RETAIL STAYING ON ITS PATH OF ADJUSTMENT TO MARKET REALITIES
By end of 2019, European commercial real estate investment reached the record of €281 bn over the past 12 months, increasing by 2.8%.
Offices and hotels, with 47% and 8% market share respectively, represent a growing portion of the turnover and come mostly at the expense of retail.
Retail investment, although it remains the 2nd largest sector by volume, is experiencing continual decline with €43 bn over the last 12 months.
In Q4 2019, total European retail investment volume amounted to €15bn, growing by +5.5% compared to Q4 2018.
Retail occupier market
Demand for European luxury high streets continues to sustain high rental values in these locations. London’s Old Bond Street and Paris’s Avenue des Champs-Elysées remain the two most expensive store locations for retailers in Europe at end 2019. Paris’s Rue Saint-Honoré (€1,167/sqm/month, +8% vs Q4 18) is a sought-after high street location for premium brands: Dolce & Gabbana has just inaugurated a new store here and Versace will open a new flagship in autumn 2020.Milan is the primary Italian city where new (especially international) entrants look for quality space. Given this high demand, prime rents increased, especially the luxury market of Via Montenapoleone (€667/sqm/month, + 11% vs Q4 18). Chinese PC giant Lenovo is set to open its first European flagship store in Milan (Corso Matteotti). Prague’s Pařížská and Na Příkopě continued to register increasing rents (€235/sqm/month, +7% vs Q4 19) and remain the most expensive street in Central and Eastern Europe.North American retailers are still attracted by the European market. Fashion brand Anthropologie started in France with 2 stores in Paris at the end of September 2019. It is set to expand in Ireland and a second German location is scheduled in Hamburg. The Canadian extreme weather outerwear retailer, Canada Goose, opened its first Italian store in Milan last September, followed by a French opening in Paris end 2019.