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1、EUROPEAN RETAIL MARKET 202301 0407020508030609Key FindingsShopping CentresRetail InvestmentEconomic LandscapeRetail ParksRe-purposing&SustainabilityPrime High StreetOccupier TrendsSavills OutlookContentsEuropean Retail Market|2023European Retail Market|202323Consumer spending has been squeezed in 20

2、23,but headwinds to dissipate in 2024Southern European markets have moved up the agenda for expansive retail brandsRetail investment is down but activity has proved more resilient against other sectorsOccupational demand has turned the corner;challenges still face secondary and tertiary assets.Small

3、er,affluent,cities and key resorts are garnering interest from luxury brandsHigh yields typical to retail have been a key draw to investors in the face of rising debt costsOccupier interest has shifted towards city centres to the benefit of prime high streetsValue and convenience driven retail conti

4、nues to perform wellGrocery stores,supermarkets and retail parks dominate investor appetite010407020508030609Key FindingsEuropean Retail Market|20235Economic&Consumer LandscapeTightening consumer finances dampened retail sales in 2023,but stronger performance forecast for 2024W ith the weight of inf

5、lation,consumer confidence well below its long-term average,and an increase in interest rates in most European markets,consumers are restricting spend in some areas as their disposable income is squeezed.As a result,total retail sales for Europe are forecast to marginally decline by-0.1%in real term

6、s in 2023.But,while macro-economic headwinds have been particularly acute this year,conditions look set to improve.Firstly,the recession in Europe looks set to be avoided this year with 0.5%GDP growth forecast,accelerating to 0.9%in 2024.The strength of the labour market has also helped to sustain t

7、he European economy,with unemployment at record lows;the EU unemployment rate is expected to hit 6%in 2023,down 20 basis points(bps)year-on-year,the lowest unemployment rate seen since the Global Financial Crisis(GFC).Finally,fiscal tightening has eased headline inflation across Europe,with CPI fore

8、cast to be 4.9%in the EU-27 in 2023,down from 9.2%in 2022.These evolving market conditions indicate an improved retail sales outlook for the coming year,particularly as the squeeze on real disposable incomes dissipates,with forecasts for European spend in 2024 pointing to a rebound with growth of 3.

9、7%(real terms).But some markets bucked the wider European trend of weaker retail sales this year.Ireland is expecting year-end sales growth to hit 4.6%,with a further 2.8%growth in 2024.The Southern European markets of Spain,Portugal and Italy are also expected to report positive growth by the year

10、end of 1.7%,1.2%and 0.4%,largely the result of lower inflation and returning tourism boosting sales,particularly in the luxury market.A stronger rebound in performance for Spain and Portugal is forecast for next year.Consumers spending priorities evolveWhile total retail sales have been under downwa

11、rd pressure this year,this has not been reflected across all parts of the retail market.Tightening consumer finances have buoyed discount and convenience-driven retail spend,as consumers look to make savings on everyday items and head for cheaper retail options.Recent spend on fashion has also been

12、impacted by the evolving consumer environment,with the sub-market projected to increase by only 0.2%this year,despite recovering to its pre-pandemic levels in 2021.However,waning headwinds to consumers discretionary spend in 2024 suggests fashion spend will strengthen with a growth of 3.7%forecast.B

13、ut again,headline performance only tells part of the fashion spend story.The mid-market has been more exposed to this years squeeze.Mass or value fashion has,on the whole,continued to perform well albeit with slower growth rates than seen in 2022.For example,Primark reported year-end sales in Septem

14、ber up 17%,with Zara also posting a 13%year-on-year growth for the first half of 2023.This relatively strong performance has also been mirrored at the premium and luxury end,with Bain-Altagamma forecasting that personal luxury goods spend in Europe in 2023 was 8.1%above that seen in 2019,with foreca

15、sts to 2030 suggesting a further 33%increase.This has been helped by not only the resumption in international tourism,but also accrued pandemic savings that,despite a de-winding from their pandemic highs,remain above pre-pandemic levels.According to the European Central Bank(ECB),overnight household

16、 deposits in September 2023 were still 22%above equivalent 2019 levels,albeit down from the 36%differential reported at the start of the year.The prioritisation of spend in the luxury part of the market by certain consumers is also being seen in the experiential space.Leisure and food and beverage(F

17、&B)sectors continue to be resilient across many markets,with spend within the sector accounting for 54%of total European retail sales to date,unchanged from its 2022 share,with this share to increase to 55%in 2024.We have seen a similar trend when it comes to leisure travel within Europe due to many

18、 households looking to reduce spend elsewhere in order to protect holiday trips and spend.Source:Oxford EconomicsSource:Oxford EconomicsAnnual GDP growthAnnual retail sales growth5%4%3%2%1%0%-1%-2%Year-on-year change(%)PortugalRomaniaSpainGreeceDenmarkNorwayBelgiumItalyFranceLuxembourgSwitzerlandNet

19、herlandsPolandUnited KingdomIrelandFinlandAustriaCzech RepublicGermanySwedenHungary8%6%4%2%0%-2%-4%-6%Year-on-year growth(%)IrelandRomaniaSpainCzech RepublicPortugalItalyPolandAustriaLuxembourgFinlandBelgiumSwitzerlandNetherlandsGermanyGreeceUnited KingdomSwedenDenmarkNorway France2023202420232024Eu

20、ropean Retail Market|2023European Retail Market|202376Omni-channel strategies mean physical stores are being increasingly prioritised The share of e-commerce in Europe is predicted to grow to 15%in 2024 from 14%in 2023;28.4%of fashion spend in Europe is forecast to be online in 2024,up from 17.1%in

21、2019.However,there are parts of the retail market where the rate of penetration is much higher or much lower.While the rise of online has had a significant structural impact,its read-through to occupational markets varies across different geographies.For example,in Southern Europe,where the online p

