European Retail Marketbeat Snapshots Q1 2012 - SPG Intercity

MARKETBEAT 

RETAIL SNAPSHOTS 

PAN-EUROPEAN 

A Cushman & Wakefield Research Publication 

1. Austria 

2. Belgium 

3. Bulgaria 

4. Czech Republic 

5. Denmark 

6. Finland 

7. France 

8. Germany 

9. Greece 

10. Hungary 

11. Ireland 

12. Italy 

13. The Netherlands 

14. Norway 

15. Poland 

16. Portugal 

17. Romania 

18. Russia 

19. Serbia 

20. Slovakia 

21. Spain 

22. Sweden 

23. Switzerland 

24. Turkey 

25. United Kingdom 

Q1 2012

MARKETBEAT 

RETAIL SNAPSHOT 

AUSTRIA 


OVERVIEW 

According to the Austrian Institute of 

Economic Research (WIFO), retail sales 

volume (excluding motor vehicles and 

motorcycles) fell 1.9% year-on-year in 

December and 0.9% in November. Sales of 

automotive fuel, textiles, clothing and footwear continued to 

register declines, albeit at a slower pace when compared with the 

previous quarter. 

OCCUPIER FOCUS 

The addition of new and refurbished properties in central 

locations has intensified the pressure on outdated shopping 

centres, peripheral streets and retail parks. The latter market is 

particularly saturated by such properties, with landlord now 

eager to modernise. There is currently active demand for train 

station projects, with the space in Bahnhofcity now fully leased 

and the prospects for Bahnhof Wien Mitte equally positive. 

While in general prime rents remained stable over the quarter, 

there were pockets of marginal growth and lower vacancy rates 

in selected prime locations. Demand continues to outstrip supply, 

although retailers remain selective when making decisions. 

Subleases in high streets are also a new trend emerging in Vienna, 

while premiums paid by retailers remain elevated. 

INVESTMENT FOCUS 

There is a distinct shortage of assets which meet investor 

requirements. Furthermore, liquidity in the investment market 

has been adversely affected by the reduction in the number of 

new projects as a result of the global economic crisis. Shopping 

centre and retail warehouse yields hover above the 6% mark, and 

whether they will fall below this figure will become clear once the 

big centres currently in development come onto the market. The 

forecast economic downturn has for the moment not affected 

demand for shopping centres; however, investors are increasingly 

risk-aware, focusing on optimising their portfolio rather than 

expanding. 

OUTLOOK 

The economic outlook for 2012 is anticipated to be more 

subdued, with GDP growth expected to slow on the 3.1% rate 

recorded in 2011, accompanied by sluggish consumer spending. 

Taxes increased on the 1 st of April, while the tax-free period for 

real estate transactions (previously 10 years) has now been 

phased out. This change means that after 10 years owners will be 

required to pay capital gains tax. 

Cushman & Wakefield LLP 

43-45 Portman Square 

London W1A 3BG 

www.cushmanwakefield.com/knowledge 

MARKET OUTLOOK 

Prime Rents: Prime rents are expected to hold steady, with 

potential growth in selected locations. 

Prime Yields: The limited supply of new prime space may 

apply some downward pressure on yields. 

Supply: Supply was boosted by the recent addition of 

new retail schemes. 

Demand: Demand remains active for prime locations, 

but dissipates in secondary pitches. 

PRIME RETAIL RENTS – MARCH 2012 

HIGH STREET SHOPS € € US$ GROWTH % CAGR 

SQ.M/MTH SQ.M/YR SQ.FT/YR 5YR 1YR 

Vienna (Kärntnerstrasse) 275 3,300 408 10.1 0.0 

Vienna (Mariahilferstrasse) 135 1,620 200 6.2 0.0 

Graz 105 1,260 156 5.6 0.0 

Linz 115 1,380 171 12.1 0.0 

Salzburg 120 1,440 178 9.3 0.0 

Innsbruck 100 1,200 148 17.3 5.3 

RETAIL PARKS € € US$ GROWTH % CAGR 


Vienna 11.50 138 17.1 2.8 0.0 

Graz (West) 10.00 120 14.8 2.1 0.0 

PRIME RETAIL YIELDS – MARCH 2012 

HIGH STREET SHOPS 

(FIGURES ARE GROSS) 

CURRENT LAST LAST 10 YEAR 

QUARTER QUARTER YEAR HIGH LOW 

Vienna (Kärntnerstrasse) 4.25 4.25 4.50 5.20 4.25 

Vienna (Mariahilferstrasse) 4.75 4.75 5.00 6.00 4.75 

Graz 5.00 5.00 5.00 6.00 5.00 

Linz 5.00 5.00 5.50 6.00 5.00 

Salzburg 5.00 5.00 5.00 5.60 4.50 

Innsbruck 5.25 5.25 5.50 5.80 5.00 

RETAIL PARKS 




Vienna 6.25 6.25 6.25 7.50 5.00 

Graz (West) 6.50 6.50 6.50 8.30 5.50 

SHOPPING CENTRES 




Austria 6.10 6.10 6.10 7.00 5.80 

With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of 

Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very 

much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used 

as a comparable for any particular property or transaction without regard to the specifics of the property. 

Source: Cushman & Wakefield 

Q1 2012 

This report has been produced by Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. 

It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources 

which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. 

No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & 

Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. 

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MARKETBEAT 


BELGIUM 


OVERVIEW 

Household consumption in the country 

slowed in 2011 and declined over the first 

months of 2012. However, despite falling 

to its lowest value in almost three years in 

February, the consumer confidence index 

rose sharply in March as the slightly more upbeat economic 

forecasts filtered through. Nevertheless, the index remains below 

the threshold mark of zero, suggesting an overall pessimistic 

outlook. 


Notwithstanding subdued consumer sentiment and lower retail 

turnover, interest for good locations remains active, albeit more 

constrained when compared with previous years. While demand 

is generally decelerating and decisions take more time, it remains 

relatively healthy. Prime rents were largely stable over the 

quarter, with rental growth only limited to annual comparisons in 

the retail warehouse sub-sector, where retail parks witnessed 

good growth and stand alone units experienced a more mixed 

picture. 

Nivelles Shopping opened its 12,500 sq.m extension successfully 

at the end of March, but overall there are a handful of new 

projects entering the pipeline, with the political debate on large 

proposed shopping centre projects currently ongoing. The final 

decisions on the permits for Uplace and Just Under the Sky are 

nevertheless expected in the coming months. 


While slower than the previous quarter, activity in the 

investment market remained strong in the first quarter. There 

was a total of €272 mn worth of retail assets traded, in contrast 

to the revised figure of €329 observed over the previous three 

months. In particular, there were a number of notable shopping 

centre transactions, namely: the purchase of a part of Westland 

shopping centre by AG Real Estate for approximately €81 million 

and the acquisition of Galeries de la Toison d’Or by Prudential 

for €62 million. Active interest exerted downward pressure on 

prime yields, which hardened by 25 bps for high street units and 

between 15-35 bps for shopping centres. 

OUTLOOK 

Economic conditions in the country will be challenging in 2012 

with Consensus forecasts suggesting stagnation. At the same 

time, however, inflationary pressures and unemployment are 

expected to ease, leading to increased economic activity in 2013. 

Furthermore, the retail property market will fare relatively well 

in 2012, with the occupier market anticipated to remain stable 

and investment activity expected to improve on last year. 






Prime Rents: Stable, but may come under pressure if 

demand slows down further. 

Prime Yields: Prime yields have sharpened and are now 

expected to remain stable. 

Supply: No new major projects in the pipeline. 

Demand: Demand likely to stay unchanged. 


HIGH STREET SHOPS € US$ GROWTH % CAGR 

SQ.M/YR SQ.FT/YR 5YR 1YR 

Brussels 1,800 223 2.6 0.0 

Antwerp 1,800 223 3.7 0.0 

Liege 1,100 136 2.4 0.0 

Ghent 1,550 192 4.4 0.0 

Bruges 1,200 148 2.7 0.0 

Hasselt 1,100 136 3.0 0.0 

STAND ALONE RETAIL WAREHOUSING 

€ US$ GROWTH % CAGR 

UNITS 


Brussels 175 21.7 0.6 2.9 

Antwerp 150 18.6 -0.7 0.0 



(FIGURES ARE NET) 



Brussels 4.75 5.00 5.00 6.00 4.25 

Antwerp 4.75 5.00 5.00 6.00 4.25 

Liege 5.50 5.75 5.75 7.00 5.00 

Ghent 5.00 5.25 5.25 6.50 4.75 

Bruges 5.00 5.25 5.25 6.50 4.75 

Hasselt 5.25 5.50 5.50 6.75 5.00 

STAND ALONE RETAIL WAREHOUSING CURRENT LAST LAST 10 YEAR 

UNITS (FIGURES ARE NET) 


Brussels 6.25 6.25 6.25 7.75 5.60 

Antwerp 6.25 6.25 6.25 7.75 5.60 





Belgium 5.35 5.50 5.50 6.25 4.50 

NOTE: Volumes below €5 million may result in sharper yields . 















MARKETBEAT 


BULGARIA 


OVERVIEW 

According to preliminary data from the 

National Statistical Institute, GDP increased 

by 1.6% year-on-year in the fourth quarter 

of 2011 and by 1.7% over the year as a 

whole. Retail sales have continued to 

decline: sales volumes (working day adjusted, excluding motor 

vehicles, motorcycles and fuel) decreased by 5.3% year-on-year in 

February, 1.9% in January and 2.9% in December. The textiles, 

clothing, footwear and leather goods segment recorded a 

particularly steep decline, with sales falling 25.7% year-on-year in 

February. 


