While most of the top 10 high streets recorded annual growth, difficult market conditions revised downward overvalued prime rents on Geneva’s Rue du Rhône in Switzerland which suffered from the largest decline in the Top 10, down 14 per cent on the same period last year.
Top 10 Retail Streets in Europe (€/sq m/month)
Q3 2013 Q3 2012 12 month change
London 863 756 ↑ 20%
Zurich 648 653 ↓→ 0%
Milan 575 580 ↑ 1%
Paris 567 542 ↑ 5%
Moscow 506 497 ↑ 7%
Rome 444 430 ↑ 3%
Geneva 409 483 ↓ -14%
Vienna 400 400 → 0%
Munich 340 330 ↑ 3%
Berlin 330 310 ↑ 7%
In terms of the most improved, Oslo in Norway reported an increase of 33 per cent in the last 12 months, and an 11 per cent increase over last six months (currently stands at €205/sq m/month). Other high streets which saw significant rental growth were in Manchester (up 9.5 per cent), and Belgrade (up 9.1 per cent).
Sean Briggs, Managing Director of Retail Agency in Europe at Colliers International, said: “Further growth in prime rents is expected in London, where demand for flagship space continues to exceed supply. Rental growth is also expected in the Baltic capitals as a result of limited number of projects in the pipeline and stable demand for retail space.
“With retail sales levels expected to oscillate within the current levels in the coming months, we will continue to see retailers across all price points, optimise their businesses with a combination of international expansion and downsizing in unprofitable markets. Even strong market players are closing unprofitable stores or withdrawing from the markets where they see no chance for a quick improvement, and then expanding into new, profitable markets. For example, Mango has withdrawn from Bulgaria due to the bankruptcy of its local partner, but has expanded in Poland and Germany”.
International expansion is not limited to the widely known global retailers such as Inditex, H&M and GAP. Eastern European brands are expanding out of home territories and into new international markets. Polish retailers LPP are entering new Eastern Europe markets and the Middle East, as well as considering the more established Western European markets; Polish footwear brand, CCC, is entering Slovenia, Austria and Turkey, with additional stores to open in Croatia and Germany.
The City which recorded the highest increase in prime shopping centre rents was Serbia’s capital, Belgrade, which experienced the over 30 per cent annual growth due to an imbalance of demand exceeding supply. The Baltic also experienced upward pressure on shopping centre rents due to low vacancy levels and stable demand. Growth was also seen in prime shopping centres rents in Oslo (10%), Dusseldorf (5.4%) and Minsk (5.7%).
The weakest performers were recorded in Southern European markets, although prime locations in major cities continue to attract international retailers. Milan, for example, remains a very popular location, especially for luxury brands, and Lisbon saw a further inflow of international retailers including Havaianas, Aristocrazy and Victoria’s Secret, with Michael Kors expected to open stores early next year.