At a Glance

Madrid Logistics
Q1 2014
ACCELERATING TRANSACTION ACTIVITY IN Q1 2014
The improvement in the economy since the summer 2013 is
driving new transactions
Logistics take-up during 2013 amounted to 263,000 m, a fgure
very close to that of 2012 (258,000 m). Transactions up to
March, 2014 amounted to 103,500 m and were based on two
large-scale deals: Norbert Dentressangle (33,000 m, Alovera)
and LG (26,000 m, Azuqueca de Henares), both mediated by BNP
Paribas Real Estate. Although take-up during Q1 2014 far
exceeded the average for the previous three quarters (44,000 m),
it remained below that of Q1 2013. The demand behind
transactions consisted of logistics end-users and logistics
operators in equal measure .
RETURN OF LARGE-SCALE TRANSACTIONS
Transactions exceeding 10,000 m cornered a signifcant share in
Q1 2014
Large-scale transactions gained a signifcant share (30%), both
during 2013 and the frst quarter of 2014. The reason lies in new
contracts with logistics operators and some foorspace
consolidation. As a result, there is a scarcity of large units in
zones adjacent to Madrid, such as the Henares Corridor (A-2) and
along the A-4. Smaller logistics units (3000 m or less) remained
important for the parcel distribution market in Madrid. The
number of logistics transactions in 2013 was lower in comparison
with 2012 (annual change of 37%). An economy inhibited by a
lack of private consumption explains why there is reduced
demand for distribution foorspace. The frst quarter of 2014
closed with a number of transactions more in line with 2012 and
stable transaction activity are anticipated for the rest of the year.
NO CHANGE TO LOGISTICS STOCK
Speculative projects are non-existent and turnkey projects
amount to 50,000 m
The logistics stock in Madrid stands at 6,060,000 m, the bulk of
these buildings being on the A2 thoroughfare (a share of 67%).
The second most important thoroughfare consisted of the A4
(20%), the remainder (13%) being taken up by the A42, A3 and A5.
Since 2012, the stock has remained stable in size due to the halt
in development activity; developers are still awaiting better
indicators from the occupier market. As a consequence, units
under development amount to 50,000 m, consisting of two
turnkey initiatives .
Take-up
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Transactions by size (Q1-2014)
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Logistics stock and vacancy rate
Logistics take-up remained stable in 2013 and will grow
during 2014
Demand for units exceeding 10,000 m
reactivates during the frst quarter
37%
11%
22%
30%
2,000 to 3,000 m 3,000 to 5,000 m 5,000 to 10,000 m >10,000 m
0
80,000
160,000
240,000
320,000
400,000
2008 2009 2010 2011 2012 2013 Q1 2014
m
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7,000,000
2007 2008 2009 2010 2011 2012 2013 Q1 2014
% m
Stock (m) Vacancy rate (%)

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without the prior permission in writing of BNP Paribas Real Estate.
Publisher and copyright: BNP Paribas Real Estate

Further Information BNP Paribas Real Estate | Madrid branch offce| Telephone +34 914 549 600| www.realestate.bnpparibas.es
Lettings and sales: Jean Bernard GaudinHead of Industrial/Logistics. Spain Email: jean-bernard.gaudin@bnpparibas.com
Research: Ramiro J. Rodriguez Deputy head of research, Spain. Email: ramiro-jose.rodriguez@bnpparibas.com
AT A GLANCE - MADRID LOGISTICS MARKET - Q1 2014
SIGNS OF SCARCITY IN QUALITY SUPPLY
A vacancy rate of 13% does not translate into an offering of
modern, well located product
The vacancy rate is steadily distancing itself from the peak seen
in 2011 (17%). At the close of 2013 the vacancy rate stood at
13.5%, falling by a half of a percentage point during the frst
quarter of 2014 (13%). The reason behind the fall lies with a
reduction in second-hand foorspace coming to market, enabling
take-up to directly reduce supply.. Units for local distribution
(close to Madrid and specialised in parcel distribution) were the
least available, with an vacancy of 9%. The vacancy rate increases
progressively in the regional (14.3%) and national logistics zones
(20.6%). High-quality units are scarce, particularly those for
parcel distribution (less than 5% vacancy). This is having an
impact on the search times for foorspace that meets the
demands of operators and will have consequences for rents in
the coming months .
PRIME RENTS UNCHANGED IN 2013
The lack of developer activity in recent years is opening the door
to increases in prime rents
The lack of available quality units has put a stop to discounts on
prime rents.. Units of a higher specifcation within the Local
Logistics Arc have rents of around 5/m/month, the same level
as at the beginning of 2013. Stability also exists in rents for the
best units within the Regional Arc, where the prime rent amounts
to 4.50/m/month. Due to the likely improvement in transaction
activity towards the close of 2014 and the scarcity of
developments, increases in prime rent are envisaged in Madrid.
There is still room for new reductions in zones facing greater
diffculties in lettings, specifcally some units within the National
Logistics Arc (those furthest from Madrid in Toledo, Ocaa and
Guadalajara), where the best units were let during Q1 2014 at
3.20/m/month. The average rent for logistics in Madrid as a
whole has undergone an increase during Q1 2014 driven by
transactions within the regional distribution arc. These may
represent a turning point for the market, although this will
require confrmation during the remainder of 2014.

OUTLOOK
Increased consumption will have a positive effect on logistics
transaction activity in the second half of 2014
Thanks to the improvement in export activity, e-commerce and
increased household expenditure, rises in take-up are anticipated
in well located zones such as Cosalda, Torrejn de Ardoz, Alcal
and Getafe.. This will put pressure on rents during the second
half of 2014, giving rise to a new logistics real estate cycle. At the
close of 2014 and during 2015 this may stimulate both
development and investment in prime and secondary units .
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Vacancy rate in the main zones
Spread between prime and average rent
Logistics and distribution zones
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Total A-2 A-4
%
2010 2011 2012 2013 Q1 2014
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2007 2008 2009 2010 2011 2012 2013 Q1 2014
/m/month
Prime Average