22、enetration rate is relatively lower,its impact has been less pronounced,with overall vacancy rates remaining relatively low,though they are on the increase for secondary and tertiary retail locations.Since the pandemic,evolving omnichannel strategies where e-commerce complements physical store perfo

23、rmance and visa-versa is resulting in prioritisation of store portfolios by retailers.This is manifesting through upsizing in key markets and targeted expansion,and has been exacerbated by the rise in online customer acquisition costs and those associated with online deliveries/returns.What has not

24、changed post-pandemic,is the fact that prime and super convenient retail locations are benefitting from this strategy.Source:StatistaShare of European online sales40%35%30%25%20%15%10%5%0%201920202021202220232024Share of total salesTotal e-commerceF&BConsumer electronicsFashionFurniture&DIYEuropean

25、Retail Market|2023European Retail Market|202398Prime High StreetMilans Via Monte Napoleone tops the ranking as Europes most expensive retail streetMilans major luxury street,Via Monte Napoleone,now outranks Londons luxury Bond Street as the most expensive retail street in Europe with prime rents of

26、14,000 per sqm per annum,7.7%higher than where they were pre-pandemic.A number of other luxury streets have also seen an improvement in rents or,at the very least,were able to minimise pandemic declines and have started to recover.For instance,across the 16 luxury streets we track in Europe,average

27、prime rents as of Q3 2023 are only 2.0%below where they were in Q4 2019,having increased by 1.2%on the pandemic lows seen in late 2021.Perhaps of most interest is the fact that much of this growth and resilience has been driven by smaller luxury streets beyond the big luxury capitals of Milan,Paris

28、and London,with average rents 1.0%ahead of 2019.This resilience has been supported by more restrained availability,but also the fact that many of these smaller markets are predominately driven by domestic spend.In contrast,the premier luxury streets in London and Paris were more exposed to the absen

29、ce of international visitors,a key driver of performance in both cases.The recovery in international travel is supporting an acceleration in the recovery of Bond Street and Avenue Montaigne.Bond Street,for example,has seen vacancy reduce by 721 bps on its 2021 pandemic vacancy high of 13.6%;rents ar

30、e up 14.3%over the same period.Smaller affluent cities moving up the agenda for luxury brands The localisation of luxury spend during the pandemic online or through department stores has provided many luxury brands with greater insight into where their customers live,and is also helping to identify

31、markets that were perhaps relatively underserved.This,combined with an evolving strategy by some luxury brands to understand both where their consumers live and where they holiday,is generating new requirements across a range of smaller affluent European cities,as well as a desire by some brands to

32、upsize existing stores in key markets.All of this is then being exacerbated by the general shift away from wholesale towards own-brand stores,which is also feeding into store strategies.Ultimately,helping to drive down vacancy and place further upward pressure on rents on prime luxury streets.Recove

33、ry on Europes prime mass market streets starts to pick up paceThe impacts of the pandemic were perhaps the most profound and drawn out on Europes major mass market streets,locations that were already facing challenges due to growing online spend and reduced occupier demand for large flagship units.F

34、or example,vacancy pre-pandemic on Londons Oxford Street(western end)had climbed 543bps over the course of 2019.However,recovery in these locations is starting to pick up pace.Based on a select number of markets where we have historical vacancy trends,the vacancy rate has compressed by an average of

35、 639bps since their pandemic peak and are now on average only 64bps above where they were in 2019.Madrids Preciados vacancy is zero,in Q1 2020,it was at 5.0%.This squeeze on vacancy is starting to generate upward pressure on rents in some markets,albeit largely confined to those smaller markets with

36、 tighter levels of supply.Beyond London,Paris and Milan,the prime mass market streets across Europe have seen average rental growth of 2.2%since 2021.As with the luxury streets,its been those more expensive mass market streets where international footfall constitutes a larger component of spend that

37、 continue to lag,with Champs Elyses in Paris and Oxford Street(west)in London being prime examples of this.Vacancy ranges from 9-12%with prime rents are at least 25%below where they were in 2019 on both streets,but these locations are both undergoing significant change via major redevelopments and e

38、nhancement of their public realm.Changes that will ultimately enhance their appeal to visitors,and in turn brands,as evidenced by recent leasing activity.Source:SavillsSource:Savills ResearchPrime high street rentsVacancy trends across select prime mass market high streets%change against 201916,0001

39、4,00012,00010,0008,0006,0004,0002,000018%16%14%12%10%8%6%4%2%0%Portal de LAngel BarcelonaPreciados,MadridOxford Street West,LondonCorso Vittorio Emanuele,Milan40%30%20%10%0%-10%-20%-30%-40%Annual GDP growth 2023Vacancy rateVia Monte Napoleone,MilanBond Street,LondonBahnhofstrasse,ZurichAvenue Montai

40、gne,ParisChamps Elyses,ParisCorso Vittorio Emanuele,MilanKohlmarkt,ViennaMaximilianstrasse,MunichGoethestrasse,FrankfurtKaufingerstrasse,MunichErmou,AthensTauentzienstrasse,BerlinOxford Street West,LondonKnigsallee,DusseldorfZeil,FrankfurtKarntnerstrasse/Graben,ViennaSpitaler Strasse and Mnckebergst

41、rasse,HamburgSchadowstrasse,DusseldorfNeuer Wall,HamburgPasseig de Grcia/Portal de LAngel,BarcelonaPC Hooftstraat,AmsterdamPreciados,MadridKurfrstendamm,BerlinAmagertorv/Ostergade,CopenhaganNedre Slottsgate,OsloOrtega y Gasset,MadridKalverstraat,AmsterdamBiblioteksgatan,StockholmBirger Jarlsgatan,St

42、ockholmGrafton Street,DublinChiado,LisbonAvenida da Liberdade,LisbonKarl Johan,OsloQ3 2023 rentPre-CovidPeak pandemicCurrentQ3 2023 vs Q4 2019()sqm per yearEuropean Retail Market|2023European Retail Market|20231110Whats driving occupier demand on these prime high footfall high streets?Firstly,occupi