Despite challenging trading conditions, several major international 

players continue to expand, albeit cautiously. Demand is highly 

selective, with retailers considering only prime locations with an 

attractive tenant mix and favourable lease terms. On the other 

hand, secondary locations are experiencing falling demand, with a 

number of smaller, domestic retailers closing unprofitable stores. 

Although interest is focused primarily on Sofia, it has recently 

been reported that the Galleria Burgas shopping centre, due to 

open in May, is more than 80% let. 

Shopping centre rents in the capital were stable over the quarter, 

with high street rents came under slight downward pressure. 

Rents in Burgas also decreased slightly due to competition from 

Galeria Burgas. Supply in Sofia is expected to increase this year 

with the opening of Paradise Center (80,000 sq.m GLA) and 

Bulgaria Mall (33,000 sq.m), which could potentially impact on 

rents. 


Prime yields were unchanged across all sub-sectors, on both a 

quarterly and an annual basis. Big-box schemes continue to 

attract a relatively healthy level of interest, as they are seen as a 

stable investment in challenging economic conditions. Indeed, the 

only retail transaction recorded over the quarter was the 

acquisition of a BauMax unit in Pleven by Bluehouse Capital. 

OUTLOOK 

A significant improvement in consumer spending is unlikely in the 

coming months, and most retailers expect a challenging year 

ahead. Occupier demand will remain subdued and selective, and 

will be largely driven by food and discount retailers and selected 

international fashion brands. Supply outstrips demand, and rents 

may come under downward pressure in the coming months as 

new shopping centres come onto the market. 






Prime Rents: Stable in the most sought-after locations; falls 

possible elsewhere. 

Prime Yields: Expected to remain stable. 

Supply: Will increase, with several shopping centres in 

the pipeline. 

Demand: Subdued and selective, largely focused on the 

capital. 




Sofia (Vitosha Boulevard) 48.0 576 71.3 -13.7 -4.0 






Sofia (Vitosha Boulevard) 9.00 9.00 9.00 15.00 6.00 





Bulgaria 9.00 9.00 9.00 10.50 7.50 





RECENT PERFORMANCE 

12.00% 

10.00% 

8.00% 

6.00% 

4.00% 



Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 

20.0% 

10.0% 

-10.0% 

-20.0% 








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0.0% 

AVERAGE PRIME YIELDS (left) RENTAL GROWTH (right)

MARKETBEAT 


CZECH REPUBLIC 


OVERVIEW 

Following another 0.1% contraction on the 

previous quarter, the country officially 

entered a technical recession in Q4 2011, 

with consumer spending unchanged and 

government expenditure continuing to 

decline as a result of austerity measures. According to the Czech 

Statistical Office, retail sales were subdued in the first two 

months of the year as they contracted on an annual basis by a 

working day adjusted 0.5% in January and 1.6% in February. The 

latest figures were driven in part by robust sales of fuel and nonfood 

goods, while simultaneously held back by lower food sales, 

which continued to fall on the back of a 4.0% rise in the lower 

VAT rate. 


Existing retailers are generally cautious but still expanding – 

especially in successful shopping centres – while the Czech retail 

market remains attractive to new retailers. Occupier demand is 

strong for successful schemes and particularly for high street 

units, the prime rents of which rose on the same period last year. 

Elsewhere, retail park rents edged up over the quarter, while the 

attractiveness of shopping centres in Prague was reflected in 

rental growth in select locations across the capital. 

The supply of shopping centre space is currently improving, 

supported by the addition of new schemes. Indeed, two new 

shopping centres opened in the first quarter of 2012, including 

Forum Nova Karolina in Ostrava – now the biggest scheme in the 

Moravskoslezsky region – while three other centres are 

scheduled to open during 2012. 


2011 proved a very successful year for the retail investment 

market as it registered the highest total trading volumes on 

record at €922 million. However, activity in the first quarter of 

2012 came to a virtual standstill with no retail transactions taking 

place. The illiquid market translated into prime yields softening 

across the sector as prime values edged up 25 bps in the retail 

warehouse sub-sector, high streets in Brno and shopping centres 

in Prague. 

OUTLOOK 

Against a backdrop of subdued consumer spending, weak 

economic growth and higher inflation, the retail sector is unlikely 

to benefit from an uplift in demand. Furthermore, a slowdown in 

eurozone growth will do little to aid exports. The occupier and 

investor market are expected to remain stable, although the 

latter may see a reduction in total trading volumes. 






Prime Rents: Prime retail rents to remain stable. 

Prime Yields: The yield compression observed last year has 

now run its course. 

Supply: Some schemes in the pipeline, but limited 

financing continues to restrict developers. 

Demand: Occupiers remain cautious, but sentiment 

gradually improving. 




Prague (Wenceslas Square / 

Na Příkopě) 175 2,100 260 0.6 6.1 

Brno (Svobody Sq.) 70 840 104 0.0 2.4 



Prague 10.15 122 15.1 -1.0 -1.0 

Brno 8.40 101 12.5 -0.8 1.8 






Prague (Wenceslas Square / 

Na Příkopě) 6.00 6.00 6.25 9.75 5.00 

Brno (Svobody Sq.) 7.50 7.25 7.50 12.50 6.50 

RETAIL PARKS 




Prague 7.75 7.50 7.75 11.50 6.15 

Brno 8.25 8.00 8.25 13.00 6.40 





Czech Republic 6.00 5.75 6.15 9.25 5.00 






9.00% 

8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




10.0% 

-5.0% 

-10.0% 









5.0% 

0.0% 


MARKETBEAT 


DENMARK 


OVERVIEW 

The economy shrank by a marginal 0.1% in 

Q4 2011 on the previous three months, an 

identical rate to the revised figure observed 

in Q3 and enough to record a second 

consecutive fall and a technical recession. 

According to Statistics Denmark, the negative trend in retail sales 

growth was also apparent at the start of 2012. Indeed, sales in 

the first two months of the year proved disappointing as they 

declined by 3.3% in January and 0.5% in February year-on-year. 


Occupier demand for the prime area of Copenhagen and prime 

regional shopping centres remains strong, while interest for nonregional 

shopping centres continues to decline. Overall, the 

occupier market is still marred by low consumer sentiment and 

turnover, allowing only the strongest retailers to actively look for 

prime space. 

Despite this cautious retail environment, several foreign brands 

are still interested in opening flagship stores in the capital, eager 

to take advantage of what can now be described as very much a 

tenants’ market. Prime rents across the country remained 

unchanged over the quarter, although there were some high 

street adjustments on an annual basis. 


Following the strongest year on record in terms of trading 

volumes, which saw €1 billion worth of assets traded, the retail 

investment market slowed sharply in the first quarter of 2012 as 

only €14 million was spent on acquisitions. The only transaction 

of the quarter was the purchase of a high street unit in 

Fiolstraede in Copenhagen by Jeudan A/S. Prime yields remained 

stable, with the lowest value of 5.00% found on the premier high 

street of the capital. 

OUTLOOK 

Looking ahead, there are some potentially encouraging signs for 

the retail sector. As exports are anticipated to decline on the 

back of subdued global demand, consumer spending is expected 

to grow modestly in 2012 and take up some of the slack, aided by 

a gradually lower inflation rate and stable unemployment. 

Nevertheless, occupier and investment activity remain generally 

subdued, and this trend is not expected to change in the short 

term. 






Prime Rents: To remain largely unchanged 

Prime Yields: Yield stabilisation anticipated in prime 

locations. 

Supply: Subdued development, with only one new 

shopping scheduled to open in 2012. 

Demand: Demand expected to remain stable. 


HIGH STREET SHOPS Dkr € US$ GROWTH % CAGR 

SQ.M/YR SQ.M/YR SQ.FT/YR 5YR 1YR 

Copenhagen 17,000 2,285 283 1.2 6.3 

Aarhus 4,750 638 79 -1.0 0.0 

Odense 3,600 484 60 -2.1 -2.7 






Copenhagen 5.00 5.00 4.50 6.00 3.00 

Aarhus 5.25 5.25 5.00 6.50 4.25 

Odense 5.75 5.75 5.50 7.50 4.50 





Denmark 6.00 6.00 6.00 6.00 4.25 






8.00% 

7.00% 

6.00% 

5.00% 

4.00% 

3.00% 




10.0% 

-5.0% 

-10.0% 









5.0% 

0.0% 


MARKETBEAT 


FINLAND 


OVERVIEW 

According to preliminary data from 

Statistics Finland, GDP grew by 1.4% yearon-year 

in the fourth quarter of 2011 and 

by 2.9% over the year as a whole, 

accompanied by a 1.4% increase in 

households’ real incomes. The consumer confidence indicator 

increased sharply in February and held firm in March after a year 

of decline, although the indicator is below both the long-term 

average and the level recorded in March 2011. Retail sales 

volumes (excluding motor vehicles and motorcycles) grew 5.4% 

in February, 3.6% in January and 1.2% in December; sales have 

been on an upward trajectory since early 2010. 


Demand for high-quality retail space remains strong, with interest 

focused on Helsinki CBD. However, occupier activity in the 

capital is constrained by very low availability on the high streets, 

although supply in central Helsinki is expected to improve slightly 

later this year with the completion of the mixed-use City-Center 

project. 

Across Finland, there is more than 200,000 sq.m of new shopping 

centre space scheduled for completion in 2012/13, most of it in 

the South of Finland, although provision is also expected to 

improve in cities including Kuopio and Oulu. The extension and 

refurbishment of the Itis shopping centre on the outskirts of 

Helsinki (formerly known as Itäkeskus) has recently started 

construction and is scheduled for completion in 2014. It has been 

reported that the owner, Wereldhave Finland, is involved in 

negotiations with several international retailers seeking to enter 

Finland. 


