Oasiz: Madrid's largest shopping centre files for insolvency

Oasiz, Madrid's largest shopping centre, goes bust with 265 million in debt

How can a 250,000-square-metre shopping centre, the largest in the Madrid region, end up in insolvency proceedings? The answer is a mix of poor design, over-indebtedness and a business model that cannot withstand the climate of the Corredor del Henares corridor. Oasiz, located in Torrejón de Ardoz, has voluntarily filed for insolvency at Commercial Court number 14 in Madrid, with debts of around 265 million euros. The appointed insolvency administrator is PJF Attest, and consultancy CBRE is already working on the sale of the complex.

The numbers behind the collapse
The project, owned by Compañía de Phalsbourg and Carlotta Iberia, started with an initial investment of more than 100 million euros and a 115 million euro loan managed by the fund Cale Street. Despite a refinancing and a restructuring plan approved by the court, total debt soared to 265 million. The gross leasable area is 90,000 square metres, out of a total of 250,000, and it has 3,600 parking spaces. Figures that, however, failed to attract sufficient consumer spending.

A design doomed to failure
Oasiz is an open-air shopping centre, a rarity in a region where winters are cold and summers scorching. Visitors complain that getting from one shop to another means going outside, which on rainy days or in extreme temperatures puts anyone off. The retail mix, halfway between an outlet and a conventional mall, with huge stores but few restaurants, has not worked. Competitors such as Xanadú, Parque Sur or La Vaguada, all enclosed and air-conditioned, enjoy far higher footfall.

Tax incentives and political criticism
The Torrejón de Ardoz town council, governed by the PP (Spain's conservative People's Party), granted tax incentives and economic advantages to the project, drawing criticism from the opposition over favourable treatment. Although the exact amounts have not been disclosed, these subsidies were not enough to guarantee viability. The location, next to a military base and in an area where the supply of shopping centres is saturated — there are around twenty within a 10-kilometre radius — did not help either.

Conversion into housing?
Given the commercial failure, the possibility of reorienting the project towards residential use is being considered. It would not be a unique case: in Miami, for example, obsolete shopping centres are being converted into housing due to the shortage of supply. The question is whether Torrejón's property market will absorb that additional supply.

With these ingredients, the "oasis" of Torrejón has become a financial mirage. Who would have thought that Madrid's largest shopping centre would end up being the clearest example of how not to do things.