Spanish retail pipeline to dip further in 2010: Savills

The Spanish property market has reacted quickly to the downturn by cutting retail development in 2009, property adviser Savills said at the Mapic retail real estate fair in Cannes.

According to Savills, the original Spanish retail pipeline forecast of 1.1 million m² has been cut to 360,000 m². This follows a record delivery in 2008 of 1.08 million m² new retail space.

The international real estate adviser reports that of the new development in 2009, the highest proportion at 33% comprised small shopping centres, followed by retail warehouse space at 29%. A further dip in the development pipeline is expected in 2010 as many Spanish developers delay commencement of projects in anticipation of a recovery in retail demand and financing facilities in 2011. Savills therefore expects to see an upsurge in development activity from 2011 onwards with many developers picking up on previously postponed schemes.

Luis Espadas, director of Savills retail investment in Spain, said: 'The economic crisis has impacted heavily on Spain with consumer sentiment at a low level and spending significantly down. As with other countries there is now stronger pressure on rents and some of the larger retailers are using this as leverage to renegotiate current rents.

He continued: 'A decline in development will help to control vacancy levels but once the market goes into recovery it should result in upward rental movement as demand puts pressure on a lack of new supply.'

Spain ranks number five in Europe in terms of gross lettable retail area per 1,000 inhabitants. Savills research puts Norway in the lead, followed by Sweden, Netherlands and Austria respectively, with the UK at number six.