Retail investment volume totalled €103 mn in the first quarter, 

compared with €143 mn in the previous quarter and €53 mn in 

Q1 2011. High street and shopping centre yields held firm over 

the quarter, with the exception of high street yields in Turku, 

which moved in by 25 bps; retail warehouse yields moved out by 

25-50 bps. While there is a high level of interest for core 

properties, activity is constrained by a lack of supply. 

OUTLOOK 

Whilst economic growth is expected to slow in 2012, sales and 

demand for prime space should remain healthy, with interest 

focused on Helsinki CBD. Prime rents in the capital are 

supported by limited availability, and the new shopping centres 

coming onto the market in and around Helsinki should be 

absorbed quickly. 






Prime Rents: Generally stable, although growth is possible 

on the top high streets. 

Prime Yields: Should remain stable. 

Supply: Slight increase in Helsinki; elsewhere, several 

shopping centres in the pipeline for 2012/13 

Demand: Demand for prime high street and shopping 

centre space will remain healthy, but selective. 




Helsinki 160 1,920 238 5.1 0.0 

Turku 60 720 89 -3.0 0.0 

Tampere 82 984 122 1.8 0.0 






Helsinki 5.00 5.00 5.00 6.50 5.00 

Turku 6.00 6.25 6.25 8.75 6.00 

Tampere 6.25 6.25 6.25 8.75 6.20 





Finland 5.00 5.00 5.00 6.25 4.30 






8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




15.0% 

10.0% 

5.0% 

0.0% 

-5.0% 

-10.0% 

-15.0% 

AVERAGE PRIME YIELDS (left) RENTAL GROWTH (right) 









MARKETBEAT 


FRANCE 


OVERVIEW 

According to the National Institute of 

Statistics GDP grew by 1.7% in 2011, with 

Q4 providing 0.2% growth. The 

unemployment rate rose slightly in Q4 to 

9.4% up from 9.3% the previous quarter. 

An increase in wages recorded in Q4 was mirrored by a similar 

rise in consumption prices keeping purchasing power relatively 

flat with a household disposable income (after inflation) recorded 

at just +0.1%. 


Demand remains strong for prime retail locations in Paris and 

other major urban areas, underpinned by strong tourist numbers 

providing a buoyant retail market - particularly for luxury 

retailers. In addition there have been a number of international 

and European newcomers to the market and recently established 

retailers have continued to expand. Prime high street remains 

the most competitive market, with short supply and high demand 

from luxury and international retailers contributing to a sharp 

upward pressure on rents. This demand is not replicated in 

medium sized shopping centres, where supply remains high. 

Prime retail parks have continued to be resilient providing some 

retailers with cheaper occupancy costs in locations that match 

their strategy. 

Prime high street rents in Paris have risen an average of 18% 

year-on-year with a 10% rise recorded in prime high streets in 

other major urban centres. Retail warehousing rents have been 

largely stable with few exceptions. Prime shopping centre rents 

remained stable. 


Retail investment reached the highest levels since Q3 2007 in Q4 

2011 (€1.7 bn), however the investment market has now 

returned to a much more subdued level with just €189 mn 

invested in Q1 2012, down 66% on Q1 2011. Investor appetite 

for retail high street locations and prime shopping centres retail 

has not waned but limited prime opportunities has kept 

investment volumes low. 

OUTLOOK 

Overall the climate is sluggish with unemployment levels not 

improving and uncertainty surrounding the outcome of the 

upcoming elections. It is unlikely that the investment market will 

perform as strongly as it did in 2011, with certain fiscal 

advantages that stimulated the market at the end of 2011 no 

longer applying. However, purchase agreement activity suggests 

the next quarter will see retail investment volumes rising higher 

than those recorded in Q1. 






Prime Rents: Prime rents are expected to remain stable or 

increasing. Growing distinction between prime 

and secondary. 

Prime Yields: Yields stabilisation anticipated. 

Supply: Stable pipeline but AAA supply remains scarce. 

Demand: Apart from prime locations demand will wane. 


HIGH STREET SHOPS Zone A € € US$ GROWTH % CAGR 


Paris 13,000 9,573 1184 6.5 30.0 

Lyon 2,200 1,620 200 4.1 10.0 

Marseille 2,000 1,473 182 4.6 11.1 

Bordeaux 2,200 1,620 200 6.6 10.0 

Strasbourg 2,000 1,473 182 n/a 0.0 

Lille 2,200 1,620 200 4.1 10.0 

Toulouse 2,200 1,620 200 6.6 10.0 

Nice 2,200 1,620 200 6.6 10.0 

RETAIL PARKS € US$ GROWTH % CAGR 


Paris Region 180 22.3 -1.1 0.0 

SHOPPING CENTRES € US$ GROWTH % CAGR 


Paris Region 2,000 247 2.1 0.0 






Paris 4.50 4.50 4.50 6.50 4.00 

Lyon 5.25 5.25 5.25 6.75 4.75 

Marseille 5.25 5.25 5.50 6.75 4.75 

Bordeaux 5.25 5.25 5.50 7.00 4.75 

Strasbourg 5.25 5.25 5.50 6.50 5.25 

Lille 5.25 5.25 5.50 7.75 4.75 

Toulouse 5.75 5.75 5.75 7.75 4.75 

Nice 5.75 5.75 5.75 7.00 4.75 

RETAIL PARKS 




Paris Region 6.00 5.75 6.00 8.25 5.00 





Paris Region 5.00 4.75 4.75 5.75 4.00 















MARKETBEAT 


GERMANY 


OVERVIEW 

According to the Federal Statistical Office 

(Destatis), growth slowed in Q4 2011, with 

GDP expanding by 1.5% y/y. Over the year 

as a whole, GDP grew by 3.0%. Consumer 

confidence remains relatively strong, with 

the willingness to buy indicator at a high level in spite of rising 

fuel and energy costs and declining income expectations. Retail 

sales volume (excluding motor vehicles) increased by 2.1% y/y in 

February, 1.9% in January and 1.3% in December. 


Several major international retailers are in expansion mode, and 

there is considerable interest for prime pitches in the Top Seven 

cities (including Cologne and Stuttgart). Rents appear to have 

stabilised, remaining unchanged across all sub-sectors over the 

quarter after experiencing upward pressure last year. On an 

annual basis, prime shopping centre rents have increased by 

around 5%, while on the high streets, values have gone up by as 

much as 28% in the most sought-after locations. 

Recent completions in the shopping centre segment include 

Boulevard Berlin, which opened on 4 April with a reported 

occupancy rate of nearly 90%. Provision in the capital will be 

boosted further in 2013 upon completion of Bikini Berlin and the 

mixed-use Leipziger Platz scheme; while in Frankfurt the 

completion of Skyline Plaza will improve availability. 


Retail properties continue to enjoy very strong popularity among 

real estate investors. A recent survey conducted by the Hahn 

Group shows an increase in risk tolerance relative to 2011: 29% 

of respondents favoured value-added properties (compared to 

17% last year). Approximately €1.5 bn. of retail assets were 

transacted over the quarter, accounting for 27.9% of all 

commercial property investment volumes. As product in the 

sought-after prime segment remains scarce and only a limited 

number of deals were closed in early 2012, the investment 

volume was noticeably lower than in Q1 2011 (€3.1 bn). 

Nevertheless, the German retail investment figure accounts for 

nearly a quarter of the Q1 European total. Prime yields were 

stable over the quarter across most of the locations surveyed. 

OUTLOOK 

Whilst economic growth is expected to slow in 2012, the 

outlook for the retail market is positive. Germany is a popular 

expansion target, and occupier demand should remain strong. 

While there are a number of projects in the pipeline, 

development activity on the whole remains subdued, and limited 

availability should support rents going forward. 






Prime Rents: Generally stable, although moderate growth is 

possible on the top high streets. 

Prime Yields: Stable, although further compression cannot 

be ruled out. 

Supply: Limited overall, but should improve slightly in 

Berlin and Frankfurt. 

Demand: Strong, with a number of major players 

planning expansion. 




Berlin 280 3,360 416 7.0 27.3 

Frankfurt 290 3,480 431 5.2 7.4 

Hamburg 290 3,480 431 n/a n/a 

Munich 350 4,200 520 6.1 12.9 

Dusseldorf 260 3,120 386 5.4 13.0 

Stuttgart 260 3,120 386 4.4 15.6 

Cologne 280 3,360 416 6.4 27.3 

Leipzig 130 1,560 193 2.5 13.0 

Dresden 115 1,380 171 2.8 27.8 



Frankfurt 15.00 180 22.3 1.4 1.7 

Munich 16.00 192 23.8 1.3 1.6 






Berlin 4.70 4.70 4.70 5.25 4.60 

Frankfurt 4.50 4.50 4.50 5.00 4.45 

Hamburg 4.40 4.40 n/a 4.40 4.40 

Munich 4.10 4.10 4.10 5.00 3.85 

Dusseldorf 4.45 4.45 4.55 5.00 4.45 

Stuttgart 4.75 4.75 4.75 5.00 4.60 

Cologne 4.45 4.45 4.50 5.00 4.40 

Leipzig 5.60 5.60 5.65 6.50 5.25 

Dresden 6.10 6.00 6.30 6.50 5.50 

RETAIL PARKS 




Frankfurt 6.40 6.40 6.65 7.60 6.25 

Munich 6.40 6.40 6.65 7.60 6.25 





Germany 4.80 4.80 5.00 5.75 4.80 















MARKETBEAT 


GREECE 


OVERVIEW 

According to provisional data from the 

Greek statistical service, GDP fell by 7.5% 

year-on-year in the fourth quarter of 2011. 

