Retail in focus as MAPIC continues
Cushman & Wakefield’s latest research, unveiled at MAPIC this week, shows that luxury retail property has been a pocket of growth in a largely subdued sector. Rental growth for space in top luxury shopping streets in Europe is up 4.5% in the year to June 2012, outpacing the growth seen on Europe’s most expensive high streets (up 1.7%) and widening the gap with the mass market (+0.5%), C&W says.
David Hutchings, head of research at Cushman & Wakefield in EMEA, said “Despite recent slower sales growth, the luxury sector will remain resilient and will continue to play a vital and prominent role in driving overall performance in Europe’s premier retail cities.”
C&W’s research found that London has the most diverse mix of international luxury brands in Europe, with only 21% of the luxury market represented by domestic brands. This shows the importance and attractiveness of the London retail market as a gateway to Europe and other global regions, the firm says.
The research also notes that, as in Paris and Milan, the London luxury retail market is seeing a significant supply-demand imbalance as retailers queue up to snap up the right units on the right streets: demand for luxury retail space in London outstripped supply by 10 to 1 last year. Peter Mace, head of Central London retail at C&W, says “Bond Street and Sloane Street have the broadest range of international luxury brands in Europe and will continue to hold their ‘super luxury’ status and experience robust demand for prime retail space. London is a natural choice for luxury retailers because of its position as a fashion hub and the rich mix of nationalities and tourists. Overseas shoppers are ensuring that luxury retail on these streets continues to thrive.”
Meanwhile in other retail research news CBRE and Retail Locations have unveiled a joint report showing that the number of shops run by multiple retailers in the UK has risen during the third quarter of 2012, despite the number of administrations in the sector. The total number of outlets run by multiples rose by 919 or 0.58%, after a slight decline in Q2, taking the year-to-date total to 665 (+0.42%). But CBRE and Retail Locations note that this rate of growth is “barely a quarter of pre-recession levels”.
With speculative retail development at a standstill, the research notes that multiples are chasing a dwindling supply of large-unit store space – mostly on retail parks. “Expansion activity at the large unit end is constrained by supply shortages. At the unit shop end it is simple demand weakness that is slowing expansion activity and undermining rental growth,” the report says.
CBRE expects net growth in multiple branches to continue in the final quarter of this year, with a small decline forecast for 2013.
Jonathan De Mello, head of retail consultancy at CBRE, noted: “It is clear from branch change at the individual network level that a relatively small number of retail majors are now making most of the running in both branch expansion and internet-related investment. The strongest players continue to make large market share inroads. New entrants such as pound shops and discounters are generally increasing the pressure on tired brands. The longer the downturn continues, the greater the attrition.”
