Interest from expanding tenants across the European retail park market is noticeably outstripping the currently available space. This is the conclusion of a recent market analysis by real estate consultancy Savills. Strong momentum on the demand side is meeting a tight supply environment in many locations, intensifying competition for suitable space within established clusters and centres.
A two-speed market development
A key finding of the Savills study is the growing emergence of a two-speed market within Europe. Market activity is far from uniform, progressing with varying intensity depending on the country and regional submarket. While certain locations are characterised by a significant excess of requirements, other submarkets present a different, more subdued picture.
The sustained demand underlines the role of retail parks as a resilient segment within the European retail property sector. Everyday essentials and high-footfall chain stores in particular are securing steady footfall for these assets. As the supply of tailored space fails to keep pace with demand in many areas, the scope for new store openings and relocations is narrowing.
Challenges for retail expansion
For retail companies, the current climate means that expansion plans are encountering operational hurdles across many European locations. The lack of readily occupiable space requires market participants to prepare leasing processes early and accurately, as well as to closely monitor local availability.
- —High tenant demand meets limited supply of retail park space across Europe.
- —Emergence of a two-speed market with varied trends across European submarkets.
- —Increasing shortage of suitable quality locations for expanding retailers, according to Savills.
The findings from Savills highlight that generalised assessments no longer apply to the European retail park landscape. Divergent performance across individual regions requires both owners and tenants to undertake sound, location-specific analysis in order to respond effectively to structural imbalances between supply and demand.
