The cost of leasing retail space in the prime areas of Europe's major cities is stable, despite deteriorating consumer sentiment as a result of the eurozone sovereign debt crisis. This is the finding of research conducted by CB Richard Ellis (CBRE), which noted rents for retail properties in Europe climbed by 3.4 per cent over the course of 2011. The firm added rental growth slowed in the second half of last year, with an increase in leasing costs of just 0.5 per cent recorded in the final quarter.
Neville Moss, head of Europe, the Middle East and Africa (EMEA) retail research at CBRE, commented: "Although retail rent levels have been largely stable, the competition over space in prime locations indicates that retailers are particularly confident about the long-term prospects of city centre locations." The demand for premises in prime positions may encourage investors to consider adding assets of this kind to their portfolios. Mr Moss pointed out a number of retailers have continued to expand over the past 12 months, despite the worsening economic picture on the continent. H&M and the Inditex brands were named as businesses that pursued aggressive expansion strategies in 2011.
A report published by Jones Lang LaSalle earlier this month revealed there is still strong competition among retailers for the most desirable space. James Dolphin, head of the pan-EMEA retail agency at the organisation, explained many of the top-tier brands won't accept anything less than flagship stores, which is "maintaining, or in some instances, putting upward pressure on rents in super-prime locations". Those looking for property investment opportunities in the retail sector may want to target the cities highlighted by the firm as being particularly sought-after by such businesses.
London topped the list, with Paris, Moscow, Madrid, Milan, Prague, Munich, Istanbul, Barcelona and Rome completing the top ten. All of these locations were described as major targets for retailers seeking cross-border expansion. Mr Dolphin noted a lack of new retail space entering the market in the most popular areas is contributing to retailers' appetite for growth in other regions, with a rising number of US firms opening stores in European destinations. He cited brands such as Hollister, Forever 21 and Abercrombie & Fitch as examples of companies that have made particular in-roads into the continent's retail sector in the past year.
- Wednesday 21 March 2012