Retail markets “turning the corner”
David Hutchings, partner in Cushman & Wakefield’s European Research team, notes that retail property markets are starting to look more interesting, and in some cases, more active as well. The group’s recent global research into retail rental levels, entitled Main Streets Across the World, shows global rents were down 1.5% in the year to June (compared with a 6.4% drop in the previous 12 months) but Hutchings says an increasing number of locations are seeing growth, with core European markets “turning the corner”. Retail investment in Europe is up 48% this year compared with a 10% increase for offices, he adds.
While retailers that are seeking to expand will not welcome an end to the decline in rents, Hutchings points out that it remains difficult in any case for them to find the quality space they want, and that this search process is not getting any easier with less development currently under way. “The focus on quality will continue and weaker locations, properties and traders face more tough times,” he notes.
Hutchings points out that retailers are taking care not to add to their costs in the current economic environment. He cites the example of clothing retailer Next, which recently reported results, saying: “Next point to cost management as well as innovation as key to success, and property providers would be wise to listen to this – and not just sit and hope for a supply-led squeeze to deliver future rental growth.”
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