The state of prime high streets in Europe - October 2008
Jones Lang LaSalle presents the first edition of Prime High Streets Europe. The report provides prime rents, annual rental growth and an indication of likely short term rental growth for over 100 retail locations across Europe. A wealth indicator for each location is also given for comparison purposes.
Despite the worsening economic climate, turbulence in the financial markets, and pressure on consumer spending through higher inflation, the prime high streets of Europe have performed relatively well over the last year and have prospered in some cases.
In the twelve months since the beginnings of the credit crunch, almost 70% of all locations assessed within this report registered some level of growth between Q2 2007 and Q2 2008.
The primary cities of Greece and Turkey saw some of the highest increases with Tsimiski Street in Thessaloniki, Ermou Street in Athens and Bagdat & Istiklal Streets in Istanbul all recording an annual growth of over 25% (mitigated somewhat in Turkey by inflation at 10%). This is due largely to a limited supply but strong demand for units, particularly from International brands. High streets in London also performed well, with prime rents on New Bond Street increasing to €6,762/sqm/year, and Oxford Street climbing to €5,372/sqm/year.
Moscow now boasts three out of the top five prime rental locations in Europe, and with strong demand from the fast growing middle class, a shortage of available space and a low level of transparency, rental growth is expected to continue. Les Champs Elysées however remains the most expensive street in Europe in 2008 with prime rents currently standing at €7,360/sqm/year.
Current retailer demand in the Ukraine is particularly strong, with high street rents in Kiev projected to see substantial growth over the next twelve months as competition for prime units increases (though, as with Turkey, this is offset in part by high levels of inflation). Several prominent locations in mature markets, particularly Germany and The Netherlands, are also anticipated to see solid rental growth through the year despite a projected slowdown in the economy, again largely thanks to major International brands seeking representation and a scarce supply of prime space. The outlook is less favourable for areas such as the Baltic States, where retail is concentrated within shopping centres and their economies face particular imbalance. A handful of western European locations, are also expected to see some downward pressure on rents, most notably in Spain.
In general, however, prime rental levels are expected to remain stable as weaker consumer spending growth in most of Europe is counter balanced by the continuing strength of occupier demand for the best locations.
Jones Lang LaSalle
22 Hanover Square
W1A 2BN London
Phone: +44 20 7493 6040
Neville Moss (Head of EMEA Retail Research), tel.: +44 20 3147 1187
Jones Lang LaSalle
Rated 0 time(s)