In recent years, the Spanish real estate and technology markets have undergone significant changes. Major players like Merlin Properties are betting on the development of data centers, targeting the growing demand from the artificial intelligence industry. However, despite ambitious plans, the company is facing serious obstacles that are holding back the implementation of its strategic projects.
Digital sector growth brings fresh challenges
Merlin is actively restructuring its operations, shifting focus from traditional segments—offices, logistics, and shopping centers—to high-tech assets. Data centers are becoming the key driver of future revenues. The company already has 64 MW of capacity in its first phase, with 44 MW operational and the remaining 20 MW awaiting connection to the power grid in Madrid. The second phase envisions another 246 MW, distributed among the Basque Country, Lisbon, and the Spanish capital.
But it is in Madrid where the development of new capacity has encountered the greatest risk. A shortage of available electricity and lengthy administrative procedures are effectively blocking the launch of new facilities. As a result, Merlin is forced to seek alternative solutions: striking private deals with providers, introducing autonomous power systems, and even considering projects outside the main grid.
Energy gridlock and bureaucratic bottlenecks
Spain has significant potential in renewable energy, but its distribution infrastructure is struggling to meet growing demand. In Madrid, according to Merlin’s management, the situation is critical: capacity is lacking, and government authorities are not offering effective solutions. The company is already implementing self-sufficiency projects, including collaborations with Solaria, to secure energy supply for its data center in Arasur.
The problems are exacerbated by slow and complex administrative procedures. Securing permits and approvals takes months, sometimes even years, resulting in a loss of competitive advantage. In comparison, similar issues are resolved much faster in Portugal, making that country more attractive to investors.
The real estate market: challenges and new opportunities
Despite these difficulties, Merlin’s traditional business sectors remain resilient. In Madrid, demand for office space remains high and rental rates continue to climb. In Barcelona, there is a temporary surplus of supply, but the company is maintaining its pace by pursuing redevelopment and new construction projects in various cities.
In the retail real estate segment, the expansion of the Marineda center has been a success, while in logistics, Merlin sticks to building only with pre-leased agreements in place. Special attention is being paid to the Portuguese market, where the company sees a balanced supply and demand dynamic as well as favorable conditions for growth.
Portugal — a role model?
Portugal is becoming an increasingly important destination for Merlin. Here, the company manages modern office spaces, a major shopping center, develops logistics sites, and is building the largest data center on the Iberian Peninsula. The key advantage of the Portuguese market is the efficiency of local authorities: gaining access to electricity and project approvals happen smoothly and without unnecessary delays.
Against this backdrop, Spain is losing ground. Investors are left waiting, and businesses face unjustified costs. Merlin’s management stresses that what the country needs is not to abandon oversight, but rather to simplify and speed up processes so it doesn’t miss out on the digital transformation opportunities ahead.
Outlook and expectations
With the completion of the second phase of data center development, this sector could make up 50% of Merlin’s revenue, and after the third phase, it may rise to 80%. This would radically change the company’s profile and position it as a leader in the digital infrastructure market. However, without reforms in energy and administration, these plans risk remaining just on paper.
In an era where artificial intelligence and digital technologies are driving economic growth, any delay could prove too costly for Spain. Merlin continues to seek solutions, but is counting on a shift in the approach of government institutions.
As RUSSPAIN reported earlier, Merlin Properties is one of the largest real estate players in Spain and Portugal. Founded in 2014, the company quickly rose to a leading position thanks to large-scale investments in office buildings, shopping centers, and logistics complexes. In recent years, Merlin has been actively diversifying its business, focusing on digital infrastructure and sustainable development. The company’s CEO, Ismael Clemente, is known for his criticism of bureaucratic barriers and advocates for modernizing administrative processes. Under his leadership, Merlin became a pioneer in the construction of data centers, which attracted international investors’ attention. The company also pays great attention to environmental standards and implements innovative solutions in energy supply. Merlin’s portfolio includes properties in the largest cities of Spain and Portugal, as well as large-scale logistics and commercial real estate projects. Thanks to its flexible strategy and focus on new technologies, the company maintains a strong position even amid economic uncertainty. In the coming years, Merlin plans to expand its presence in the European market and continue introducing digital solutions into real estate management.