Over the year as a whole, the economy 

contracted by 6.8%, with unemployment 

climbing to 20.7%. Retail sales volume (excluding automotive fuel) 

decreased by 10.2% year-on-year in January, 10.0% in December 

and 6.6% in November. A particularly sharp contraction was 

recorded in the clothing and footwear segment, with sales 

declining by 19.9% year-on-year in January, while food, beverages 

and tobacco recorded a fall of 18.1%. 


With footfall and turnover in decline, activity has continued to 

slow. Numerous store closures have been reported on the 

country’s high streets, with vacancy increasing even in the most 

traditionally sought-after areas. In March, the National 

Confederation of Hellenic Commerce (ESEE) estimated vacancy 

in central Athens at around 29.6%, up from 23.4% in March 2011. 

Demand is driven by cafes and food operators, with the majority 

of occupiers focused on renegotiating their leases. Development 

activity has come to a standstill, with no projects scheduled for 

completion in 2012 or 2013. 

Rents came under pressure over the quarter across all subsectors, 

declining by 4-6% on all of the high streets surveyed, and 

6-7% in prime shopping centres in Athens and Thessaloniki. On 

an annual basis, most prime high street rents have decreased by 

around 10%, falling by nearly 18% in Kifisia submarket. Shopping 

centre rents have fared better due to limited provision, holding 

firm throughout 2011. 


The uncertain economic climate, limited availability of financing 

and an ever-changing tax environment continue to deter 

investors, and activity remains subdued. Retail transaction 

volumes are estimated to total approximately €2 mn in the first 

quarter, compared with €10 mn in both the previous quarter and 

Q1 2011. Prime high street yields moved out by 25 bps over the 

quarter, while shopping centre and retail park yields moved out 

by 10 bps. 

OUTLOOK 

The economy is expected to contract further in 2012, and sales 

are likely to suffer against a backdrop of austerity and rising 

unemployment. Occupier and investor demand will be subdued 

for the foreseeable future and rents will come under further 

downward pressure. 






Prime Rents: Further falls expected as supply continues to 

outstrip demand. 

Prime Yields: Coming under further upward pressure over 

the coming months. 

Supply: No new projects in the pipeline, but vacancy 

increasing even in prime locations. 

Demand: Retailers extremely cautious, with very few 

planning to expand. 




Athens (Kolonaki-Tsakalof) 105 1,260 156 -10.2 -8.7 

Athens (Ermou) 170 2,040 252 -8.5 -12.8 

Athens (Glyfada-Metaxa) 110 1,320 163 -9.4 -8.3 

Athens (Kifisia-Kolokotroni) 110 1,320 163 -9.4 -8.3 

Athens (Piraeus-Sotiros) 62 744 92 -9.1 -11.4 

Thessaloniki (Tsimiski) 115 1,380 171 -0.8 -11.5 






Athens (Kolonaki-Tsakalof) 7.85 7.60 7.35 7.85 5.50 

Athens (Ermou) 7.75 7.50 7.45 7.75 5.00 

Athens (Glyfada-Metaxa)* 

Athens (Kifisia- 

8.15 7.90 7.40 8.15 5.50 

Kolokotroni)* 8.15 7.90 7.40 8.15 5.50 

Athens (Piraeus-Sotiros)* 8.25 8.00 7.80 8.25 6.00 

Thessaloniki (Tsimiski) 8.25 8.00 7.40 8.25 5.75 





Greece 7.85 7.75 7.50 8.00 6.00 

NOTE: * 6 year record 






9.00% 

8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




15.0% 

10.0% 

5.0% 

0.0% 

-5.0% 

-10.0% 

-15.0% 










MARKETBEAT 


HUNGARY 


OVERVIEW 

According to preliminary estimates from 

the Central Statistical Office, GDP 

increased by 1.4% year-on-year in the 

fourth quarter of 2011 and by 1.7% over 

the year as a whole. The GKI-Erste 

consumer confidence indicator increased in February and March 

after declining throughout 2011, although confidence remains low 

against a backdrop of austerity and economic uncertainty. Retail 

sales volume grew 0.6% year-on-year in January, 1.6% in 

December and 1.1% in November. 


Sales were stagnant throughout 2011, stabilising after several 

years of decline, and the majority of occupiers remain cautious. 

However, several major international players are in expansion 

mode, taking advantage of attractive commercial terms to open 

stores, with a handful of new entries reported in recent months. 

Rents came under downward pressure in selected shopping 

centres in Budapest, partly due to competition from KÖKI 

Terminal, which opened last October. Elsewhere, rents were 

unchanged. 

Development activity has come to a virtual standstill: while there 

are several shopping centres at the development stage, 

completion dates are uncertain. On 1 January, a ban on 

constructing commercial facilities larger than 300 sq.m came into 

force; the “plaza stop” legislation will be in place until 31 

December 2014. However, exemptions have been granted to 

several schemes, all of them under 5,000 sq.m. 


The scarce availability of debt and investment-grade product 

remains a barrier for investors, and no retail transactions were 

recorded in the first quarter. Prime yields held firm across all 

sub-sectors. 

OUTLOOK 

The economy is expected to enter into recession this year, and a 

rebound in consumer spending is unlikely in the foreseeable 

future. However, the top high streets of Budapest will continue 

to attract interest from global brands. As a consequence of the 

“plaza stop” legislation, no new shopping centres are scheduled 

for completion in 2013/14, and existing vacant space in prime 

locations should gradually be absorbed as selected retailers 

continue to expand. The focus of development activity will shift 

towards the refurbishment of existing schemes, as established 

centres modernise in order to maintain their competitiveness and 

accommodate newcomers. 






Prime Rents: Stable, supported by relatively healthy (albeit 

selective) demand. 

Prime Yields: Expected to hold firm. 

Supply: Development activity has come to a standstill. 

Demand: Several international retailers active in the 

market, interest focused on prime locations. 




Budapest (Váci utca) 90 1,080 134 -5.6 -10.0 

Budapest (Andrássy út) 40 480 59 -7.8 -20.0 



Budapest 8.00 96 11.9 -2.3 0.0 

Budaörs 8.00 96 11.9 -2.3 0.0 






Budapest (Váci utca) 6.50 6.50 7.00 10.00 5.50 

Budapest (Andrássy út) 6.50 6.50 7.25 11.50 6.00 

RETAIL PARKS 




Budapest 7.75 7.75 8.00 10.75 6.25 

Budaörs 7.75 7.75 8.00 10.50 6.00 





Hungary 6.50 6.50 6.75 8.00 5.00 






9.00% 

8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




20.0% 

10.0% 

-10.0% 

-20.0% 









0.0% 


MARKETBEAT 


IRELAND 


OVERVIEW 

Following three successive annual falls in 

GDP, initial figures from the Central 

Statistical Office suggest an expansion in 

GDP by 0.7% for the year in 2011. 

Consumer confidence remained cautious in 

the first quarter of 2012, as reduced spending and personal debt 

consolidation was reflected in a recorded 2.1% decrease in retail 

sales volume (excluding motor trades) year-on-year in February. 


Despite the difficult trading conditions, many retailers retain a 

positive outlook for prime retail locations, particularly in Dublin 

city centre and in strong suburban shopping centres. Flexible 

leasing arrangements and attractive rental terms have created an 

increased interest from overseas retailers in prime locations. 

However, no new lettings were achieved on Grafton Street or 

Henry Street in Q1 2012. 

Outside of Dublin it is the discount brands that continue to 

expand most aggressively. The pharmaceutical sector is also one 

to watch, with existing operators seeking to expand and new 

European market entrants expected. 

Prime high street rents continued to come under downward 

pressure over the quarter. Dublin fell by almost 7%, whereas 

Galway and Limerick both saw falls of 17%. In Cork and 

Waterford, the declines were more moderate as values edged 

down by 4% and 2.5%, respectively. Prime shopping centre and 

retail warehouse rents were unchanged. 


While no retail investment deals were completed in Q1, there 

were a significant number of new retail investments opportunities 

brought to the market during this period. It is anticipated that 

this increased choice will provide investors with the potential to 

secure income yields that will outperform most other asset 

classes. Prime yields in the locations surveyed moved out by 10- 

20 bps over the quarter. 

OUTLOOK 

Although trading conditions remain difficult the latest consumer 

sentiment index provided by the Economic and Social Research 

Institute (ESRI) is increasing. There is less concern about the 

employment market and a perception of better stability within 

the eurozone. The increase in enquiries from retailers in recent 

months could translate into leasing activity in the remainder of 

2012, but landlords have to remain flexible with lease structures 

to attract retailers. 






Prime Rents: Further falls expected. Landlords increasingly 

flexible. 

Prime Yields: Moderate upward pressure is anticipated. 

Supply: Decreasing for prime locations. Development 

levels subdued. 

Demand: Overall demand should remain stable, with 

interest focused on prime locations. 


