Fashion takes lead as European retailers’ letting deals stabilise

European retailer leasing activity in H1 2024 remains strong and in line with deal volumes for the same period a year earlier.

Cushman & Wakefield has published a new analysis of 900-plus retail letting deals it handled in Europe in the first half of this year. The fashion industry was overall the most active sector, accounting for nearly a third of all letting deals and nearly 40% of the total leased area. JD Sports, and brands owned by Calzedonia and Inditex were among the most active.

A third of deals were accounted for by food and beverage operators and personal goods retailers, which represented 15% and 14% of new leasing activity respectively.

 Within the personal goods category, luggage retailers, whose sales have surged as global tourism has recovered, have expanded their recent letting activity.

Brands opening stores in 2024 include Tumi, Delsey, Carl Friedrik and Rotate, and many new store openings are planned owing to expectations that European travel volumes will overtake pre-pandemic levels for the first time in 2024.

In terms of retailer market segment, mass market retailer activity accounted for around 70% of both floorspace leased and overall deal volume in the first half of 2024, with over 12% more deals and 5% more floorspace leased compared with the same period in 2023.

Premium brand retailers registered a notable drop, with floorspace take-up declining by over 50%, while the number of luxury retailer deals decreased by 40% compared to the same period last year.

 Real estate activity in the retail sector remains primarily focused on smaller units, with units smaller than 200 sq m making up more than half of deals.

 Rent levels across all retail asset types declines following the onset of the pandemic. C&W said that  analysis of the data collected for over 200 high streets, more than 100 shopping centre sub-markets and over 100 retail park sub-markets, shows that all three have posted positive rental growth over the past several years.

 Retail park rents are an average of 9% ahead of December 2018 levels. Shopping centre and high street rents have seen improvement and in nearly all markets rents have grown or remained stable for 12 months.

 Looking ahead, C&W said economic conditions and consumer sentiment have steadily improved during the year to date and are expected to continue rallying in the near-term, although sales volumes have remained broadly stable. This indicates that the improvement in consumer sentiment has yet to be fully reflected in retail sales.

 Economic improvements, including cuts to interest rates and reductions in the rate of inflation, are anticipated in the near-term. The consumer spending outlook across Europe remains cautiously optimistic, with retail sales volumes expected to experience modest growth in the second half of this year.

“Our analysis of lettings deals completed across Europe by Cushman & Wakefield in the first half of 2024 shows that retailers are more focused than ever on elevating the customer experience,” Cushman & Wakefield’s ead of EMEA retail Rob Travers said. “Many brands are positioning their stores as strategic destinations, using targeted strategies and creating compelling reasons to visit stores and boost brand engagement.”

However, he added that although the economic outlook continues to improve, customer and retailer sentiment is still cautious. “Now more than ever, making the right real estate decisions is a vital component in determining retailer success.”