Retail and Offices Yields increase 10 basis points

Retail and Offices Yields increase 10 basis points

This increase was reflected in all types of retail, according to the report “Retail Fundamentals” from JLL. The High Street prime yield increased to 3.25%, the shopping centres yield to 5%, and the medium-sized parks yield to 5.50%. This increase between the first and second quarter of 2020 may be the reason why «some investors will take advantage and enter the market in search of opportunities», assumed the consultant.

Despite the 10% drop in prime rent of retail spaces, it is still expected for them to show a stronger resilience to the crisis than the retail spaces located in the cities’ secondary areas, where there will be more spaces available.

The quarterly variation also showed the same «slight» increase for the prime yields within the office segment for the whole of Spain, establishing it at 3.35% in Madrid and 3.6% in Barcelona. Unlike retail, the office segment maintained the same prime rent values as last year: €36.5/sqm/month in Madrid, and €27.5/sqm/month in Barcelona.

Investments move on…

After a good start of the year, retail and office investment should regain some pace during the second half of the year.

A total 1.435 million euro were invested during the first 6 months of 2020 alone, 95% higher than the same period last year, which is explained by the conclusion of 2 mega-operations: intu asturias and intu puerto venecia, which represented 56% of all investment.

«Although there were no significant transactions in the second quarter, there are opportunities in the market that we will see culminate in the coming months. These are mainly focused on supermarkets and hypermarkets portfolios. At the same time, medium-sized retail stores are attracting the interest of investors as defensive assets and for last mile needs», revealed the consultant.

The aggregated investment for the office segment until June – around 1.000 million euro – is in line with the last few years’ average during the same period and, despite the activity during the second quarter representing only 20% of that amount, prospects for the second half of the year are positive.

«Despite the impact of Covid-19 and the shortage of Core and Core+ product on the investment market, negotiations and closures of deals have continued thanks to a strong investment appetite for this type of asset, in addition to significant interest for Value Add products at appropriate discounts»,  it can be read in JLL’s latest report “Office Fundamentals”.

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