Slowed momentum in the retail investment market – opportunities for the second half of the year due to a well-filled sales pipeline

The environment for the German retail investment market has been characterized by uncertainty and fluctuations in the course of 2026 so far, which is reflected in transaction activity. According to Colliers, retail properties were traded for 1.9 billion euros in Germany in the first half of the year. This corresponds to a decline of 25 percent compared to the previous year. After a promising start to the year with an incipient market recovery, geopolitical developments since March – in particular the economic implications of the Iran war – have dampened momentum in the second quarter. The transaction volume fell by 41 percent in the second quarter. The number of contracts almost halved. This was even more pronounced than in the overall market for commercial real estate investments, which recorded a decline in transaction volume of 38 percent and in transactions of 23 percent in the same period. The market share of retail properties in the transaction volume fell to 17 percent within three months, putting it in third place behind the office segment with 27 percent and logistics with 22 percent.

Developments in the Middle East and higher capital market interest rates in particular had a noticeable impact on the investment climate in the second quarter.

Nicole Römer, Head of Retail Germany at Colliers, said: "As expected, the real estate market has also come under pressure following developments in the Middle East. With the rise in capital market interest rates, financing conditions are more challenging than at the beginning of the year. Real estate-related capital market interest rates have already risen significantly since March, and ten-year government bonds are hovering around the three percent mark. Ongoing purchase price negotiations are being put to the test again, and banks are acting more cautiously. Risk premiums for financing have a disproportionate impact as the property volume increases, thus slowing down large transactions in particular."

In the first half of 2026, around 58 percent of the transaction volume and 94 percent of all trades were transactions below the 50 million euro mark. Market-defining sales in the core segment, such as the sale of a portfolio of 37 local suppliers from TREI Real Estate to the Edeka subsidiary CEV or the Leipzig shopping centre Höfe am Brühl, were already completed in the first quarter. Accordingly, the portfolio share fell to 18 percent by the middle of the year. With a few exceptions, small-volume real estate packages have recently dominated the market.

In the first six months of the year, specialist stores and retail parks maintained their position as by far the form of retail with the highest turnover. They accounted for 55 percent of the transaction volume and 58 percent of all registered sales in the retail segment. More than three-quarters of these properties have a food anchor. Inner-city commercial buildings follow in second place with a volume share of 27 percent, while shopping centers occupy third place with 13 percent.

Despite the weaker market development in the second quarter, there is still potential for a revival of transaction activity in the further course of the year.

Römer: "In recent weeks, numerous local supply portfolios with volumes of more than 100 million euros in some cases have been launched on the market. Thanks to long-term leases with retailers with strong credit ratings, they continue to meet with lively interest from equity-strong, increasingly foreign investors or corporates. The decisive factor for a successful conclusion is likely to be whether buyers and sellers can continue to agree on price expectations in view of increasing price sensitivity. Measured against the current level of bond yields, food-anchored retail parks with 5.5 percent or local supply stores with 5.4 percent gross initial yield are significantly more attractive than other established property types in terms of their risk premium."

The streamlining of existing portfolios creates increasing opportunities for developmental inner-city properties and shopping centres – especially in the core-plus and value-add segments. For risk-averse buyers who want to position themselves primarily in the small to medium-sized market segment and leverage long-term value creation potential, the market will offer more buying opportunities in the coming months. In these risk categories, the differences in the pricing process are significantly higher than in the core segment.

Looking ahead to the second half of the year, Römer emphasises: "Volatility in the financial markets and a lower propensity to invest will continue to accompany us in the coming months. Even if the resilience of the stabilized local supply segment continues to support the retail investment market and there will be investors for core products, the other market segments will be even more affected by prolonged purchase price negotiations and price pressure. Against this backdrop, we are adjusting our forecast for the full year 2026 to the previous year's level of around EUR 5 billion in transaction volume."