Cushman & Wakefield Global Cities Retail Guide occupies an important position among developed economies in the world and the EU. In terms of GDP Spain places 14 in the global ranking while holding the fifth position in the . The domestic market enjoys a critical mass with close to 46.7 million consumers and a knowledge based economy, with three quarters of its production coming from the service sector.

Spain has been a leader of economic expansion since 2014 with the highest rates of output expansion in the EU, and beat forecasts of GDP growth in 2016 and 2017. During 2018 the economy continued to expand with an increase of 2.5% of GDP. The highly developed infrastructure aids sound economic activity and state-of-the-art facilities can be seen in high-speed train and freight railways, logistics parks and worldwide connected as well as urban transport and telecommunication networks.

Private consumption represents a strong share of the output of GDP (ranging from 75% to 78%) which means retail sales have a strong correlation with families’ disposable income. Retail sales have remarkably improved in the last four years, with steady expansions since 2014 and consistent strong growth from early 2015 to 2018.

Record figures have also been achieved in the tourist sector. In 2018, the estimated number of tourists was more than 82.6 million visitors; this is close to the world’s top tourist destination. The tourist industry has therefore been a driver of recent economic growth at the national . A number of cities are important destinations for international SPAIN retailers due to the strength of the local economy, their demographic composition and tourists. The major Spanish cities include, , , , , Valencia, Palma de OVERVIEW and Malaga. Spanish fashion is well established and internationally known retailers such as Zara (Inditex Group), Mango, Cortefiel, El Corte Inglés and Desigual drive retail space demand almost regardless of the economic cycle. Also, major international retailers continue to consider Spain as a remarkable opportunity for international expansion.

Cushman & Wakefield | Spain | 2019 1 SPAIN ECONOMIC OVERVIEW

ECONOMIC SUMMARY ECONOMIC INDICATORS* 2018 2019F 2020F 2021F 2022F GDP growth 2.6 2.2 2.0 1.7 1.4 Consumer spending 2.3 2.0 1.8 1.4 1.3 Industrial production 0.3 0.9 1.9 1.8 1.3 Investment 5.3 3.9 2.8 2.3 2.0 Unemployment rate (%) 15.3 13.8 12.8 12.0 11.4 Inflation 1.7 1.1 1.5 1.7 1.9 US$/ € (average) 1.2 1.1 1.2 1.2 1.3 Interest rates 3-month (%) 0.0 0.0 0.2 0.5 0.7 Interest rates 10-year (%) 1.4 1.3 1.5 2.0 2.5

ECONOMIC BREAKDOWN RETAIL SALES GROWTH: % CHANGE ON PREVIOUS YEAR Population 46.6 million (2018F) GDP (nominal) US$ 1.43 trillion (2018F) SPAIN 2018F 2019F 2020F 2021F 2022F Public Sector Balance -2.6% of GDP (2018F) Retail Volume* 1.2 1.5 1.5 1.5 1.6 Public Sector Debt 114% of GDP (2018F) Current Account Balance 0.9% of GDP (2018F) Partido Socialista obrero español (PSOE) Head Of State King Felipe VI Prime Minister Pedro Sánchez

NOTE: *annual % growth rate unless otherwise indicated. Figures are based on local currency and terms. E estimate F forecast. Cushman & Wakefield | Spain | 2019 SOURCE: Oxford Economics Ltd. 2 CITY POPULATION Madrid 3,223,334 Barcelona 1,620,343 Valencia 791,413 Seville 688,711 666,880 Malaga 571,026 447,182 409,661 de Gran Canaria 378,517 Bilbao 345,821

Source: Ine 2018

SPAIN LARGEST CITIES

Cushman & Wakefield | Spain | 2019 3 SPAIN RETAIL OVERVIEW

MAJOR DOMESTIC FOOD RETAILERS , Hipercor, Ahorramás. Eroski.

MAJOR INTERNATIONAL FOOD RETAILERS Carrefour, Alcampo, Aldi, Leclerc. Lidl, Dia.

MAJOR DOMESTIC NON-FOOD RETAILERS El Corte Inglés, Inditex Group (Zara, Bershka, Pull & Bear, Massimo Dutti, etc…), Cortefiel Group (Cortefiel, Women Secret, Springfield, Pedro del Hierro, etc), Desigual, Mango, Blanco, Decimas.

