The new Barcelona Retail report published by Forcadell highlights the great demand for smaller units and its focus on the Services sector.
Regarding prices, there is the establishment of a bonus or subsidy for the first years of the contract which should favour demand recovery.
The 2021 Retail Market started the year with the objective of gradually leaving behind the consequences of the pandemic. While the path the sector has to travel will take its time, nevertheless, 2021 has seen trends and indicators that forecast a slow but firm recovery. If the H1 2021 tendency prevails, there is a prospect of a year-end closing that will set forth a firm base for a 2022 recovery.
DEMAND, VACANCY AND PRICES
According to the Forcadell Retail Market report, in H1 2021 there has been a revitalization for demand of rental retail premises, reaching a 35% growth rate respect the same period last year. Rents represented a predominant figure respect sales, registering 85% of the total volume. However, the type of demand for retail units changed, regarding the profile of the demand occupier as well as its requirements. On the one hand, while requirements for large premises came to a standstill respect H2 2020, the majority of demand came from petitions for smaller units –less than 200 sqm- which reached 74% of demand volume (+6 b.p. respect the past half-year).
Analyzing by activity, the trend observed in previous editions gained momentum, as the Services segment secured storefront positions, becoming the main occupier of the market, after 3 months registering the highest demand rate, 30% of the total volume. This period also reinforced the greater presence of activities non-exposed directly to the end-user, absorbing most of the available occupier stock. This group includes the so-called dark kitchens and dark stores, both activities driven by the delivery boom and the logistics needed to set them in motion.
On the other hand, demand increase was not enough to absorb the stock vacancy, as reflected in Forcadell’s Report. In fact, at the closing of H1 2021, vacancy increased in 4% half-year rate, according to data published by the real estate portals. “This increase is due to the ceasing of activity of small and medium retail stores, as well as the closing of large brands and major chains that continue to fast-track its new storefront strategies”, as signaled by Xavier Aguilar, Forcadell’s Retail Department director.
Regarding prices, Forcadell’s report highlights that requested rents in the main commercial areas of the Catalan capital remained still below the pre-Covid rents. In the 6 researched zones, prices stood at a 2 to 5 % rates, figures below the prices registered in 2019. However, during this first 2021 half-year, the market registered a 4% rate increase.
The demand recovery, driven by the influx of greater opportunities in the market, exerted an upward pressure on prices. The 2 year bonus that agrees on two initial years of lower rents, ending on the third year taking it back to its initial rate, allowed the gradual access of new transactions, even if for the time being these third-year rent prices are still not at Pre-Covid levels.
THE MOST RELIABLE COMMERCIAL HUBS DURING THE CRISIS
The Forcadell report includes a detailed analysis of the 10 commercial hubs of Barcelona, which comprised a guide that softened the impact of the pandemic, since the hubs contribute in bringing a sense of security and proximity to consumers and end-users, which also helped the commercial premises located there to overcome the worse and most intense periods of the crisis. Its impact, however, was asymmetrical, and recovery is also developing at different speeds in each zone.
Forcadell’s H1 2021 analysis registered an improvement of all commercial 2nd Lines as a whole, which were the first ones to notice the recovery in the local commercial consumption by their own neighbours. The Creu Coberta hub stands out, reaching a considerably fast recovery, with 15% price rate increase in its First Commercial Line, closing the half-year with an average of €36.9/sqm/mnth. On the other hand, Cor Eixample, an example of a fast recovery pace, slowed down its occupancy rate, with it its average monthly rent in its First Commercial Line, which then raised 10% in a six- month period (€20.6/sqm/mnth)
RETAIL INVESTMENT MARKET
According to Forcadell’s report, acquisition of retail premises in H1 2021 focused basically in activity based on investment opportunity sets. The temporary rent decline lead on to investment of empty premises, new supply at opportunistic pricing brought on by the close down of a considerable number of stores. This situation has captured part of the interest of the investment market, which in short to medium term will keep the unit rented, awaiting until the total recovery of the market will allow its sale with capital gain.
The retail investment market accumulated turnover was almost €300m in the first 2021 half-year, a figure which includes shopping centres as well as street-front retail premises. Investment appetite maintained momentum during the first half of the fiscal year, and yields maintained stability, standing at 3% and 6% rate. The city’s commercial hubs were the zones offering the highest minimum yields, at 4, 5%. “A gradual growth is expected in the real estate investment segment, encouraged by the health crisis control and thus improvement of socializing, consumer activity and the touristic sector’s recovery”, concludes Xavier Aguilar, Forcadell’s Retail department director.
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