Logistics sector demand stable while traditional industrial sector sees year-on-year demand decrease

16 Oct, 2008, Madrid

• Companies currently seeking sites of 1,000 to 3,000 m2, though this product’s supply remains limited.
• Logistics hubs moving ever further away from capital, to up to 90 km depending on highway concerned.
• Industrial and logistics products attracting investors since yields have climbed to 7% in last year.
• Coslada with €8.5/m²/month and Getafe with €7/m2/month have highest rents for logistics sites, while San Sebastián de los Reyes and Alcobendas lead in industrial premises, with around €8 /m2/month.
• The most expensive logistics space currently available inof Madrid and central Spain is at San Fernando, with €325/m2.
• Purchases of industrial sites have decreased due to scarcity of bank financing for firms, which are in the end renting or renting with a purchase option.

The reduced availability of industrial and logistics products remains the defining feature, despite excess supply being seen in small premises. New logistics developments planned in the short run are continuing the trend of locating sites ever further from the Spanish capital, to up to 90 km away. Fewer developers, meanwhile, are prepared to build speculatively. Demand from logistics remains strong though the traditional industrial sector has seen a year-on-year decline. Foreseeably, as in most economic sectors the change in economic cycle shall negatively affect industrial demand in the next few months. Turning to prices, these have remained stable or even increased slightly in the best logistics locations.

Speaking of the industrial sector, Roger Cooke, Managing Director of Cushman & Wakefield in Spain believes that: “in the next few months there could be price adjustments in the areas with least demand and/or most supply”.

SUPPLY
There is currently excess supply in small industrial sites, of up to 500 m2 in surface area, and somewhat of an increase in the supply of logistics premises.
In addition, the trend of increasing the distance from the city of Madrid is strengthening with new logistics hubs. In this respect, we can point out new developments at Trijueque y Torija, at around 70 km along the A-2, and Ontígola y Noblejas, at around the 60 km segment of the A-4. Even further away at the 90 km point of the A-3 we could highlight the district of Tarancón.

DEMAND
Marketing periods are increasing in both sales and rental.
Demand is increasing from companies needing to rent sites of between 1,000 m2 and 3,000 m2, although the supply of this type of product tends to be low quality.
The demand for developable land in strategic areas remains high, meanwhile, although it is naturally being directly affected by the financing difficulties interested buyers are facing.

PRICES
Average rents:
a) Logistics sites
Coslada and Getafe, with €6.75/m²/month, lead the market in average rents for logistics sites in the self-governing community of Madrid — although in Coslada rents can be as much as €8.5/m²/month — while Ocaña with €2.75/m2/month and Noblejas with €2.50/m2/month have the lowest.
b) In industrial sites
The largest average rents for industrial premises in the self-governing community of Madrid are at San Sebastián de los Reyes (€8.25/m²/month) and Alcobendas (€7.75/m²/month), parks that have become very service-oriented.

Average sale prices of industrial premises in Madrid
The average sale price in Las Rozas is €2,150 per square metre, this being the most expensive location in the self-governing community. The cost is so high in Las Rozas due to the predominance of commercial sites.
Average land sale prices in municipalities of Madrid and central Spain:
a) Industrial
The highest average price is at Tres Cantos, though this is land that has become very much service-oriented. Looking at purely industrial premises we would mention areas like Vicálvaro and Coslada.
b) Logistics
The area with most expensive logistics land available in Madrid and the central region is at San Fernando de Henares, Getafe and Pinto.

INVESTMENT MARKET
While prime yields ended 2007 at around 6.25%, they are currently very near 7%. This is a scarce product so all factors suggest that with less speculative development of supply, 2008 should see smaller investment than in the last few months.

back to real estate News & Events

Printer Friendly Version