HIGH STREET SHOPS Zone A € € US$ GROWTH % CAGR 


Dublin (Grafton Street) 5,000 2,810 348 -12.0 -7.4 

Dublin (Henry Street) 3,500 1,775 243 -10.2 -12.5 

Cork 2,300 1,166 144 -10.9 -11.5 

Limerick 500 254 31 -28.1 -37.5 

Waterford 780 396 49 -17.2 -8.2 

Galway 1,250 634 78 -16.1 -28.6 



Dublin 150 18.6 -14.1 0.0 






Dublin (Grafton Street) 6.90 6.85 6.45 6.90 2.85 

Dublin (Henry Street) 6.90 6.85 6.45 6.90 2.75 

Cork 8.00 7.85 7.65 8.00 3.70 

Limerick 8.50 8.15 7.85 8.50 4.00 

Waterford 8.50 8.25 7.85 8.50 4.00 

Galway 8.15 8.00 7.75 8.15 3.75 

RETAIL PARKS 




Dublin 8.10 8.00 7.85 8.10 4.25 





Ireland 8.00 8.00 7.65 8.00 4.25 















MARKETBEAT 


ITALY 


OVERVIEW 

After a significant fall of 3.7% in December, 

the retail sales decline recorded in January 

2012 was milder as sales eased back by just 

0.8% on the same month last year, 

according to the Italian National Institute of 

Statistics (ISTAT). The deceleration came on the back of stronger 

food sales, which recorded very marginal growth over the 

quarter. The difference between large chains and smaller retailers 

was marked across all segments, with large operators consistently 

outperforming smaller retailers. 


Occupier demand remains focused on prime locations, with the 

high street interest centred on key cities, with smaller towns 

increasingly under pressure. Tenant demand is particularly 

evident in prime locations where supply continues to be limited, 

while secondary locations with high availability lag behind. In the 

shopping centre market, lease renewals with lower rents have 

been evident only in secondary centres. Retail parks generally 

offer a more efficient cost structure and less sub-sector 

competition compared with shopping centres, which however are 

able to attract more visitors and potential customers. On the 

supply side, new starts on development have slowed considerably 

across the sector. 


No significant single asset shopping centre deals have been 

registered in Q1. International players continue to seek 

opportunities to purchase established centres recognising their 

defensive qualities and risk diversification. The coming months 

may indicate if this asset class will see any material re-pricing due 

to the restricted amount of available finance. Based on present 

sentiment, rather than market evidence, prime yields for proven 

shopping centres have been held steady. 

OUTLOOK 

The gap between prime and secondary products is expected to 

widen further. Economic headwinds are expected to persist, with 

GDP forecast to contract and consumer spending significantly 

dampened by austerity measures and increased unemployment. 

While values for prime retail assets cannot be immune from this 

general scenario, they are likely to be one of the most resilient 

asset classes. 






Prime Rents: Prime values expected to hold. 

Prime Yields: Mostly stable in prime locations, but softening 

in secondary. 

Supply: Limited financing continues to hamper 

development, but availability is high in 

secondary pitches. 

Demand: Retailers to remain cautious. 




Milan 7,000 866 3.5 2.9 

Rome 6,800 841 4.7 1.5 

Bologna 2,200 272 n/a 4.8 

Naples 1,900 235 0.0 0.0 

Turin 1,700 210 2.5 0.0 



Milan 220 27.2 -3.3 0.0 

Rome 200 24.7 -5.1 0.0 

SHOPPING CENTRES € US$ GROWTH % CAGR 


Milan 800 99.0 0.5 0.0 

Rome 800 99.0 1.3 0.0 






Milan 5.00 5.00 5.00 5.00 4.00 

Rome 5.00 5.00 5.00 5.00 4.25 

Bologna 5.75 5.75 5.50 6.50 5.00 

Naples 6.00 6.00 6.00 7.00 5.25 

Turin 5.50 5.50 5.50 6.75 5.00 

RETAIL PARKS 




Milan 7.00 7.00 7.00 7.00 6.00 

Rome 7.00 7.00 7.00 7.00 6.00 





Milan 6.25 6.25 6.25 6.50 5.00 

Rome 6.25 6.25 6.25 6.50 5.00 















MARKETBEAT 


THE NETHERLANDS 


OVERVIEW 

According to provisional data from the 

Central Bureau of Statistics (CBS), retail 

sales declined by 1.7% in both February and 

January on the same months last year. The 

growth rate has now been negative since 

May 2011, highlighting ongoing pressures on retailers. The 

weakness of the non-food segment remains the catalyst behind 

the subdued retail turnovers, with the 4.8% fall in sales 

underlined by another sharp decline in the sale of household 

equipment, which contracted by 7.7%. On the other hand, shops 

selling foods fared much better, with supermarkets recording a 

4.0% increase in sales. 


Occupier demand for retail space across the country is waning, 

although for prime locations interest has held relatively firm in 

the first quarter of 2012. Secondary locations are under 

increasing pressure as sales decline and vacancy increases. Market 

activity is currently driven by international retailers focusing on 

major cities, while domestic retailer activity is increasingly 

subdued. Indeed, one of the key openings of Q1 was the first 

Apple flagship store on the Leidseplein in Amsterdam. 

Availability of retail units in prime locations across major cities 

remains low, while secondary cities on the other hand are 

experiencing an increase in supply in both prime and secondary 

pitches. Availability in cities with a non-dominant catchment area 

is also generally above the national average, and these locations 

are expected to see further increases on the back of limited 

occupier activity. 


The investment market was relatively subdued in the first quarter 

of 2012, with just over €145 million worth of assets traded. 

However, the slowdown in activity was primarily caused by a 

dearth of large transactions. Indeed, the biggest deal recorded 

was the €23 million portfolio sale of several high street assets. In 

total, there were just six transactions over €10 million in the first 

three months of the year. Prime yields remained largely 

unchanged over the quarter. 

OUTLOOK 

Looking ahead, the retail market is expected to see a 

performance disparity between major and secondary cities in 

2012. While the former will remain fairly stable compared with 

previous years, the latter cities will see an increasing number of 

vacant units. Furthermore, investment activity is expected to 

slow, with investors principally interested in prime products with 

a dominant catchment and a strong tenant mix. 






Prime Rents: Prime rents in major cities are expected to 

either hold firm or increase slightly over 2012. 

Prime Yields: Values to remain stable. 

Supply: Supply anticipated to increase in secondary 

locations, but stay unchanged in prime pitches. 

Demand: Strong demand for prime locations; weak 

elsewhere. 




Amsterdam 2,800 346 8.1 14.3 

Rotterdam 1,800 223 3.7 0.0 

Den Haag 1,500 186 6.4 0.0 

Utrecht 1,600 198 4.2 0.0 

Maastricht 1,600 198 2.7 0.0 

Eindhoven 1,450 179 3.9 0.0 



Amsterdam 135 16.7 -1.4 0.0 






Amsterdam 4.70 4.70 4.70 5.50 4.00 

Rotterdam 5.00 5.00 5.00 5.70 4.75 

Den Haag 5.10 5.10 5.10 6.00 4.75 

Utrecht 5.10 5.10 5.10 6.00 4.75 

Maastricht 5.10 5.10 5.10 5.90 4.75 

Eindhoven 5.10 5.10 5.10 6.30 4.75 

RETAIL PARKS 




Amsterdam 7.60 7.60 7.60 7.75 6.00 






8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




10.0% 

-5.0% 

-10.0% 









5.0% 

0.0% 


MARKETBEAT 


NORWAY 


OVERVIEW 

Mainland GDP grew by 2.7% year-on-year 

in the fourth quarter of 2011 and by 2.6% 

over the year as a whole, accompanied by a 

4% increase in households’ real disposable 

incomes. Retail sales volume (excluding 

motor vehicles, motorcycles and automotive fuel) increased by 

7.4% year-on-year in February, 6.7% in January and 2.6% in 

December. 


Demand has continued to improve, with strong interest from 

domestic and international retailers alike. Low vacancy is 

reported for prime high streets and shopping centres across the 

country, with full occupancy on the top high streets of Oslo. 

Prime rents came under upward pressure across all sub-sectors, 

rising by around 5% in most of the locations surveyed. On Karl 

Johan Gate in Oslo, rents grew 12.5% over the quarter and are 

now at record levels. Rents in the Strommen Storsenter and 

Aker Brygge shopping centres also increased considerably, 

reaching record levels, partly due to major upgrades to both 

schemes. Strommen Storsenter is being extended by 35,000 sq.m, 

with completion scheduled for October, while the refurbishment 

of Aker Brygge is scheduled for completion in 2015. 

Per capita shopping centre provision in Norway is the highest in 

Europe, with nearly 700 sq.m per 1,000 inhabitants, and in recent 

years the focus of development activity has shifted towards the 

extension and refurbishment of existing schemes. Indeed, 

extensions make up more than 60% of the development pipeline 

for 2012/13. This includes the third and fourth phases of 

Sørlandssenteret in Kristiansand S; upon completion, 

Sørlandssenteret will be the largest scheme in the country. 


Retail transaction volume in the first quarter totalled €189 mn, as 

compared with €256 mn in the previous quarter and €117 mn in 

Q1 2011. The acquisition of a portfolio of four shopping centres 

by NIAM accounted for most of the total. Yields were stable 

over the quarter across all sub-sectors; on an annual basis yields 

have moved in by 50 bps. 

OUTLOOK 

The economy is expected to expand further in 2012, with low 

export growth likely to be offset by increased domestic demand. 

The outlook for the retail market is positive, with Statistics 

Norway predicting continued growth in household consumption 

in 2012. Demand for new space will remain strong, and the new 

supply coming onto the market should be absorbed quickly. 






Prime Rents: Supported by limited availability; further 

growth likely in the top locations. 


Supply: Several projects under construction; 

extensions account for most of the pipeline. 

Demand: Strong demand for prime retail space across 

the country. 


