The lack of cash or credit from Spanish banks for retail development in Spain appears to be the standout ‘nightmare’ for senior real estate developers and operators in Spain. That is the headline of research commissioned by global architecture, urbanism and design practice Broadway Malyan and entitled ‘The Caffeine Report’.
The study marks the third quarterly research project into what keeps developers and operators in different countries awake at night, as well as what helps them sleep more easily.
The fieldwork has been conducted by TNS, part of Kantar, one of the world's largest insight, information and consultancy groups. A total of 30 interviews were conducted in June 2013.
The research covers a range of topical issues and the extent to which industry professionals agree or disagree with each of the areas below (using a five point semantic scale – strongly agree, tend to agree, neither agree nor disagree, tend to disagree, strongly disagree):
‘Nightmares’ – issues that keep you awake at night (% who agree: ‘strongly’ or ‘tend to’):
- No cash or credit from Spanish banks for retail development in Spain (90%)
- Variable planning legislation and restrictions across Spain (63%)
- Growth in online sales and long-term general threat to physical retail centres and stores (63%)
- Pressure to maintain or grow market share in Spain in face of competitor activity (43%)
Other nightmares highlighted were: a fall in consumption directly impacting on retail purchases; the lack of a clear economic plan for the country; the need for reducing tax burdens through financial reform; and the perception of Spain (together with other countries in Southern Europe) as being a risky place for investment.
The study also identifies opportunities for retail developers in the Spanish retail sector including:
‘Sweet dreams’ – issues that help you sleep at night (% who agree: ‘strongly’ or ‘tend to’):
- Opportunity to invest and reposition outlets with market recovery predicted in the mid-term (87%)
- Long-term market potential in South American markets for Spanish and European expertise (57%)
- Low land prices in Spain (54%)
- Continued role of physical stores in context of growth in mixed retail and leisure uses (50%)
- Growth of off-price and price-conscious retail and opportunities for brand-led development (47%)
Other ‘sweet dreams’ highlighted were: the creation of new opportunities, operators, business lines, relocations and corporate repositioning that lead to a new business model shaped to current market conditions; recognition for the growing expertise of retail centre managers with proven track records; and the further development of environmental and sustainable models.
Asked for their views on wider macroeconomic issues, respondents said that their primary concern is the need to facilitate greater access to finance for both developers and consumers. They also mentioned financial reforms, with a reduction in income tax and VAT mentioned as positive changes that would support existing businesses and consumers, and help to attract new inward investment.
Respondents would also like to see reforms implemented to drive employment as well as seeking greater consistency across Spain’s autonomous governments. Significantly, they viewed Spain as a country lacking political leadership with clear policies.
Asked about the management of their own businesses, retailers operating in Spain have developed increasing flexibility in looking for new markets – driven more by consumer necessity tan by speculative profit. They have also created new comercial spaces and working models.
Respondents highlighted the labour market as being particularly badly affected by the economic downturn, resulting in widespread salary freezes and dismissals. In contrast, many took inspiration from an increased awareness of the social aspects of the crisis including continued education, changes to working patters and overseas relocation.
Broadway Malyan Director Jorge Ponce comments: “The research suggests that a new benchmark for business is being defined through the sale of inoperative assets and investment in strategic ones, as well as through short-term cost management and exploring new opportunities in emerging markets.
"Despite the economic crisis, the retail sector has a particular vitality and demands attention for its ability to adapt to a changing economic environment. Through the market-leading skills, expertise and experience of our team of world class retail design experts we are working in partnership with clients to take advantage of the clear opportunities appearing in the current marketplace in Spain and Latin America.”
Broadway Malyan’s recent projects in Spain include the concept design for the 35,000m² extension to the Carrefour Holea Plaza, one of Spain’s largest hypermarkets, located in Huelva, in the south of the country.
The practice’s Madrid-based team is also delivering projects in South America, including in Argentina where it is designing a mixed-use scheme built around an existing retail centre on a site covering approximately 150,000m² in the city of Dalvian Mendoza.
It is also supporting the delivery of a major extension and refurbishment to the San Miguel Argentina shopping centre for client Carrefour, involving18,000m² of new retail and leisure space to transform the existing hypermarket into an iconic shopping destination on the outskirts of Buenos Aires.