El Corte Inglés delays its office project in Castellana
What: El Corte Inglés indefinitely delays its planned 15,000-square-meter office development on Madrid's Castellana, despite strong market demand and rising prime office rents in the area.
Why it is important: The suspension highlights how major retailers are taking increasingly cautious approaches to property development, even in prime locations, as they focus on core business transformation and debt reduction strategies.
El Corte Inglés has placed its ambitious office development project next to its Nuevos Ministerios center on indefinite hold. The plot, acquired from Adif in 2014 for EUR 136 million, was initially considered for luxury retail expansion before being designated in 2021 for a 15,000-square-meter office building designed by Thomas Heatherwick. Despite current market conditions showing strong demand, with CBD vacancy rates below 2% and prime rents reaching EUR 44 per square meter, the company has maintained the site for temporary events and food fairs. The decision comes amid Madrid's thriving office market, where recent transactions include LVMH's 20,000-square-meter lease at Castellana 4. While industry experts suggest potential tenant interest from international law firms and consultancies, the company's real estate division, led by Javier Catena, continues to evaluate the investment's long-term viability against current market opportunities.
IADS Notes: El Corte Inglés's cautious approach to the Castellana project reflects its broader transformation strategy. As reported in February 2025, the company invested EUR 428 million in upgrading 25 existing locations while implementing significant management restructuring under CEO Gastón Bottazzini in March 2025, including the creation of a dedicated Transformation Office. This strategic focus follows the successful development of their 2025-2030 plan with McKinsey in October 2024, emphasizing operational efficiency and digital innovation. The company's strong financial performance, achieving 4.3% like-for-like growth and EUR 1.2 billion EBITDA in June 2025, suggests this measured approach to property development aligns with their priorities of maintaining financial stability while pursuing core business transformation.