HIGH STREET SHOPS Nkr € US$ GROWTH % CAGR 


Oslo (Karl Johan Gate) 18,000 2,370 293 2.4 12.5 

Oslo (Bogstadveien Street) 11,500 1,514 187 -2.4 4.5 






Oslo (Karl Johan Gate) 5.25 5.25 5.75 7.80 4.50 

Oslo (Bogstadveien Street) 5.50 5.50 6.00 7.80 4.50 





Norway 5.50 5.50 6.00 7.50 5.25 






8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




10.0% 

-5.0% 

-10.0% 









5.0% 

0.0% 


MARKETBEAT 


POLAND 


OVERVIEW 

According to preliminary estimates from 

the Central Statistical Office, GDP grew 

4.3% in 2011, with individual consumption 

expenditure rising 3.1%. Despite declining 

consumer confidence, retail sales have 

continued to grow: sales volume increased by 8.9% year-on-year 

in February, 9.9% in January and 4.2% in December. Furniture, 

radio, TV and household appliances recorded year-on-year 

growth of nearly 20% in both January and February. 


Demand for prime retail space remains healthy, with interest 

focused mainly on established locations. Activity is driven by large 

international and domestic brands: many major players are 

actively expanding and several new entrants are expected this 

year. Smaller retailers, on the other hand, are far more cautious 

and selective in their expansion plans, considering only prime 

locations with competitive rents and incentive packages. There is 

a healthy shopping centre pipeline in the large regional cities, 

which should be absorbed relatively quickly – most of the new 

schemes completed in 2011 opened 80-90% let. 

Prime high street rents were stable over the quarter, while 

shopping centre rents increased by around 5% in most of the 

locations surveyed. Secondary shopping centre rents, on the 

other hand, are under downward pressure, with landlords 

offering favourable lease terms and more generous incentive 

packages to attract and retain tenants. Retail warehouse rents in 

smaller cities also decreased by around 7% quarter-on-quarter 

due to limited interest from large-format retailers. 


Retail investment volumes totalled €221 mn in Q1. The largest 

single-property transaction recorded over the quarter was the 

acquisition of the Alfa Olsztyn shopping centre by Rockspring for 

€84 mn. Shopping centre yields moved in by 25 bps in many of 

the cities surveyed, but held firm in the capital. Prime high street 

yields were unchanged in all of the locations surveyed. 

OUTLOOK 

Despite forecasts of slowdown, the Polish economy should 

continue to outperform most of Europe in 2012. Poland is an 

attractive expansion target and demand for new space will remain 

healthy, albeit selective. Prime rents will be supported by limited 

availability, possibly coming under upward pressure in the most 

sought-after locations. The gap between prime and secondary 

locations will widen, with the latter attracting little interest. 






Prime Rents: Generally stable, with moderate growth 

possible in the most sought-after locations. 

Prime Yields: May come under further downward pressure, 

with a number of schemes under negotiation. 

Supply: Healthy pipeline in the large regional cities; 

limited in the capital. 

Demand: Strong interest from large international 

players, weak from smaller tenants. 




Warsaw 85.0 1,020 126.2 4.0 0.0 

Krakow 79.0 948 117.3 5.7 1.3 

Katowice 59.0 708 87.6 5.6 1.7 

Poznan 58.0 696 86.1 6.2 0.0 

Lodz 28.0 336 41.6 -1.4 -3.4 

Wroclaw 46.0 552 68.3 1.4 -4.2 






Warsaw 7.75 7.75 8.25 12.50 7.25 

Krakow 8.00 8.00 8.50 14.00 7.75 

Katowice 8.00 8.00 9.00 14.00 8.00 

Poznan 8.00 8.00 9.00 13.00 8.00 

Lodz 8.00 8.00 9.00 14.00 8.00 

Wroclaw 8.00 8.00 9.00 14.00 8.00 

STAND ALONE RETAIL WAREHOUSING CURRENT LAST LAST 10 YEAR 

UNITS (FIGURES ARE GROSS) 


Poland 8.00 8.00 8.00 13.00 6.25 





Poland 6.00 6.00 6.50 9.50 5.50 






10.00% 

9.00% 

8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




25.0% 

15.0% 

-5.0% 

-15.0% 

-25.0% 









5.0% 


MARKETBEAT 


PORTUGAL 


OVERVIEW 

According to Statistics Portugal, GDP 

contracted by 2.8% year-on-year in the 

fourth quarter and 1.6% for the whole 

2011. Retail sales continue to decline 

against a backdrop of austerity measures, 

with volumes (excluding automotive fuel) decreasing 8.5% yearon-year 

in February. The fall in consumption is expected to 

continue, preserving the downward trajectory in retail sales in 

the short term. 


Occupier activity has continued to focus on prime high streets in 

Q1. International retailers have targeted high street locations as 

part of their expansion plans, viewing the current market as an 

opportunity to obtain favourable property terms on any deals. 

Limited availability has allowed prime rents to remain relatively 

unchanged over the quarter across all sub-sectors. The pipeline 

of developments continues to adjust, 11 schemes are still 

scheduled for a 2014 completion, however, only 2 of these are 

under construction leaving a high level of uncertainty for the 

other schemes. There is a strong focus by some owners to 

refurbish existing schemes and optimise their tenant mix in order 

to keep them as competitive as possible. 


The continued decrease in consumer spending means many 

institutional investors remain wary of investing in this sector, 

however prime assets remain attractive. Investors’ main focus will 

be the prime high streets and the food sector, where sales have 

not been impacted as greatly as other segments. Prime yields 

have remained stable over the quarter. 

OUTLOOK 

Consumer confidence recovered slightly in the latter part of Q1, 

driven by Manufacturing, Industry and Trade. This development 

has halted the negative momentum observed since the end of 

2009, albeit still close to the minimum recorded level of January 

2012. A contraction in disposable household income will continue 

in 2012 and is expected to result in increased pressure on the 

retail sector. Retailers and landlords will need to innovate and 

optimise their offer in order to survive this market correction. 






Prime Rents: Prime locations will remain stable, supported 

by limited availability. 

Prime Yields: Expected to remain unchanged, but may soften 

due to weak demand 

Supply: The pipeline is adjusting but supply is expected 

to be low in the short term 

Demand: Stable for the most sought-after locations. 

Demand for secondary locations will fall. 




Lisbon (Chiado) 80 960 119 1.3 0.0 

Lisbon (Avenida Liberdade) 73 870 108 -0.7 0.0 



Portugal 9.00 108 13.4 -5.6 0.0 






Lisbon (Chiado)* 7.00 7.00 6.50 7.00 6.00 

Lisbon (Avenida Liberdade) 7.25 7.25 6.75 7.25 6.00 

RETAIL PARKS 




Portugal 10.00 10.00 8.25 10.00 5.75 





Portugal 7.75 7.75 6.75 7.75 5.00 







8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




10.0% 

-5.0% 

-10.0% 









5.0% 

0.0% 


MARKETBEAT 


ROMANIA 


OVERVIEW 

According to National Institute of Statistics 

(INS), the economy contracted by 0.2% in 

Q4 2011 quarter-on-quarter, but expanded 

1.9% on the same period in 2010. 

Nevertheless, consumer spending grew and 

retail sales (excluding motor vehicles and motor cycles) 

continued on their upward trajectory, rising by an adjusted 3.0% 

in February year-on-year, the fifth consecutive positive month. 

The latest results were driven by impressive food, beverages and 

tobacco sales, which rose by 7.2%. In contrast, non-food and fuel 

sales fell by 0.9% and 0.1% respectively. 


Occupier demand continues to be supported by international 

(primarily European) fashion brands and grocers, keen to take 

advantage of a tenant’s market. Newcomers are becoming 

evident through the signing of a number of pre-lease contracts. 

Elsewhere, strong retailers are again evaluating expansion 

opportunities; while struggling operators have shown signs of 

recovery. 

In 2011, there were 215,234 sq.m of shopping centre space 

delivered onto the market, representing a 16.2% year-on-year 

increase. The new stock consisted of six new schemes and six 

extensions, with the main openings including: Maritimo Shopping 

Center in Constanta, Electroputere Parc in Craiova and Galleria 

in Arad. No new schemes were opened in the first quarter of 

2012, with the second phase (3,564 sq.m) of a small retail park 

developed by InterCora in Campina the only development of 

note. 


Investment market activity came to a virtual standstill in Q1 2012, 

with no retail acquisitions completed. 2011 was overall a subdued 

year, with a total of €43 million worth of retail assets traded. 

Notwithstanding limited activity, prime yields hardened across 

the sector over the quarter as values declined by 25 bps points 

for retail warehouses and by 25-50 bps for shopping centres. 

With the exception of Brasov – where prime values hardened by 

25 bps – high streets values remained largely unchanged. 

OUTLOOK 

Economic activity in 2012 is forecast to grow modestly; 

nevertheless, the occupier and investment market are expected 

to perform well as players take advantage of attractive pricing and 

a looser monetary policy. Although prime values will remain 

generally unchanged, a select number of prime shopping centres 

and high street locations may harden and fall respectively as the 

year progresses. 






Prime Rents: Generally stable, but prime shopping centre 

rents may see increases in 2012. 

Prime Yields: Yields to remain largely unchanged, although 

high streets values may harden. 

Supply: A steady stream of new projects added to the 

shopping centre pipeline. 

Demand: Demand to be supported by improved trading 

conditions. 