43、er demand for prime high streets across Europe has seen a strong bounce post the pandemic.And in some markets,such as southern Europe,demand is perhaps stronger than what was seen in 2019.There are some concerns around the strength of consumer spending going into 2024,which is generating headwinds i

44、n some markets such as Germany and the Nordics.But in most cases,brands are taking a longer-term view buoyed by strong balance sheets alongside rebased rents and improved availability in target markets.What is perhaps different post-pandemic is the focus by some occupiers on city-centre locations.Th

45、ere is a definite appetite from brands to be in city centres to enhance their visibility to a greater number of customers,with a view to drive sales.Even with the entrenchment of agile working,prime high streets across Europe can deliver on this visibility and for a range of cities we track,prime se

46、gments on key mass market high streets can have an average monthly footfall of above 860,000.On Champs Elyses,a unit on its prime pitch could see footfall as high as 1.5 million per month.When it comes to who has and will be driving this demand going forward,the profile of occupiers and their specif

47、ic requirements is perhaps the most diverse than we have ever seen(see page xx for more detail).Even for the major fashion groups and their stable of brands,such as Zara and H&M,their occupational demands vary from market to market,ranging from upsizing flagships to rolling out new smaller concept s

48、tores in order to enhance their ability to secure new sites and grow their footprint.Current vacancyPreciados,Madrid0%MASS MARKETPC Hooftstraat,Amsterdam1.2%LUXURY MARKETAvenue Montaigne,Paris3.8%LUXURYBond Street,London6.4%LUXURYMonte Napoleone,Milan0%LUXURYNedre Slottsgate&Karl Johan,Oslo2%MIXED:L

49、UXURY&MASSGrafton Street,Dublin4.4%MIXED:LUXURY&MASSOxford Street,London9.4%MASS MARKETBiblioteksgatan,Stockholm0%MIXED:LUXURY&MASSVittorio Emanuele,Milan3.3%MASS MARKETPasseig de Gracia,Barcelona4.9%MIXED:LUXURY&MASSOretage y Gasset,Madrid9.8%LUXURYPart of Birger Jarlsgatan0%LUXURY MARKETPortal de

50、LAngel,Barcelona3.8%MASS MARKETKalverstraat,Amsterdram6.1%MASS MARKETChamps Elysees,Paris12.2%MIXED:LUXURY&MASSSource:SavillsEuropean Retail Market|2023European Retail Market|20231312Shopping CentresFootfall recovery may be lagging,but basket spend on the upShopping centre(SC)footfall is yet to reco

51、ver to pre-pandemic levels,with several markets showing-15-20%down on levels recorded in January 2020.However,basket values have increased in most countries we monitor;this is largely an inflationary impact rather than an increase in purchasing sentiment,but it does point to more purpose-driven cons

52、umerism.The post-Covid bounce-back in footfall seen in 2022 has slowed through the course of 2023 as the cost-of-living crisis has unfolded,yet growth remains in positive territory,albeit marginal in most markets.Spain and Portugal have bucked the trend,with year-on-year growth in footfall above 4%t

53、hroughout the year.Visitors are a key factor here,accounting for more than 10%of turnover in schemes in tourist hotspots.Meanwhile,secondary shopping centres across Europe show signs of struggling to remain relevant,accelerating the polarisation between strong and weak assets and is reflected in a v

54、ariation in vacancy and rental tone.Rental changes:rebasing,adjustment&growthThe shopping centre rental picture highlights three themes that dictate the variations in different markets:rebasing,adjustment and growth.Cities that have seen significant rebasing of prime rents over the last five years i

55、nclude Amsterdam,Berlin,London,Paris and Vienna,where rents have fallen 10-35%.This brings the rents of prime shopping centres in these cities down towards the benchmark average of 1,205 sqm in Q3 2023.This rebasing was being seen prior to the pandemic across a number of markets due to growing impac

56、t of online spend on retailers store strategies,which was then exacerbated by the pandemic.Source:Savills Annual shopping centre footfall growthA second group of cities,including Lisbon and Madrid,have seen a 5-10%fall in rental values in the last five years.With no further fall in the last 12 month

57、s,this could indicate that the adjustment in rents has been sufficient.Whether adjustment or rebasing,the rental levels now seen in these cities shopping centres are likely to make them look more affordable and attractive to tenants.Cities that have continued to exceed expectations in rental growth

58、given the economic backdrop include Dublin and Milan,with around 5%growth in the last year.Bucharest has seen 5%growth consistently each year since 2018,with prime shopping centre rents now exceeding those recorded in Amsterdam and Stockholm.In Oslo,rents have increased by 18%over the past five year

59、s.14%12%10%8%6%4%0%-2%-4%March 2023April 2023May 2023June 2023July 2023August 2023September 2023ItalyUKSpainFranceSource:Savills Prime shopping centre rents30%20%10%0%-10%-20%-30%-40%4,5004,0003,5003,0002,5002,0001,5001,0005000%changeYear-on-year growth(%)()sqm per yearAmsterdamBerlinBucharestCopenh

60、agenDublinLisbonLondonMadridMilanOsloParisPragueStockholmVienna5yr changeAnnual changePrime SC rent 2023 Q3European Retail Market|2023European Retail Market|20231514The flight to quality by occupiers widening the gap between prime and secondaryShopping centre stock in both the Netherlands and Sweden

61、 are some of the highest in Europe on a per capita basis(0.3 sqm/0.5 sqm per capita),which may go some way to explaining the adjustment to rents seen in these countries.There is a loose correlation that more shopping centre supply tends to result in higher void rates and rental decline.Irrespective

62、of relative supply levels in each country,the long-term picture across Europe shows an increase in empty shops,with some schemes and retail brands struggling to keep pace with evolving consumer demand or are eclipsed by the growth of out-of-town retail formats and e-commerce.Twenty years ago,the ave

