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CEE: retail parks market still under supply

Anna Pakulniewicz 05 July 2019
CEE: retail parks market still under supply
Source: Cushman & Wakefield
EUROPE As the Cushman & Wakefield report „European Retail Park 2019” shows, in recent years, European retail parks have experienced a significant transformation with regard to the breadth of tenant mix and quality of design. Retail park development continues to evolve across Europe. In Western Europe, where retail park development has reached maturity, the new schemes have to be innovative and compelling to be successfully developed. Many of the new retail park schemes include leisure and F&B to make them more attractive as retail destinations. In Central and Eastern Europe, the market has relative under supply, providing scope for increased levels of retail park development activity.
Affordability, flexibility, convenience and accessibility are the main attractions for new retail park occupiers and shoppers. European retail park floorspace increased by 2.2 pct in 2018, reaching 50.1 mln sqm. Overall, 995,000 sqm of new retail park space was completed, 15 pct less than in 2017.

France was the most active country in 2018, accounting for more than a third of total new space in Europe. Spain took second position with 165,000 sqm, followed by the United Kingdom with 121,000 sqm of new space. A steady supply of new space is expected going forward, with 1.45 mln sqm of new retail park space scheduled for opening in 2019/2020.

Nevertheless, quick and easy construction and a growing number of schemes below 5,000 sqm are expected to boost the number of openings.

In Western Europe, development continues to Focus on large cities with strong catchment areas and high pedestrian flows, although the development of small schemes is accelerating in some countries.

Strong economic fundamentals, demographics and attractive catchment areas are the main criteria for site selection. However, some retailers are also developing their own small retail parks, offering spaces to other brands and activities. An increasing amount of older stock is now looking dated and will require refurbishment/redevelopment going forward. Many landlords are reviewing their retail park portfolios and identifying opportunities for redevelopment and alternative uses, although these opportunities are currently restricted to the major cities.

In Central and Eastern Europe, the outlook for the retail park market remains positive. Development is turning to smaller schemes in smaller cities and suburban areas, in addition to secondary and tertiary locations. More dominant retail parks are expanding by attracting mass market fashion retailers. Retailer expansion in smaller towns is creating opportunities for the development of small and medium schemes, which is boosting opportunities for local developers.

The continued growth of online retail sales will have an increasing impact on the out-of-town retail market. However, retail warehousing remains relatively less exposed than other sub-sectors, given the more sustainable rental levels and continued popularity of car-borne shopping.

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