INTERNATIONAL RETAILERS IN SPAIN , Primark, Ikea, H&M, Apple, C&A, Hollister, Forever 21, Superdry, Decathlon.

FOOD AND BEVERAGE OPERATORS Five Guys, McDonalds, Burger King, Muerde la Pasta, 100 Montaditos, Vips, Ginos

TYPICAL HOURS

MONDAY – SATURDAY centers 10:00 - 22:00 (varies by region) (Food anchor opens 9:00) 10:00 - 21:30 High Streets 10:00 - 21:00

NEW ENTRANTS TO MARKET Urban Outfitters Uniqlo Dealz Five Guys

Cushman & Wakefield | Spain | 2019 4 SPAIN RETAIL SCENE

The Spanish retail market is evenly Retail Parks: total existing GLA in Spain is over 2.8 million spread between high streets and shopping sqm. Although this is now a mature market in Spain, there centres with retail parks gaining in is still a limited number of major players in terms of both developers and retailers. Prime rents are currently at importance. The high street market is €22.50/sqm/month in Madrid and €18/sqm/month in concentrated primarily in the major Barcelona. provincial capitals, such as Madrid, High Streets: the availability of prime space in major Barcelona, Valencia, Bilbao, Palma de Spanish cities is scarce, but over the last few years there Mallorca, Zaragoza, Sevilla and Malaga. has been an increased interest in near-prime locations. In Madrid, Barcelona and Valencia are the three major this sense retail space demand is improving as some contributors to the Spanish retail market, although there brands are expanding or trying to enter the market. are various specific shopping centres and retail park schemes in other strategic locations that are important in the retail landscape. Shopping centres: total existing GLA in Spain is over 11.4 million sqm in a total of 414 schemes above of 5,000 sqm. Retail density per 1,000 inhabitants stands at 244 sqm/1,000 inhabitants, still below the European average. The amount of new space over the next two years is currently estimated at 290,000 sqm. Prime rents in shopping centres in Spain have been stable over the years and stand currently at €85/sqm/month for in-town schemes and €52/sqm/month for out-of-town. Shopping centers are one of the most popular assets on the Spanish investment market.

Cushman & Wakefield | Spain | 2019 5 SPAIN SHOPPING CENTRES

TOP SHOPPING CENTRES BY SIZE NAME CITY SIZE (GLA SQM) YEAR OPENED Puerto Venecia Zaragoza 206,890 2007 Marineda City Coruña, A 176,000 2011 Parquesur Leganés (Madrid) 159,000 1989 Madrid Xanadú Arroyomolinos (Madrid) 152,887 2003 Bonaire (Valencia) 137,000 2000 Plaza Imperial Zaragoza 132,000 2007 Megapark Barakaldo (Vizcaya. Basque country) 127,772 2004 Parque Oeste Alcorcón Alcorcón (Madrid) 125,000 1994 Luz Shopping (Cádiz) 124,430 2010 Parque Corredor Torrejón de Ardoz (Madrid) 123,380 1995

Cushman & Wakefield | Spain | 2019 6 SPAIN KEY FEATURES OF LEASE STRUCTURE

SUBKEY -FEATURESHEADING OF LEASE SHOPPING CENTRE RETAIL PARK

ITEM COMMENT COMMENT

Lease Duration 10 years 5/7 - 25 years

Annual CPI Review Yes Yes

2+3 Obligatory Periods / Break Options Varies. Generally 5 – 7 years 3+2+5

Normally in 10th year or fixed increases after each obligatory Market Rent Reviews Normally after 5th year or fixed increases e.g. CPI +3% period/lease extension

Turnover Rent Yes 5% - 8% Sometimes possible 3% - 5%

Payment of all service charge costs and property tax (IBI) plus Payment of all service charge costs and property tax (IBI) plus Tenant Obligations maintenance and repair costs of fixture and fittings maintenance and repair costs to the fixture and fittings

Payment of the property management and the Payment of the property management and the building/structural Landlord Obligations building/structural insurance. Also obliged to maintain/repair insurance as well as repairs to the structure the structure and exterior of the building

Sub-letting / Lease Assignment Only with landlord permission Only with landlord permission

Cushman & Wakefield | Spain | 2019 7 ROBERT TRAVERS, MRICS Head of Retail Agency Spain Tel: +34 934 881 881 Mob: +34 661 43 55 83 Fax: +34 932 152 950 [email protected]

No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and the same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2019 Cushman & Wakefield LLP. All rights reserved.