63、rage shopping centre vacancy rate in Europe was below 3%,but it doubles a decade later,with the UK being the only market with vacancy above 10%.In 2018,three more countries had seen vacancies in their largest cities reach double figures.By 2023,only three countries remain below 10%,with Germany,Neth

64、erlands,Finland and the UK now having voids above 15%.While these vacancy rates are reflective of total stock,a flight to quality means that vacancy for prime shopping centres is much lower.The upward pressure in vacancy seen across the wider market is causing occupational and investment stress in m

65、arkets with more mature provisions.This has been reflected in asset revaluations and the need for significant redevelopment;in recent years,a number of UK shopping centre assets have fallen in value by as much as 80%for the least relevant schemes.Value degradation for the most relevant,prime and dom

66、inant assets has been much less significant,in the region of 25%.Other European countries are also showing signs that stranded assets are a real proposition.However,the risk of empty shops still provides challenges to emerging markets where the rate of development has the potential to quickly satura

67、te local markets and re-designate prime supply.Hungary,for instance,has the highest growth in shopping centre rents in our benchmark,below average retail provision,and yet shopping centre vacancy is above the European average.The nuance evidenced points to a trend that we are seeing unfold in almost

68、 all European markets and explains why we can record at the same time in general terms high rental growth and high voids in the same cities.This is the flight to quality(F2Q),which is polarising the best and worst locations.F2Q sees additional demand for retail schemes in locations with the right of

69、fer in the right place and often creates an undersupply in the best pitches.However,it is clear from the limited pipeline of new shopping centre schemes across the block that investors are focussing primarily on repositioning,repurposing or redevelopment opportunities.More detail on this evolving tr

70、end can be found on page 28.Source:Savills,PMA LLP Average shopping centre vacancy rates2520151050Vacancy rateAustriaBelgiumCzech RepublicDenmarkFinlandFranceGermanyHungaryIrelandNetherlandsPolandPortugalSpainSwedenUKEU EU Prime2003201320182023European Retail Market|2023European Retail Market|202317

71、16Retail ParksThe challenges to consumer spend and subsequent stronger performance in the discount and value retail segment has proved beneficial to retail parks.The convenience of these locations to consumers,particularly in those markets where agile working has become the norm post pandemic,has al

72、so come into play.This is evidenced by the fact that the most profitable retail parks are typically anchored by food stores,spend at which is often insulated by macro-economic headwinds as it is an essential spend category.It is also a retail sector where the online penetration rate is much lower co

73、mpared to other parts of the market.Consequently,retailers with a focus on essential product categories and value have continued to drive footfall to retail parks across Europe.UK footfall levels remain at parity with those seen pre-Covid,peaking over Easter weekend at 4.5%above the levels seen at t

74、he same time in 2019.The strength of performance and subsequent growth ambitions of retail park operators has resulted in a decline in voids across Europe,with the UK dipping as low as 4.4%this year.However,if the available space that is no longer fit for purpose and needs to be repurposed is exclud

75、ed,the vacancy rate is actually closer to 2.1%or just 81,700 sqm of available space less than two years of supply.It is a similar picture across most of Europe and is reflected in the strength of rental growth over the last five years.Dublin,Vienna,Amsterdam and Lisbon have all seen significant grow

76、th of 14%or more in prime rents over the last five years.In the case of Dublin,Vienna and Amsterdam,this is largely a consequence of low voids,exacerbated by a restriction in new stock.For Lisbon,it is more reflective of a market that is still emerging and gaining in popularity with consumers and oc

77、cupiers alike.From a retailers standpoint,retail parks offer competitive cost-effective operations,including lower rent and service charges than other retail formats.There is still a positive story for those markets where rental growth has been absent over the last 12 months,or where we have seen re

78、ntal declines,particularly when benchmarked against other retail segments.For example,prime retail park rents in London are down a total of 6%over the last five years;in contrast,prime rents on Londons Oxford Street are down 40%over the same period.This highlights the relative resilience of the form

79、er particularly in light of recent events.A restricted development pipeline will help to drive further rental growth Retail park stock across Europe is projected to total 42.7 million sqm by the end of 2023.Stock has expanded by an average annual rate of 12%over the last five years,but this expansio

80、n has been slowing,with a 2%increase recorded for 2023.Despite the incremental increase in supply across the continent,various markets are at varying evolutionary stages.Sweden(0.33 sqm),UK(0.16 sqm),Netherlands(0.14 sqm),Austria(0.14 sqm)and Ireland(0.14 sqm)all have the highest retail warehouse su

81、pply on a per capita basis above the European average at 0.10 sqm per person.Both annual and five year growth in supply in these more mature markets has been subdued.But this is not reflective of weak demand as evidenced by the strength of rental growth in some of these markets;Dublin has seen prime

82、 retail park rents increase almost 15%over the last five years.Rather,the restrictive development pipeline is a response to a combination of reasons.Firstly,the demand for large plots has proved difficult to satisfy when development space is at a premium and is often competing with the ambitions of

83、the residential or logistics property market.Furthermore,build costs have also proved to be prohibitive across a number of these more mature markets,and as a result,many retail park developments are now for smaller schemes.The 3.4%growth in UK stock over the last five years has almost exclusively be

84、 through the expansion of existing schemes,allowing landlords to drive greater value from their existing portfolios.New high growth,under-supplied markets,emergingPortugal,Finland,and Denmark comprise a group that epitomises emerging markets,with the lowest overall stock levels in Europe and below-a

85、verage supply per capita.This relative under-supply on a per capita basis presents an interesting development and investment opportunity,one that is starting to be realised when considering historical trends.For example,expansion over the last five years in these markets has been in excess of 15%whe

86、n compared to 2018,albeit this does reflect growth off a low base.Poland has been one of the fastest growing markets in stock terms having seen growth of 84%over the last five years.As a result,it is relatively well supplied in terms of total quantum of stock,coming second to Spain with 2.4 million