Bucharest (Magheru 

Boulevard) 60.0 720 89.1 -11.4 -7.7 

Bucharest (Calea Victoriei) 55.0 660 81.7 -11.3 0.0 

Brasov 40.0 480 59.4 0.0 33.3 

Timisoara 35.0 420 52.0 -2.6 0.0 

Constanta 25.0 300 37.1 -9.0 -7.4 

Cluj Napoca* 35.0 420 52.0 -10.2 0.0 






Bucharest (Magheru 

Boulevard) 9.25 9.25 9.25 16.00 7.50 

Bucharest (Calea Victoriei) 9.25 9.25 9.25 15.00 7.50 

Brasov 9.75 10.00 10.00 14.00 8.00 

Timisoara 10.00 10.00 10.00 14.00 8.00 

Constanta 10.00 10.00 10.00 14.00 8.00 

Cluj Napoca* 10.00 10.00 10.00 12.00 8.00 





Romania 


8.50 9.00 9.00 9.00 6.25 






11.50% 

10.00% 

8.50% 

7.00% 

5.50% 

4.00% 




35.0% 

17.5% 

-17.5% 

-35.0% 









0.0% 


MARKETBEAT 


RUSSIA 


OVERVIEW 

According to Rosstat, GDP grew 4.8% 

year-on-year in the fourth quarter of 2011 

and 4.3% over the year as a whole. In 

February, inflation slowed to a post-Soviet 

record of 3.7%, partly due to the 

government’s decision to delay the annual increases in utilities 

tariffs ahead of the presidential elections. Retail sales have 

continued to increase, with volumes rising by 7.7% year-on-year 

in February, 6.8% in January and 9.5% in December. 


Many retailers are actively expanding, with strong interest in the 

regions and several new entries expected in the coming months. 

Prime rents were stable for the third consecutive quarter across 

all sub-sectors. Due to restrictions on construction, development 

activity in Moscow has slowed considerably: no new projects 

have been announced in recent months, and only one new 

scheme was delivered over the quarter – the retail gallery within 

the Moskva hotel near Red Square. Activity in the capital has 

shifted towards the outskirts, with several projects under 

construction beyond the Third Transport Ring. Vacancy in highquality, 

established shopping centres in the capital is below 1%. In 

the regions, the pipeline is healthy; recent completions include 

KomsoMall in Volgograd and the third phase of Krasnaya 

Ploschad in Krasnodar. 


Retail investment volumes totalled €942 mn over the quarter, the 

second-highest quarterly figure on record after Q3 2007. Much of 

the total is accounted for by the acquisition of the Galeria 

shopping centre in St Petersburg by Morgan Stanley Real estate 

Fund VII for €836 mn, the largest transaction ever recorded on 

the Russian real estate market. Built in 2010, the 93,000 sq.m 

Galeria is the largest shopping centre in St Petersburg. Prime 

yields were unchanged over the quarter. 

OUTLOOK 

Going forward, demand for prime highs streets and shopping 

centres will remain strong, with many retailers in expansion 

mode. However, inflation is likely to surge in the summer when 

utility tariffs are increased, and sales growth could potentially 

slow in the second half. While rents appear to have stabilised 

after coming under upward pressure in late 2010 and early 2011, 

further growth is possible in Moscow, with vacancy close to zero 

in the most sought-after shopping centres and development at a 

virtual standstill. Morgan Stanley’s acquisition of Galeria is 

evidence of strong demand for prime retail assets in Russia’s 

regions, and a healthy level of investment activity is expected in 

the coming months. 






Prime Rents: Stable overall, with growth possible in top 

Moscow shopping centres. 


Supply: Healthy pipeline in the regions and in Moscow 

outskirts; shortage in central Moscow. 

Demand: Strong, with many retailers expanding, and 

growing interest in the regions. 


HIGH STREET SHOPS US$ € US$ GROWTH % CAGR 


Moscow (Tverskaya) 4,500 3,379 418 10.0 12.5 

Moscow (Novy Arbat) 2,500 1,877 232 2.6 0.0 

St Petersburg 2,500 1,877 232 35.4 25.0 






Moscow 9.25 9.25 9.50 13.00 8.50 






16.00% 

13.00% 

10.00% 

7.00% 

4.00% 




35.0% 

17.5% 

-17.5% 

-35.0% 









0.0% 


MARKETBEAT 


SERBIA 


OVERVIEW 

GDP increased by 1.6% in 2011, with 

growth slowing considerably in the second 

half and unemployment climbing to nearly 

24% in November. Retail sales have been 

on a downward trajectory since January 

2011. According to the latest figures from the Statistical Office of 

the Republic of Serbia, sales volume declined by 5.8% year-onyear 

in February and 3.7% in January; this follows declines of 15- 

20% in the preceding nine months. 


In light of this year’s disappointing sales figures, most occupiers 

remain cautious. Serbia was granted EU candidate status on 1 

March. While entry talks could take several years with no 

guarantee of admission, it is hoped that EU integration will bring 

significant economic benefits, as well as sending a positive signal 

to retailers, investors and developers. Indeed, Serbia is seen as 

having strong long-term potential, and selected retailers have 

continued taking advantage of challenging trading conditions to 

establish a presence in the country. 

Prime rents are supported by limited supply and held firm over 

the quarter. Availability of high-quality retail space in Belgrade is 

restricted to the main shopping area around Kneza Mihaila and 

handful of malls, most of them built in the past five years. No new 

shopping centres are scheduled for completion in the capital in 

2012/13, although there are several centres at the planning stage. 

Provision in Kragujevac increased by 22,000 sq.m in March with 

the opening of Kragujevac Plaza. It is reported that the shopping 

centre, which features leisure facilities including a multiplex 

cinema and bowling alley, was 92% let on opening. 


Investment activity remains subdued due to strict lending criteria 

and a continued shortage of quality stock. No major transactions 

were recorded over the quarter, and yields were unchanged 

across all sub-sectors. 

OUTLOOK 

Economic conditions remain highly challenging, and a recovery 

consumer sentiment is unlikely in 2012. However, the retail 

market is underdeveloped relative to other European countries, 

with significant long-term opportunities for retailers, developers 

and investors. With no new shopping centres under construction 

in Belgrade, prime rents should hold firm in the coming months. 

The retail park and factory outlet formats are growing rapidly, 

with several major schemes under construction around the 

country. Fashion Park Outlet Center Indjija, the first factory 

outlet centre outside of Belgrade, opened on 19 April. 






Prime Rents: Supported by limited availability; however 

landlords becoming increasingly flexible. 

Prime Yields: Expected to hold firm in the short term, 

although softening is possible. 

Supply: No new space in the capital. Growth of 

factory outlet and retail warehouse formats. 

Demand: Most retailers cautious, with some interest 

from international players. 




Belgrade (Kneza Mihaila) 92 1,100 136 -3.6 -8.3 






Belgrade (Kneza Mihaila) 10.50 10.50 10.50 11.00 9.50 






12.00% 

10.00% 

8.00% 

6.00% 

4.00% 




15.0% 

10.0% 

5.0% 

0.0% 

-5.0% 

-10.0% 

-15.0% 










MARKETBEAT 


SLOVAKIA 


OVERVIEW 

Although GDP in Q4 2011 grew by 0.9% 

quarter-on-quarter and 3.4% year-on-year, 

much of the expansion came as a result of 

stronger exports, with consumer spending 

actually declining by 0.4% on the same 

period in 2010. Nevertheless, annual retail sales growth in the 

county bounced back in Q1 2012 as sales rose by 1.5% in January 

and 2.0% in February. The latest figures were achieved through 

record turnover growth in recreational and cultural goods, and 

strong fuel sales. That said, it is worth noting that annual 

comparisons may be influenced by a relatively weak start to 2011, 

when VAT was raised to 20%. 


Retailers continue to expand only in good locations and for 

reasonable rents and the best conditions. Occupier demand 

remains weak, with tenants unwilling to expand while turnovers 

do not grow and vacant units become a visible aspect of the 

market. Prime rents remained largely unchanged over the 

quarter, with the sole exception of shopping centre values in 

Bratislava, which fell by 7.7% on the previous three months. 

On the supply side, availability is high allowing tenants greater 

choice when expanding. Central shopping centre (35,000 sq.m) is 

expected to open in seven months, while a number of other 

schemes across the country are also in the planning stage, 

potentially boosting future provision. 


There were no deals concluded in the investment market in Q1 

2012. This was in contrast to a very strong end to 2011 when 

€151 million worth of retail assets were traded and total trading 

volumes reached the highest figure in four years (€191), marking 

retail assets as the preferred real estate investment product. 

OUTLOOK 

Notwithstanding strong economic figures in 2011, Consensus 

forecasts for 2012 are considerably more restrained, with GDP 

expected to grow by 1.1% on last year. While exports will slow 

as a result of waning external demand, consumer spending is not 

expected to pick up the slack. Despite witnessing some marginal 

improvement in recent months, the consumer confidence index 

remains largely pessimistic and is unlikely to receive some respite 

in 2012 as it’s weighed down by austerity measures. Prime rents 

are expected to either remain stable or soften slightly over the 

course of the year. 






Prime Rents: Stable, although slight falls remain a possibility. 

Prime Yields: Anticipated to stay unchanged in the short 

term. 

Supply: Expected to benefit from the addition of 

shopping centre space in 2012/2013. 

Demand: Stable and centered on prime locations. 


