Spain

Market Bulletin

Madrid, Summary

In the currently complex economic climate, the industrial property market has evolved slowly but surely. Logistics companies have been responsible for strengthening demand in the sector whilst, understandably, technological concerns have been less in evidence in the light of the current international business scenario. In addition, the fall in orders and exports of manufactured goods has not helped to improve results. Those mixed use buildings which fall under Regulation 9.4 a (Industrial/Offices) provide a good opportunity to develop high quality products, for which there is a good level of demand in the market. Nevertheless, the decision by many companies not to expand and the uncertainty in the technological sector are factors which are leading developers to consider that construction on an indiscriminate basis is precarious.

Rents have risen steadily by almost 10% during the year, with yields for prime products at rack rents remaining firm at between 8% and 9%. Good opportunities exist for logistic companies to move to newly completed buildings and investors can find firstclass companies as tenants for their buildings. Industrial premises are now to be found as far away as 60 Kms from the capital, with distribution, the services sector and manufacturing dominating, at least in the central region.