According to an article prepared by the industrial department of the real estate consultancy Cushman & Wakefield, American and, primarily, European investment funds have entered the Spanish industrial market, attracted by the strong returns and the potential for growth that still exists to catch up with other countries, especially in the logistics sector. Meanwhile, the consultancy King Sturge presented a report in Madrid on the main sectors of interest to investors.
In recent years, Spain has witnessed the implementation of the general characteristics necessary for the development of logistics parks that are attractive to operators. These projects are being approached with increasing seriousness, requiring in-depth knowledge of logistics and transportation on the part of the developers and construction companies involved.
Until recently, the essential characteristics for transport-related activities were not very well understood, and all of them, in addition to the typically industrial ones, were being accommodated in industrial parks that were not very operational and insufficient.
The great heterogeneity of the companies located there, as well as the infrastructure that those areas possessed, meant that coexistence with industrial companies greatly hindered the rest of its neighbors and, especially, activities related to transport and storage.
Therefore, new developments show a growing specialization of industrial parks, depending on the activity to be carried out there. Thus, we could distinguish between: business park, business activity park, technology park, industrial park, commercial park, and logistics park.
According to the aforementioned Cushman & Wakefield article, for a logistics development to gain acceptance from operators, the location for its future implementation must be carefully chosen. It should be an area with an easily identifiable site and wide roads to facilitate maneuvering.
Furthermore, intermodality between rail and road is becoming increasingly valued, as it reduces costs for operators and offers another option for low-cost freight mobility.
Barcelona or Madrid?
Using data updated to the end of the third quarter of this year, the consulting firm King Sturge has conducted a study on the Office, Investment, and Industrial real estate markets in the cities of Madrid and Barcelona. The report's findings shed light on the price, demand, and supply differences between the two markets.
While the value of industrial land in Madrid has risen by 30%, in Barcelona the increase has been only 15%, exactly half. This explains why land rents in Barcelona have not fallen as much as in the Spanish capital during the third quarter of the year.
In the office market, some differences are also evident. Compared to the previous year, the absorption rate is 25% higher in Madrid. This figure is negative in Barcelona, where the absorption rate was 10% lower in the third quarter compared to the previous year. In both cities, office rents have seen a price decrease over the last 12 months, ranging from 7% to 15% in Madrid and from 6% to 13% in Barcelona.
However, there are also some similarities between the two industrial markets. In both examples, the lack of available industrial land is driving development to other areas.
In Madrid, the scarcity of industrial land is driving new developments towards Toledo and Guadalajara. In Catalonia, this shift is occurring towards the Alt Penedès region and the province of Girona. Thus, Spanish cities are following the trend of their European counterparts, such as Paris, where returns on properties located in the suburbs are already reaching 9%.
Forecasts for 2004
According to sources at King Sturge, the scarcity of good, profitable properties, high investor liquidity, rising prices, and falling margins were the characteristics that marked the Spanish real estate market at the end of 2003.
According to King Sturge's Chief Investment Officer, John Thompson, for the year that is now beginning, "as long as interest rates remain stable, the trends with which we ended the year will continue."
By then, according to forecasts from this international real estate consultancy, the main sectors of interest for investors will continue to be office buildings, shopping centers, and logistics centers.
According to an article prepared by the industrial department of the real estate consultancy Cushman & Wakefield, American and, primarily, European investment funds have entered the Spanish industrial market, attracted by the strong returns and the potential for growth that still exists to catch up with other countries, especially in the logistics sector. Meanwhile, the consultancy King Sturge presented a report in Madrid on the main sectors of interest to investors.
In recent years, Spain has witnessed the implementation of the general characteristics necessary for the development of logistics parks that are attractive to operators. These projects are being approached with increasing seriousness, requiring in-depth knowledge of logistics and transportation on the part of the developers and construction companies involved.
Until recently, the essential characteristics for transport-related activities were not very well understood, and all of them, in addition to the typically industrial ones, were being accommodated in industrial parks that were not very operational and insufficient.
The great heterogeneity of the companies located there, as well as the infrastructure that those areas possessed, meant that coexistence with industrial companies greatly hindered the rest of its neighbors and, especially, activities related to transport and storage.
Therefore, new developments show a growing specialization of industrial parks, depending on the activity to be carried out there. Thus, we could distinguish between: business park, business activity park, technology park, industrial park, commercial park, and logistics park.
According to the aforementioned Cushman & Wakefield article, for a logistics development to gain acceptance from operators, the location for its future implementation must be carefully chosen. It should be an area with an easily identifiable site and wide roads to facilitate maneuvering.
Furthermore, intermodality between rail and road is becoming increasingly valued, as it reduces costs for operators and offers another option for low-cost freight mobility.
Barcelona or Madrid?
Using data updated to the end of the third quarter of this year, the consulting firm King Sturge has conducted a study on the Office, Investment, and Industrial real estate markets in the cities of Madrid and Barcelona. The report's findings shed light on the price, demand, and supply differences between the two markets.
While the value of industrial land in Madrid has risen by 30%, in Barcelona the increase has been only 15%, exactly half. This explains why land rents in Barcelona have not fallen as much as in the Spanish capital during the third quarter of the year.
In the office market, some differences are also evident. Compared to the previous year, the absorption rate is 25% higher in Madrid. This figure is negative in Barcelona, where the absorption rate was 10% lower in the third quarter compared to the previous year. In both cities, office rents have seen a price decrease over the last 12 months, ranging from 7% to 15% in Madrid and from 6% to 13% in Barcelona.
However, there are also some similarities between the two industrial markets. In both examples, the lack of available industrial land is driving development to other areas.
In Madrid, the scarcity of industrial land is driving new developments towards Toledo and Guadalajara. In Catalonia, this shift is occurring towards the Alt Penedès region and the province of Girona. Thus, Spanish cities are following the trend of their European counterparts, such as Paris, where returns on properties located in the suburbs are already reaching 9%.
Forecasts for 2004
According to sources at King Sturge, the scarcity of good, profitable properties, high investor liquidity, rising prices, and falling margins were the characteristics that marked the Spanish real estate market at the end of 2003.
According to King Sturge's Chief Investment Officer, John Thompson, for the year that is now beginning, "as long as interest rates remain stable, the trends with which we ended the year will continue."
By then, according to forecasts from this international real estate consultancy, the main sectors of interest for investors will continue to be office buildings, shopping centers, and logistics centers.
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