87、sqm of stock.However,Poland continues to have one of the lowest densities of retail park stock per capita at 0.06 sqm.The more mature markets of the UK,Netherlands,Sweden,Austria and Ireland have more than doubled this,with stock per capita averaging 0.18 sqm.While a further 900,000 sqm of new space

88、 is expected to be delivered by 2026/2027 into Poland,helped in part by the relative ease developers can source suitable out-of-town locations,it will only have an incremental impact on per capita supply increasing it to 0.08 sqm per capita.Rising footfall and falling vacancy;retail parks continue t

89、o out performEuropean Retail Market|2023European Retail Market|20231918Source:Savills,PMA LLPSource:SavillsRetail warehouse stockPrime retail warehouse rents12,00010,0008,0006,0004,0002,000030%25%20%15%10%5%0%-5%-10%-15%0.350.30.250.20.150.10.050600 5004003002001000Stock(thousands sqm)%changeDensity

90、EUR sqm per yearUKGermanyFranceSwedenSpainPolandNetherlandsItalyAustriaBelgiumIrelandCzech RepublicPortugalHungaryFinlandDenmarkDublinLondonCopenhagenMadridOsloParisViennaStockholmAmsterdamLisbonStocksqm per capitaAnnual growth5 year growthPrime rent Q3 2023European Retail Market|2023European Retail

91、 Market|20232120Occupier TrendsWhat are the new and most expansive segments and brands to watch?Despite the pandemic and the shift of retail spend online,investment into retailers and their associated brand industries(apparel,consumer durables,restaurant and leisure)has been on an upwards trend.Inve

92、stment over the last 18months has slowed but 2021 was a new three year peak totalling 284bn globally,with retail companies receiving 61%of this investment.But,does this tell us anything about future expansion into physical space?Typically,fresh investment often translates into new space requirements

93、,albeit this will be dependent on the types of companies receiving investment.In the case of recent trends,the bulk of activity has been focused on verticals related to E-Commerce with some of the largest growth seen for verticals covering supply chain technology(+150%3yr CAGR)and mobility technolog

94、y(+152%3yr CAGR).There has also been increased investment into companies that are more likely to take physical space.Beauty,for example,has seen cumulative investment expand 79%per annum over the last three years.Wellness-focused companies have seen inflows increase by 60%per annum on the same basis

95、.Likewise,restaurants,leisure and hotels have seen a 17%increase per annum,with significant growth in E-Sports(+80%per annum)and Gaming(+71%per annum)concepts.These recent investment trends are already starting to feed through to space requirements,some of which are explored in more detail opposite.

96、Global capital investment into Apparel,Consumer Durables,Restaurant,Leisure and retail companies&brands Most expansive segments and market hotspotsVALUE RETAILERSCOMPETITIVE SOCIALISINGGermany,Southern Europe,Central EuropeHotspots:Retail parksBrands:Lidl/Aldi/Home Bargains/Pepco Group/MercadonaGerm

97、any,Southern Europe,Central EuropeHotspots:High footfall high streets and shopping centres&major European citiesBrands:Lane 7,F1,ActivateATHLEISUREEV BRANDSLondon&Southern EuropeHotspots:Premium and high footfall high streets Brands:On/Alo Yoga/Fabletics/VuoriNorthern EuropeHotspots:High footfall hi

98、gh streets&major destination shopping centresBrands:NIO/Zeekr/Geely GroupBEAUTYFUNITURE&HOMELondon&ParisHotspots:Premium and high footfall high streets Brands:Diptyque/Aesop/Byredo/Sephora/Kiko MilanoSouthern EuropeHotspots:Premium and High footfall high streets;major regional destination shopping c

99、entresBrands:H&M Home/Zara Home/Ikea/BoliaF&BBIG BOX|IMMERSIVEHotspots:Premium and high footfall high streets Brands:Big Mamma GroupHotspots:High footfall high streets&major destination shopping centresBrands:Culture Spaces/Museum of Illusions/Moca MuseumSource:Savills 400,000350,000300,000250,00020

100、0,000150,000100,00050,000 01,2001,0008006004002000Capital investment mApparel&accessoiresConsumer durablesRestaurants,hotels&leisureRetailTotal deal countEuropean Retail Market|2023European Retail Market|20232322Retail Investment However,banks and lenders remain cautious about the sector,with a redu

101、ced appetite to participate in potentially high-risk transactions.This is reflected in the decline in the number of large,high-leverage deals that once fuelled market growth and were relatively common in the retail sector.We have seen a number of large portfolios across Europe fail to attract buyers

102、 due to lenders reluctance to finance these substantial transactions.Collaborative efforts have emerged as a prudent strategy for adapting to these evolving dynamics.In some countries,financial institutions and buyers are increasingly opting for joint venture arrangements to mitigate the associated

103、risks in these sizable deals.Acquisitions by occupiers accounting for a larger shareOne notable emerging trend of the last 12 months has been the increasing number of retailers opting to purchase the buildings they rent.They accounted for more than 10.3%of total retail investment.This is an increase

104、 on their 6.7%share recorded for the same period in 2022 and significantly up on the 1-2%share seen over the preceding five years.The most active in this group have been the supermarkets.The likes of Sainsburys,Aldi,Lidl,Tesco,Coop,and Edeka,sitting on fairly major cash reserves,are capitalising on

105、the downward pressure on capital values.This approach offers retailers greater independence from rental dependencies:a prudent move for both retailers stability and long-term profitability.Source:SavillsShare of retail investment100%90%80%70%60%50%40%30%20%10%0%2017 to Q32018 to Q32019 to Q32020 to

106、Q32021 to Q32022 to Q32023 to Q3OfficeIndustrialRetailMultifamilyOtherHotelPBSASenior living&care homesInvestment activity remains relatively resilient European retail investments over the first nine months of the year totalled 17.7bn,which was 34%below the five-year average for the period.Whilst vo

