Savills, the industrial real estate advisor, is predicting the Spanish commercial property market is set to grow further in 2015.
Last year, strong investment volumes were seen in the country’s office market where a total of €2.8 billion in transactions were recorded – triple the amount from 2013, when €990 million was transacted.
Location matters in Spanish commercial real estate. A full 60 per cent of investment was made in Madrid, 30 per cent in Barcelona and 10 per cent was made in other locations nationwide.
According to Savills, increasing demand and lack of supply is continuing to push yields down in Central Business Districts (CBDs).
Prime yields at the end of 2014 moved 100 basis points, secondary areas moved 75 basis points and out of town locations moved 50 basis points.
SOCIMI, which are the Spanish equivalent of REITs, were very active in the office market in 2014. More than one-quarter (27 per cent) of their capital was invested in commercial property and 76 per cent of that total was put into the office sector.
The report goes on to say that take-up in the office market at the end of last year was about 2.5 per cent less than the previous year.
However, 2013 take up was distorted by a large letting to Vodafone. When that transaction is discounted, take-up grew by 12 per cent over the previous year.
One of the signs of recovery in Spain is that some occupiers are prepared to sign pre-lease agreements on speculative space in CBDs.
This is prompting major market players to carry out speculative developments and the resulting increase in take-up will lead to an increase in rents on the best properties for the rest of the year.