2010 Global Market Report - NAI Commercial Real Estate

Madrid, SpainStockholm, SwedenContactNAI Sol+ 34 91 181 1567Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)UnemploymentRate (%)1334.3-3.77%$1,438.36$31,141.50-0.29%18.20%The International Monetary Fund expects Spanish GDP tocontract 3.8% in 2009 and 0.7% in 2010. New constructionpermits declined 40.1%. Unemployment could reach 20%in 2010. Public deficit rose 5.9% of GDP. Rents have fallen,especially in secondary locations with high vacancy.New development is currently on hold. Prime yields areincreasing with stable demand in prime locations. Tenantscontinue to remain very selective. Banks and savings banksare divesting after going from €2 billion in December 2007to €15.3 billion worth of assets due to foreclosures and debtin March 2009.Only 15 of the predicted 20 to 25 shopping centers openedin the retail sector (600,000 SM) as rents continued to fall.Rental rates are down 15% on prime space and 25% onsecondary properties. Demand for well operated and opportunisticassets is rising.The office market saw a decline of 25% in the number ofdeals completed compared to 2008. The average deal sizefell to roughly 620 SM. Companies are relocating and/ortaking advantage of lower rents as a cost savings measureand many are reducing space. The prime rents in Madridfell to €32 SM/month, about a 28% decrease from theprevious year. Landlords are offering rent free periods andmore flexible lease conditions.Although some industrial space is being converted to mixeduse, manufacturing companies are vacating older industrialparks in favor of more modern facilities. Logistic demandremained steady.Almost 40% of transactions were sale-leasebacks withtenant covenants being a key factor. Banco Pastor, CaixaCatalunya and BBVA’s €1.5 billion transaction, by DeutscheBank are prime examples. The current economic climatehas brought a return of foreign funds and investors to themarket. Colonial sold its Principe Pío mall in Madrid for €125million to Dutch investor Corio.ContactNAI Svefa+46 8 441 15 50Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)UnemploymentRate (%)1334.3-4.83%$397.70$43,146.742.25%8.50%Despite the past year’s international economic turmoil, Swedenhas been doing relatively well. GDP has been decreasingbut the exceptionally low rate has supported theconsumption and kept the prices on a stable level for theresidential market. The Repo rate is now on a historicallyand extremely low level of 0.25%. The prime rent in theStockholm CBD has declined approximately 10% duringthe past year.The vacancies for offices have not increased substantiallyyet but higher vacancy levels are expected. An increase insublets or second-hand lease agreements with lower rentshas been observed. No bigger office construction projectshave been started during the year and the decline of rentlevels is noticeable. Almost no construction of new biggerretail areas has started during the last year. Slightly highervacancy rates than before have been noticed. However,turnover-based rents may prevent rising vacancies.Some investors fear that the retail market doesn’t need toomuch additional expansion during the upcoming years. Theindustrial market is relatively stable and has, as the othermarkets, experienced a very low transaction volume.Increasingly companies are doing sale-leasebacks in orderto improve their balance sheets. Yields for industrial realestatehave been relatively stable throughout the year. Rentalregulation for the residential market has kept rents on arelatively low level, especially in the city of Stockholm. Newagreements between different negotiating parties havemade it clear that bigger consideration of location shouldbe taken into account in the Stockholm area in the futureregarding rent levels. Even government level changes of thelaw in this area have been taken into consideration andmight be changed to allow more differentiated and highertop rents.The transaction market has experienced higher yield levels.The Swedish banks had some problems about a year agoand the government gave credit guaranties to some of them.Mostly it was investments in Baltic countries that causedproblems. Since funds are relatively accessible again, thenumber of transactions has increased.Interest Rate(%)1.00%Interest Rate(%)0.25%Population (Millions) 46.188Population (Millions)9.217Madrid At A GlanceConversion: 0.793 EUR = 1 US$ NET RENT/M 2 /MO US$ RENT/SF/YRLow High Low High VacancyCITY CENTER OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAIL€€€€€€€€€22.0016.0014.0020.008.005.004.003.505.00€€€€€€€€€32.0024.0018.0030.0019.0010.006.006.006.00$$$$$$$$$30.9322.4919.6828.1211.257.035.625.627.03$$$$$$$$$44.9933.7425.3142.1826.7114.068.448.448.445.5%8.0%15.0%30.0%15.0%N/AN/AN/AN/ACity Center€ 55.00 € 126.00 $ 77.32 $ 177.14 N/ANeighborhood Service CentersCommunity Power Center (Big Box)Regional MallsSolus Food Stores€€€€10.004.006.008.00€€€€11.005.607.0010.00$$$$14.065.628.4414.06$$$$15.467.879.8419.68N/AN/AN/AN/ADEVELOPMENT LAND Low/M 2 High/M 2 Low/SF High/SFOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidential€ 700.00 € 1,050.00 $ 82.01 $ 123.01€ 210.00 € 630.00 $ 24.60 $ 73.81€ 525.00 € 210.00 $ 61.51 $ 24.60N/A N/A N/A N/A€ 175.00 € 630.00 $ 20.50 $ 73.81€ 525.00 € 2,275.00 $ 61.51 $ 266.52Stockholm At A GlanceConversion: 6.8275 SEK = 1 US$ RENT/M 2 /MO US$ RENT/SF/YRLow High Low High VacancyCITY CENTER OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew ConstructionClass A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseSEKSEKSEKSEKSEKSEKSEK3,500.003,700.002,000.001,700.001,700.001,100.00800.00SEK 4,000.00SEK 4,200.00SEK 3,200.00SEK 2,400.00SEK 2,300.00SEK 1,500.00SEK 1,100.00$$$$$$$47.6250.3527.2123.1323.1314.9710.89$$$$$$$54.4357.1543.5432.6631.3020.4114.9710.0%7.0%12.0%6.0%10.0%15.0%6.0%ManufacturingSEK 600.00 SEK 900.00 $ 8.16 $ 12.25 9.0%High Tech/R&DRETAILSEK 800.00 SEK 1,150.00 $ 10.89 $ 15.65 6.0%City CenterSEK 10,000.00 SEK 15,000.00 $ 136.07 $ 204.11 N/ANeighborhood Service CentersCommunity Power Center (Big Box)Regional Shopping Centers/MallsSolus Food StoresSEKSEKSEKSEK1,700.001,500.001,000.001,000.00SEK 2,500.00SEK 2,500.00SEK 4,000.00SEK 1,800.00$$$$23.1320.4113.6113.61$$$$34.0234.0254.4324.49N/AN/AN/AN/ADEVELOPMENT LAND Low/ M 2 High/M 2 Low/SF High/SFOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidentialSEK 8,000.00 SEK 13,000.00 $ 1,171.73 $ 1,904.06SEK 1,500.00 SEK 2,900.00 $ 219.70 $ 424.75SEK 650.00 SEK 1,300.00 $ 95.20 $ 190.41SEK 500.00 SEK 950.00 $ 73.23 $ 139.14SEK 1,300.00 SEK 2,300.00 $ 190.41 $ 336.87SEK 2,500.00 SEK 4,000.00 $ 366.17 $ 585.872010 Global Market Report ■ www.naiglobal.com 53