107、lumes were down,activity fared better than other European asset classes;multifamily and office investment over the same period was down-57%and-53%,respectively,against their five-year average.Nearly all countries saw retail volumes down against their five-year average bar Ireland(+69%),the Czech Rep

108、ublic(+54%)and the UK(+13%).As a result of robust activity in the UK,the core markets(UK,Germany and France),captured 71%of this retail activity.The relatively shallower declines in volumes against other segments meant retail accounted for 17%of total European investment volumes,its largest share si

109、nce 2016.Compared to the past five-year average,retail volumes declined in nearly all countries except Ireland(+69%),the Czech Republic(+54%)and the UK(+13%).Why has investment proved to be relatively more resilient?Its a combination of factors.Higher yields,particularly in light of higher debt cost

110、s,and weaker investor confidence in other asset classes have all come into play.The sector had already seen strong repricing over the past five years(+150 bps on average across Europe),meaning it had become highly attractive to investors seeking yield.This appeal has been further intensified in the

111、current high financing cost environment,with pockets of liquidity emerging.These include assets offering defensive qualities,divestments from investors looking to raise capital and secondary assets with active asset management,redevelopment,or repurposing angles.Investment volumes have also proved t

112、o be relatively more resilient in response to investors growing diversification strategies and,more recently,weaker confidence in the office sector,particularly in light of its much tighter,or even negative,spread to debt costs.European Retail Market|2023European Retail Market|20232524Robust investo

113、r appetite for retail parks and grocery stores Unsurprisingly,considering the strength of its occupational market,retail parks have been the most resilient part of the retail investment market,recording the lowest annual decline in investment volumes(-26%).Strong activity was recorded in Italy,thank

114、s to a few portfolio deals,including the joint acquisition by Polis Fondi and LeadCrest Capital Partners of Technomat properties(five properties)for 70bn.There has also been strong activity in CEE countries,notably Austria,Czech Republic and Poland.That said,most of the retail park investment activi

115、ty seen to date in 2023 was concentrated in the UK,a reflection of the fact that it is a more mature asset class in that market.This meant the UK accounted for 45%of European retail park investment volumes.Grocery store investment,including supermarkets and hypermarkets,remained relatively unchanged

116、,accounting for approximately 19%of all year-to-date retail investment volumes.Strong activity was recorded in the UK,mainly due to two large occupier acquisitions by Sainsburys in January and March for 960 million and 867 million,respectively.The more subdued activity in the grocery market in 2023

117、is a reflection of a lack of opportunities rather than a lack of investor appetite,which is very focused on assets occupied by discount and value-orientated brands.Big US REITs such as LCN and Realty are notably very active in that space,particularly across the larger lot sizes.At the smaller end of

118、 the spectrum,there is a much wider investor pool,which has helped to generate downward pressure on prime yields.Luxury high-street opportunities drive high-street investmentOverall,investors appetite for luxury high streets is somehow mitigated by the fact that there were not enough price correctio

119、ns.However,high-street investments accounted for 28%of the total retail volume transacted in the first nine months of 2023,in line with the five-year average of 27%but up on the 19%share recorded last year.This relative resilience has been driven by a small number of trophy assets signed in Paris,Lo

120、ndon and key German cities,including the Louis Vuitton Flagship on 101 Champs Elyses bought by LVMH from Gecina for 770m.As evidenced in this deal,and similar to that seen in the grocery market,luxury brands have become increasingly acquisitive both as a way to ensure occupational security and reduc

121、e exposure to future rental increases but also as a means to deploy capital reserves.Shopping centre investment has been most exposed to rising debt costs Despite a slight rebound in shopping centre investment activity during the first half of the year,volumes contracted in the third quarter,meaning

122、 that year-to-date volumes as of September were down by nearly 49%year-on-year.Despite this decline,shopping centre investment still accounted for a sizeable share of total volumes at 27%,albeit below its historical five-year average share of 33%.France grabbed the largest market share of shopping c

123、entre investment(33%).Notable French transactions include the acquisition by Ingka group(IKEA)of the“Italy portfolio”,two shopping centres based in the Paris 13th district from Hammerson for 550m.Passy Plaza in Paris 16th district was bought by AEW Ciloger from Generali Re Investment BV for 130m,and

124、 a five-factory outlet portfolio(Marque Avenue)was bought by Mata Capital for 200bn.Generally,shopping centre deals take longer to close due to asset-level complexity and the need to finalise business plans,which,in many cases,have a number of moving parts.In March,Generali and ECE completed the acq

125、uisition of the Pep shopping centre in Munich,a deal that was initially agreed upon in late 2022.Apart from the super prime assets,shopping centres generally attract value-add investors seeking opportunities to lease or repurpose.Factory outlet centres,which are a strongly performing subsector and o

126、ffer transparency on tenant trade,remain on the investor radar.However,these types of investment opportunities are relatively rare.Upward pressure on yields continues,albeit the pace of softening is slowingWhile the acceleration in debt costs in the latter part of 2022 and into early 2023 generated

127、significant upward pressure on prime retail yields,this has been less pronounced than in other sectors where the starting yield was much keener.Since Q2 2022,for example,prime industrial yields have softened by 101 bps to average 5.00%,with office yields out by 116 bps to 4.80%.In contrast,prime ret

128、ail yields across Europe have softened by an average of 71 bps over the same period to reach 5.30%.There are also some early signs that yields are starting to stabilise.September 2022 saw the largest single outward shift in yields,with European retail reporting a quarterly softening of 20bps on a me

129、dian basis.European Industrial yields over that same period softened by 31bps.Since then,we have seen consistent quarterly increases in yields,albeit the rate of this decompression has slowed,with Q2 2023 average retail yields moving out by 11 bps quarter-on-quarter,down on the 14bps softening repor

