quarter, rents stood at €17.5/sq.m. /month on average, prime rents remained stable compared to the same period of the previous year, as did retail parks’ prime net yield, which remained at 5.6%.
In the following months, this type of investment is expected to maintain its attractiveness and continue to grow in terms of volume and importance. Over the next 2 years, 23 new retail park projects are expected to be added, representing more than 430,000 sq.m. of GLA altogether with a total of 600 new retail spaces and €17 million sq.m. of leasable space.