The retail sector is recovering in Spain after a difficult period.
Retail spending in Spain is expected to grow by more than 4% in 2021 and 2022, due to more consumption and the restarting of tourism, according to Oxford Economics. Madrid is set to outperform, with retail spending growing by 6% in 2022.
Thanks to the high vaccination rates (more than 78% of the population has been fully vaccinated), and a significant drop in infection rates, restrictions in the Spanish capital have been all but lifted. From 20 September, all restaurants, cafés and night clubs were allowed to open as late as their licences allow, and shopping malls, markets, shops, cinemas, theatres, museums and galleries no longer have to apply capacity limits.
Tourism is picking up as a result, although the 1 million overseas tourists registered in the first nine months of the year is still far below the 5.7 million in the same period of 2019. Tourist spending is up with average daily spend around €237, 2% above the average of 2016-19, making Madrid the region with the greatest average daily spend in Spain ahead of the national average of €138.
The capital, with household disposable income 30% higher than Spain’s average and strong tourist attractiveness boosted by the opening of new luxury hotels, is a preferred location for international retail brands.
Despite the boom in online sales during the pandemic, demand for stores is picking up as physical premises enable social interaction and boost overall sales. Brands are looking to open flagships in very commercial areas as part of their omnichannel strategy.
The increase of the availability in prime locations offers an unprecedented opportunity for brands to find strategic locations at more affordable rents with more flexible terms and conditions.
Some international firms are already taking advantage of these opportunities with upcoming openings in Madrid’s prime shopping areas Barrio de Salamanca and Distrito Centro.
Salamanca, where the vast majority of premium and luxury brands in Madrid are concentrated, was chosen by Off White to open its first store in the capital this year. Additional openings such as Moncler with its first store in Serrano 72 and Gant, already present in Madrid but expanding, at Serrano 32.
In Centro, activity is resuming with the opening of Bershka's new flagship store on Preciados 13 and Inditex’s brands Zara and Stradivarius moving into 9,000 square metres in the landmark Edificio España totaling 9,000 square metres. Sketcher’s is opening at Gran Vía 32.
Centro, which was traditionally mass market-oriented, is undergoing a major transformation following the opening of the Four Seasons in 2020. New luxury hotel openings are scheduled for 2022, such as Hotel W just across in Plaza Canalejas and the Hotel Madrid Edition 700 metres away. This wave of new luxury hotel openings is expected to drive both the quantity and quality of tourism, drawing high-end brands like Cartier which opened a store this year in the 15,000 square metres Canalejas Gallery. This new luxury epicentre is set to raise the profile of the retail offering in the surrounding area.
Confidence in the recovery of activity in main commercial streets is driving investor demand. Core investors are seeking opportunities in high street retail, such as the Spanish insurance company Mutualidad de la Abogacía, which acquired a 2,560 square metres store at Serrano 5 in Salamanca in 2020. It is also negotiating the purchase of a 2,400-square-metre store at Preciados 4 in Centro. Other relevant transactions were the acquisition of Puerta del Sol 11 in Centro for more than €80 million by Bankinter Investment and Serrano 36 in Salamanca for over €40 million by Tander, the Spanish REIT in which Canadian firm Premier Alliance holds a stake.