According to a new analysis by the property consultancy Savills, the market for retail parks in Europe is increasingly developing at two different speeds: rapid growth is being recorded in parts of Central and Eastern Europe. This contrasts with an increasingly limited supply in a number of mature Western European markets.
The analysis reveals significant differences in the development of specialist retail centres across the continent. Since 2020, the per capita number of specialist retail centres has risen by 123 per cent in Poland, by 56 per cent in Romania and by 31 per cent in the Czech Republic. In Ireland, by contrast, it has fallen by 9 per cent, in the United Kingdom by 3 per cent and in the Netherlands by 2 per cent.
Despite significant developments in some countries, tenant demand remains strong across Europe. Vacancy rates are below 3 per cent in Ireland and below 4 per cent in the United Kingdom, whilst, according to Savills, there are often virtually no vacant units to be found in smaller Polish developments.
Across Europe, the density of retail parks has risen from 100 m² per 1,000 inhabitants in 2020 to 109 m² today. However, it remains well below the 261 m² per 1,000 inhabitants recorded for shopping centres. The figures vary considerably from country to country, ranging from 57 m² per 1,000 inhabitants in Portugal to more than 330 m² in Sweden.
In countries where supply is tight, low vacancy rates and low tenant turnover can limit the availability of high-quality space, thereby reducing the number of transactions that serve as the basis for setting prime rents. At the same time, rental agreements linked to the consumer price index ensure income growth for existing tenancies, even if estimated prime rents have remained largely unchanged.
Limited availability is leading to particular pressure on rents in mature markets such as Sweden and the UK. In Central and Eastern Europe, Spain and France, numerous new-build projects in recent years have opened up more opportunities for retailers to expand, thereby somewhat alleviating the pressure on rents that might otherwise have arisen due to strong demand.
Thomas Nandzik, Director of Retail Agency at Savills in Germany, comments: “The European retail park market is increasingly characterised by the tension between scarcity and expansion. In mature markets, healthy tenant demand is met with limited opportunities for new developments. Consequently, the focus there is on the further development of the existing portfolio through sub-division, extension, refurbishment and reorganisation. In contrast, markets such as Poland remain in expansion mode, with new developments responding to demand and retail parks establishing themselves as the primary shopping destinations for many smaller, underserved catchment areas.”
