Demand for out-of-town retail space in Spain persists: Savills

Spain is set to see a sustained level of demand for out-of-town retail space due to the expanding retail warehousing concept, according to a report by property consultant Savills.

The retail warehousing concept, which includes bulk consumer products such as DIY and electrical goods, has resulted in centres opening at occupancy levels of 100% in comparison to between 80% and 85% in shopping centres, and 95% in prime shopping centres. These occupancy levels are being achieved despite reports of a slowdown in private consumption, the report said.

'The retail warehousing concept has arguably come at the right time for this market as it offers good value floor space. We are seeing demand from international brands who represent strong anchor tenants,' Eri Mitsostergiou, director of Savills research, says.

Developer appetite remains strong for cities or areas of low commercial density such as Cataluna. In total, a record of over one million square metres of gross lettable surface area is set to come on stream in 2008.

Looking ahead to the rest of the year, Luis Espadas, head of Savills retail, says: 'With real estate pricing corrections taking place in a similar vein to the rest of Europe, we believe that investment is going to pick up after the summer but this will be influenced by the bank finance situation. We have noted that forward-funding structures have become less common with investors preferring to buy centres with proven track records.'