Commercial real-estate brokers Cushman & Wakefield have put out their September global retail rental market report and it makes for some interesting reading.
In particular, the writers observe some dramatic regional splits within Europe. For example, the rental picture is observably bleaker in central and eastern Europe, than, in say, western Europe. As C&W explain (our emphasis):
In many Central and Eastern European markets, poor retail sales figures have led to a difficult trading environment and have put pressure on rents, with some countries witnessing a very sharp deterioration in values. Over the year to June, significant rental falls were seen in Romania (-38.9%), Russia (-25%), Hungary (-23.1%), Turkey (-18.9%), and Bulgaria (-15.6%). Whilst the Romanian economy was slower than some of its neighbours to succumb to the downturn, the retail sector has now experienced a particularly sharp slowdown.
Retailer demand also continued to ease in Russia and Hungary as a result of lower consumer confidence, higher unemployment and falling sales. Across the region, most high street retailers are focusing on optimizing their existing portfolios and remain cautious about expansion. Rental falls were less pronounced in the Czech Republic and Slovakia (down -5.9% and -6.3% respectively), although some retailers have been increasingly cautious and are generally no longer willing to pay high rents, even for units in proven top locations.
And it’s not that much better in the Scandinavian markets:
Rents in the Nordics have suffered badly during the recent slowdown, with the region as a whole recording a sharp fall of -11.9% over the year to June. The most significant rental falls were seen in Norway (-23.1%), followed by Finland (-15.5%), while Denmark (-5.4%) and Sweden (-3.6%) have faired somewhat better. Asking rents are not being achieved in the majority of retail locations and premiums have fallen significantly. Vacancy rates are increasing, with secondary locations being the most adversely affected. However, whilst rents have fallen, the leasing market has remained active, with some retailers looking to take advantage of current lower entry costs to establish a presence in the region.
The overall picture for Europe, meanwhile, looks like this:
We should add, however, that not all European markets registered rental declines. In fact, moderate rental growth was observed in the 12 months to June 2009 in Austria (3.9 per cent), Germany (2.2 per cent) France (1.6 per cent) and even Spain (0.9 per cent).
On Spain and Italy specifically the writers note:
Indeed, the result for Spain indicates the resilience of the top high street locations against what has been a very difficult period for the retail sector as a whole, with sharp falls in retail sales in the last 12-18 months. Italy produced a surprisingly positive result over the year to June in that prime high street rents remained stable in the face of a very challenging retail environment, despite recent quarter-on-quarter falls in rents.
The full report can be viewed in the usual place.
Related links:
Poland, not so strong after all? – FT Alphaville
Credit contagion – next up commercial property – FT Alphaville