130、ted the previous two quarters.The latest quarter did see a small acceleration in decompression to 15bps,but we are of the view that this will be a relatively isolated occurrence considering expectations that the current rate-rising cycle has peaked.In Q3 2023,the European average prime retail wareho

131、use yield stood at 5.9%,marking a 59 bps increase compared to the same period last year.The European average prime shopping centre yield was at 6.1%,reflecting an annual increase of 49 bps.Luxury high street yields were at 4.2%on average across Europe,42 bps up on the same quarter last year and mass

132、-market high street yields moved out by 53 bps annually to 5.1%in Q3 2023.Going forward,with the deteriorating economic sentiment steering investors towards super-prime assets and restraining investment opportunities,we expect further yield expansion across Europe until mid-next year,yet at a slower

133、 pace than that recorded over the past nine months.Source:Savills,RCAEuropean prime average yieldsSource:Savills,RCARolling past 12-month retail investment volume80706050403020100High streetShopping centresRetail warehouseSupermarketbillion(euros)6.5%6.0%5.5%5.0%4.5%4.0%3.5%3.0%201720182019202020212

134、02220236.1%5.9%5.1%5.0%4.8%4.2%IndustrialOfficeLuxury high streetRetail warehouseMass market high streetShopping centreEuropean Retail Market|2023European Retail Market|20232726Repurposing&Sustainability Diversification is happening and often under the radarRepurposing is materialising across Europe

135、,but only at scale in markets where there is an excess supply or significant retail failures.Consumers have returned from the pandemic with a higher expectation for what will drive their footfall.Hence,the focus is on convenience-based and experiential retail and leisure formats,while the average mi

136、d-market schemes increasingly struggle to remain relevant and compete.Many retailers are consolidating their businesses,reassessing store numbers and reducing overheads amid significant cost inflation,which is hitting margins as well as consumer sentiment.Department stores have been affected particu

137、larly badly in recent years,and there are examples of repurposing projects within this subsector across the continent.The administration of Debenhams in the UK in 2021 left 126 units vacant,which have been re-occupied by retailers such as Marks and Spencer,The Range,TK Maxx in some locations,and rep

138、urposed for alternative uses such as cinemas,training centres and hotels in other locations.In 2019,Canadian department store brand Hudson Bay closed 15 stores in the Netherlands.In 2020,Debenhams and Topshop went into liquidation following the fate of several other high-profile brands in large stor

139、e formats in the UK,which is anticipated to result in 25%excess retail stock,of which 40%of vacant units are already redundant.It is estimated that 75%of shopping centres in Germany need to be repositioned or converted.In 2023,in Germany,Galeria Karstadt Kaufhof has closed 52 stores,the majority of

140、which are being considered for redevelopment as there are not enough alternative retail occupiers leasing large units.Retail repurposing was already starting to happen in several countries before COVID-19 as part of longer-term structural changes to the consumer-retailer dynamic.But there is no doub

141、t that the pandemic accelerated these trends into focus.We saw the increased reliance on convenience and amenity,the importance of health and wellbeing,and an appetite for leisure experiences and F&B,with these trends persisting into 2023 despite consumer inflationary concerns.Blended consumer uses

142、are reviving spaces,but sticking to leisure where possibleThe range of uses being considered for redundant retail space is varied,and while most notable when accounting for larger stores or SC blocks,small-scale adjustments to tenant line-ups mean that many schemes are evolving into more blended and

143、 relevant propositions.An imbalanced transition towards sustainability measuresSCs are moving towards investing in energy efficiency initiatives with lots of activity across Europe.The cost of energy and extreme weather events has created a greater sense of urgency.Spain and Portugal are arguably ah

144、ead of the curve.A Portuguese study examining sustainability practices in shopping centres,states that 85%of operators have good management practices,in line with the UNs sustainable development goals,and 57%already produce photovoltaic energy or are developing projects in this area.The average recy

145、cling rate in the industry is 53%,and half of the SCs are BREEAM,LEED or WELL certified.Spain has 100 BREEAM-certified SCs and 50 more in the pipeline.Across the rest of Europe,the cost of implementing measures and applying for certification has resulted in a lower take-up.The UK has some of the hig

146、hest SC provision in Europe(over 800 schemes),but only a handful of BREEAM building certificates and BREEAM in use is yet to reach double figures.While SCs across Europe are implementing a range of efficiency measures,overall,the changes are not sufficiently rapid to meet carbon targets.With investo

147、rs increasingly seeking green assets(often as a result of fund criteria),schemes that fail to install adequate measures are likely to find declining investment interest and risk becoming obsolete.There is a close synergy between optimising space through repurposing underutilised retail space and und

148、ertaking sustainability measures simultaneously.Refurbishing buildings provides an opportunity to implement greener infrastructure while bringing in more meaningful uses,extends the life of the buildings and can reduce embodied carbon.Investor sentiment is increasingly drawn to redevelopment opportu

149、nities where they can add value and meet net-zero targets.What about markets where repurposing is not currently a consideration,where the void rates are low and where there is a pipeline of new retail development?The key question is whether future developments will address the macro trends being fel

150、t in more congested markets by building more flexible agile places with a more blended offer or continue to develop retail only developments.The clear message to the market is that the future of retail is in adopting the right balance of mixed consumer uses if they are to be future proof,particularl

151、y on locations off the prime pitch.La Vie shopping centre in Porto is undergoing a retail-to-office conversion,with phase 1 already complete and operating.Clerys Department store in Dublin has been converted to provide a blend of retail,office,leisure and F&B to reinvigorate a key city high street.X

152、-Madrid has seen a struggling traditional big-box leisure scheme transformed into an experiential leisure and retail destination.47,000m2,including surfing,scuba diving,event space,cinema,gaming and leisure retail,plus a wide range of F&B.Maj,Prague sees a department store repurposed to create a new

