Developer to build shopping centre in south of country with retailer Eroski
UK developer Citygrove is to develop a shopping centre in southern Spain with Spanish retailer Eroski.
The joint venture plans a 645,840 sq ft shopping centre in the port town of Algeciras. An Eroski hypermarket will anchor the scheme, which has an estimated completed value of €125m (£100m).
Citygrove, run by chairman Toby Baines, will build the centre on an 11.3 acre site in the Alamillo area of Algeciras, close to the bay of Gibraltar and next to the N340 Malaga-to-Cadiz highway.
The site, bought for €22m (£18m) is part of a swathe of land in the town earmarked for residential development by the local authority.
Despite a downturn in what is widely regarded as a saturated national residential development market, Baines said Spanish retail space was still in demand. ‘There is still a lot of demand from retailers and still an undersupply of retail in Spain,’ he said. ‘We think it is a great time to invest at the moment.’
The site was bought on a conditional basis, which means the go-ahead for the scheme is dependent on a second licence approval – the final stage of the planning process in Spain. It is the only site in Algeciras that can be used for commercial retail development, as specified in the local authority’s planning guidance.
Citygrove and Eroski have put equity into the scheme to which they will add debt secured from Spanish bank Banco Popular. The partners would not comment on what level of gearing had been used.
Eroski has signed up for separate stores for two of its other retail brands, in addition to the signing of the 150,696 sq ft hypermarket unit on a 20-year index-linked lease. The prelets to Eroski take the scheme to more than 40% let. Citygrove will start on the centre, designed by architect Broadway Malyan, in the first quarter of 2009 and aims to complete in the fourth quarter of 2010.
Rents at the scheme will be in the region of £15/sq ft a year.
The project is run by Citygrove managing director Murray Adair and managing director for Spain Hector Gonzalez in Madrid. Gonzalez, who joined Citygrove in April last year, is a former director of Jones Lang LaSalle and Knight Frank in Spain.
Citygrove aims to work on several developments in the Spanish and Portuguese markets, which it entered in 2006 and has been previously linked to the purchase of a shopping centre scheme in Alicante.