There are up to ten posters advertising transfers and leases for commercial premises on the Diagonal in Barcelona, in the section between Francesc Macia and Passeig de Gràcia. Most have been put up in the last two months. It is one of the prime streets in the area of the city but it is evident that they have not escaped the economic situation. Only three years ago such premises would have not remained on the market for longer than a few weeks, with business owners paying hundreds of thousands to simply take over the existing lease agreeements.
The proliferation of for “rent signs” is extreme in the areas of prime location and AA locations, where the major property companies in the city estimated that between 10% and 15% of premises are available to be leased or transferred.
Most of the premises up for rent are ones which were occupied in the past five years. This is due to them paying higher rents than those which have been occupied longer. Also resulting in them only enjoying very small profit margins. According to Gregor Schellhammer, a business broker specializing in the hospitality industry in Barcelona: “Property owners in Barcelona have been extremely abusive over the past 5-10 years, raising rents at every opportunity. The Spanish law allows landlords to raise the rent by up to 25% (depending on the original contract) every time the lease changes hands. This has led to rents spiraling out of control”.
Over 2,000 premises changed hands last year. The figure represents just 2% more than what was recorded in 2007. Gregor Schellhammer adds: “The government stopped issuing new licenses a few years ago for bars and restaurants, forcing investors to buy existing licenses, something which inevitably contributed to the huge increase in prices for licenses as well as an disproportionate increasein rents.” Without a doubt Barcelona’s clampdown on business owners has also contributed to the sector nearing a total collapse.