153、 17,000m2 shopping centre,which shows that repositioning is about creating relevant spaces and not just conversion away from retail.Schemes across Portugal,Germany,Poland,the UK and Sweden have seen an increase in alternative consumer uses,such as medical uses and veterinary services,taking single s

154、tores or upper floors of SCs.This represents an important diversification away from pure retail while extending hours of operation and creating additional footfall drivers.European Retail Market|2023European Retail Market|20232928Savills Outlook Consumer Landscape:Prime High Streets:Shopping Centres

155、:Consumer landscape Headwinds to retail spend to dissipate and stronger growth to emerge,supporting stronger trade performance Retail sales in Europe forecast to increase 3.7%in real terms in 2024,supported by real disposable incomes moving back into positive territory as inflation continues to slow

156、.All major European markets are forecast to see retail sales growth next year,with the growth markets of 2023(Ireland,Spain,Portugal)continuing to report growth in excess of 2%.The evolution of consumer spending habits and the prioritisation of experience spend is expected to continue,feeding positi

157、vely into F&B and leisure spend.Momentum builds with major mass market streets accelerating their recovery Vacancy will continue to be squeezed,with rental growth to continue.This is likely to be confined to markets beyond Germany and the Nordics over the next six months.Londons Oxford Street and Pa

158、ris Champs Elyses will continue its recovery trajectory with availability constraints to intensify in the latter part of 2024.Its rental recovery likely to be more protracted and extend into 2025.Luxury demand for new sites in major cities to slow,in line with the current normalisation in trade.Hots

159、pots of activity will materialise as new best-in-class opportunities in key streets,such as Bond Street and Champs Elyses,are delivered.Strong appetite for smaller affluent markets by luxury brands will continue with a growing interest in resort markets.Demand on major high footfall mass market stre

160、ets to further diversify;F&B and leisure will become more pronounced with new entrants from Asia Pacific targeting flagship opportunities in London,Paris and Milan.Vacancy rates expected to reach double figures in most markets,but prime assets continue to be more defensible The polarisation between

161、prime and secondary assets to continue to widen.Beyond prime destination shopping centres,vacancy is likely to get a little higher before it starts to recover in late 2024.For secondary and tertiary schemes,further challenges await,with vacancy rates continuing to track upwards through 2024,particul

162、arly if there is a significant alternative supply.Vacancy trends will dictate rental performance,which we expect will remain flat for prime assets over the course of 2024 with upward pressure on rents to emerge in 2025.Landlords to increasingly look to introduce a more dynamic and leisure-orientated

163、 offer into their schemes in order to increase footfall,dwell time and ultimately retail spend.Investor sentiment should improve in 2024,with assets in some markets likely to look good value,particularly if there is a compelling redevelopment angle.What does the next 12 months have in store?Retail P

164、arks:Space is at a premium in all but emerging markets,which will lead to further rental growth Occupational demand to continue into 2024.For those markets where availability remains significantly constrained,but where spend performance is strong,competitive tension will materialise generating upwar

165、d pressure on rents.Stock expansion to continue,led by those emerging markets that have the lowest per capita stock and have seen some of the highest expansion to date.These include Portugal,Finland,Denmark and Poland.Investment:Retails relatively higher yields will continue to attract investor inte

166、rest,with the focus on more defensible assets such as retail parks and supermarkets Prime yields are stabilising,with further outward shifts anticipated to be minimal and restricted to the first half of 2024.The continued repricing of retail assets,particularly in relation to other real estate asset

167、 classes,will intensify investor appetite.Investment activity has bottomed out,with volumes likely to increase over the next 12 months.This resurgence is anticipated to be most prominent in countries where significant price corrections have occurred.The expected decline in central bank rates in the

168、latter part of 2024 and into 2025 will provide a boost to investment activity.This will generate downward pressure on prime yields in some parts of the market.Grocery stores,supermarkets and retail parks will continue to capture most of investors appetite for retail assets.High street investments wi

169、ll remain restrained by the lack of opportunities on the market rather than a lack of appetite.European Retail Market|2023European Retail Market|20233130Larry BrennanHead of European Retail larry.brennansavills.ieTristam LarderHead of European Capital MPeter HablizelDirector,Germanyphablizelsavills.

170、de Lydia BrissyDirector-European Researchlbrissysavills.frTom WhittingtonDirector-UK Retail R Sam ArrowsmithDirector-UK Retail RAnthony SelwynCo-Head of Prime Global RJames BurkeEuropean Capital Markets and Global Cross-Border IGeorgia FerrisAnalyst-European RAlexander GlavasDirector Prime Global Si

171、lvia SegaleHead of Italy Retail Leasing OOT&Pilotagesilvia.segalesavills.itSam FoyleCo-Head of Prime Global R Jos GalvoHead of Portugal Retailjose.galvaosavills.ptChristian NehmHead of France Retail Services Investment&Lettingscnehmesavills.frLuis EspadasHead of Spain Retailluis.espadassavills.esMar

172、k Garmon-JonesHead of UK Retail IMarco MontosiHead of Investment Italymmontosisavills.it Marie HickeyDirector-Retail RLaura ClowesDirector-Prime Global RDaniel KroppmannsHead of Germany Retail Agencydkroppmannssavills.deRetail Occupational MarketInvestment MarketResearchSavills plc is a global real

173、estate services provider listed on the London Stock Exchange.We have an international network of more than 600 offices and associates throughout the Americas,UK,Europe,AsiaPacific,Africa,India and the Middle East,offering a broad range of specialist advisory,management and transactional services to

174、clients all over the world.This report is for general informative purposes only.It may not be published,reproduced or quoted,in part or in whole,nor may it be used as a basis for any contract,prospectus,agreement or other document without prior consent.While every effort has been made to ensure its

175、accuracy,Savills accepts no liability whatsoever for any direct or consequential loss arising from its use.The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.Savills ResearchWere a dedicated team with an unrivalled reputation for producing well-informed and accurate analysis,research and commentary across all sectors of the UK property market.