HIGH STREET SHOPS € 

SQ.M/MTH 

€ 

SQ.M/YR 

US$ 

SQ.FT/YR 

GROWTH % CAGR 

5YR 1YR 

Bratislava 42 504 62 -9.2 0.0 




CURRENT 

QUARTER 

LAST 

QUARTER 









LAST 

YEAR 

10 YEAR 

HIGH LOW 

Bratislava 7.25 7.25 7.25 16.00 6.00 



CURRENT 

QUARTER 

LAST 

QUARTER 

LAST 

YEAR 

10 YEAR 

HIGH LOW 

Slovakia 7.25 7.25 7.25 7.75 6.50 






9.00% 

8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




35.0% 

17.5% 

0.0% 

-17.5% 

-35.0% 


MARKETBEAT 


SPAIN 


OVERVIEW 

GDP grew 0.3% year-on-year in the fourth 

quarter of 2011, and 0.7% over the year as 

a whole, with household consumption 

declining by 0.1% compared with 2010. 

Unemployment reached nearly 23% in Q4, 

and retail sales have continued to decline: sales volumes 

(excluding service stations) decreased by 2.9% year-on-year in 

February, 4.2% in January and 6.4% in December. 


Demand for prime high streets, shopping centres and retail parks 

remains strong, with several major international players looking 

to increase their presence. Prime rents are supported by limited 

availability and were stable over the quarter in most of the 

locations surveyed. However, secondary locations are 

experiencing falling demand, with a number of retailers closing 

unprofitable stores. 

Despite challenging trading conditions, new schemes with an 

attractive catchment area are attracting a healthy level of interest. 

Indeed, it has recently been reported that the shopping centre 

element of Puerto Venecia in Zaragoza (123,500 sq.m GLA), 

scheduled for completion in the autumn, is 75% pre-let. Other 

major projects scheduled for completion this year include As 

Cancelas in Santiago de Compostela (50,000 sq.m) and Gran 

Plaza 2 in Marid (45,800 sq.m). 


Retail investment volume totalled €20 mn in the first quarter. 

While this represents a considerable decline relative to the 

previous quarter’s total of €337 mn, the Q4 figure was skewed 

by Unibail-Rodamco’s purchase of Splau shopping centre in 

Barcelona for €186 mn. Transactions in Q1 include the 

acquisition of Bahía Mar shopping centre in Cádiz by local 

property firm Grupo Soluciones for €6.5 mn. Prime yields held 

firm for most of the high street locations surveyed and for prime 

in-town shopping centres in Tier 1 cities, moving out by up to 25 

bps elsewhere. Yields for stand-alone retail warehouse units in 

the major provincial capitals moved out by 75 bps. 

OUTLOOK 

A recovery in sales looks improbable in the short term, with 

further austerity measures expected to impact on consumer 

spending. However, dominant locations will continue to attract a 

healthy level of interest, and prime rents should remain stable. 

Secondary rents, on the other hand, are likely to come under 

further downward pressure as demand for new space becomes 

increasingly selective. 






Prime Rents: Prime rents are well-supported and expected 

to remain stable in the short term. 

Prime Yields: Should hold firm. 

Supply: Low for prime properties and high for 

secondary. 

Demand: Strong for prime locations; two-tier market 

becoming more deeply entrenched. 




Madrid 240 2,880 356 0.0 0.0 

Barcelona 265 3,180 393 8.0 1.9 

Seville 120 1,440 178 0.0 0.0 

Bilbao 120 1,440 178 1.8 0.0 

Valencia 130 1,560 193 0.8 0.0 

Malaga 145 1,740 215 2.2 0.0 

Palma 85 1,020 126 2.5 0.0 

Zaragoza 100 1,200 148 0.0 -4.8 



Madrid 17.50 210 26.0 1.8 0.0 

Barcelona 17.00 204 25.2 3.2 0.0 






Madrid 4.85 4.85 4.75 5.75 4.00 

Barcelona 4.85 4.85 4.75 5.75 4.00 

Seville 5.50 5.50 5.25 6.00 4.50 

Bilbao 5.50 5.50 5.50 6.25 4.50 

Valencia 5.50 5.50 5.25 6.00 4.50 

Malaga 5.50 5.50 5.25 6.50 4.50 

Palma 5.50 5.50 5.50 6.50 4.50 

Zaragoza 5.50 5.50 5.50 6.50 4.50 

RETAIL PARKS 




Madrid 6.75 6.50 6.50 7.50 4.70 

Barcelona 6.75 6.50 6.50 7.50 4.70 





Spain 6.00 6.00 6.00 6.50 4.25 















MARKETBEAT 


SWEDEN 


OVERVIEW 

Retail sale volumes in the country recorded 

their fourth consecutive period of annual 

growth in February, rising by 3.4%. 

According to Statistics Sweden, this was 

achieved through strong sales of durables 

(4.6%) – where a double-digit sales rise in footwear and sporting 

goods sales drove the overall rate – and moderate growth in 

consumables (1.9%). Despite a slowing economy, the latest 

figures were supported by interest rate cuts and improved 

consumer confidence, painting a relatively benign picture of the 

retail market. 


Occupier demand is stable, but especially active for space in 

prime locations. This is fuelled by a number of international 

retailers eager to establish their first store in the country. 

However, supply of prime high street space is at a premium, 

particularly in the capital, translating into elevated rents and key 

money. Nevertheless, rental growth was restricted to prime 

retail parks, with values in other sub-sectors stable. 

The supply of shopping centre space is increasing slightly as a 

result of several extensions across major cities. Furthermore, 

modern retail provision is expected to continue improving with 

the addition of a several large schemes, scheduled to open by the 

end of 2015. 


Investment market activity slowed considerably in Q1as only €78 

million worth of retail assets were traded, a sharp fall on €761 

million transacted in Q4 2011. However, a number of large 

shopping centres are anticipated to come onto the market in the 

year ahead and several quality retail properties are already on 

sale. When combined with good interest from international 

buyers, activity in 2012 is expected to regain the vibrancy 

witnessed in 2011. Prime yields in Q1 remained stable on the 

previous three months. 

OUTLOOK 

Looking ahead, the strong economic momentum observed over 

the past two years is not expected to be maintained in 2012, with 

Consensus forecasts anticipating a mild contraction in 

manufacturing and modest growth in consumer spending. Prime 

values are expected to hold firm over the course of the year, 

although rental growth in selected retail parks and high streets 

may eventually materialise. 






Prime Rents: Stable, although selected high streets and retail 

parks may see some growth in 2012. 

Prime Yields: Yields unlikely to change in the short-term. 

Supply: Availability extremely scarce in prime pitches. 

Several shopping centres in the pipeline. 

Demand: Centered on prime locations, but expected to 

remain stable. 


HIGH STREET SHOPS Skr € US$ GROWTH % CAGR 


Stockholm 14,600 1,652 204 4.0 4.3 

Gothenburg 8,050 911 113 2.0 0.6 

Malmo 6,200 702 87 1.3 1.6 

RETAIL PARKS Skr € US$ GROWTH % CAGR 


Stockholm (Kungens Kurva) 1,875 212 26.3 0.8 5.6 

Stockholm (Barkarby) 1,875 212 26.3 0.8 5.6 






Stockholm 5.00 5.00 5.00 6.00 4.50 

Gothenburg 5.50 5.50 5.75 6.50 5.25 

Malmo 5.50 5.50 5.75 7.00 5.50 

RETAIL PARKS 




Stockholm (Kungens Kurva) 5.75 5.75 6.00 7.25 5.00 

Stockholm (Barkarby) 5.75 5.75 6.00 7.25 5.00 





Sweden 5.00 5.00 5.25 6.50 4.50 






8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




10.0% 

-5.0% 

-10.0% 









5.0% 

0.0% 


MARKETBEAT 


SWITZERLAND 


OVERVIEW 

Economic growth returned in Q4 with 

GDP up 1.3% compared with Q4 2010 and 

growing 0.1% from Q3. Consumer 

confidence has increased slightly this 

quarter although it remains low. 

Preliminary data from the State Secretariat for Economic Affairs 

(SECO) shows Q4 retail sales volume (excluding fuel) grew 0.4% 

year-on-year in February. The non-food sector experienced 

negative growth of 0.5% over the same period. 


Demand for prime high street retail in key cities remains and a 

lack of supply is reflected in stable rental levels. Despite most 

retailers forecasting a continued decrease in revenue, prime high 

street locations are still sought after. International luxury retailers 

continue to be the preferred occupiers of prime central retail 

units for most landlords and in Geneva there is a trend for local 

shops and restaurants to exit the CBD when their leases expire. 

The retail warehousing sector saw a slight decrease in rental 

levels over the quarter, however landlords are beginning to offer 

longer rent free periods in an effort to prevent further rental 

falls. 

The shopping centre development pipeline for 2012 is limited, 

with the focus on refurbishment and extensions of existing stock. 


It is difficult to ascertain the exact number of transactions and 

trading volumes due to many deals being completed off market. 

However, activity in the retail investment market in Q1 was 

estimated to be worth €150 mn, double the level recorded in the 

previous two quarters. Price correction has not been as severe as 

most other Western European markets and as a result prime 

yields have remained stable across all retail sectors in Q1. 

OUTLOOK 

The economic environment for 2012 does not favour an increase 

in private consumption, however the outlook is for stability in 

prime locations due to occupier demand exceeding supply in 

these markets. Secondary locations are expected to experience a 

fall in rental levels as retailers continue to focus on locating in the 

best and most established retail destinations. The investment 

market is also expected to remain stable. Yield levels will be 

dependent upon the economic policy adopted by the Swiss 

National Bank and how quickly it decides to raise interest rates in 

line with the ECB. 






Prime Rents: Stable prime values in city centres, with 

potential falls in secondary locations. 

Prime Yields: Unlikely to see adjustments in the short term. 

Dependent on interest rate decisions 

Supply: Tight supply in prime locations, exacerbated 

by a limited shopping centre pipeline. 

Demand: Continued strong demand for prime locations 


HIGH STREET SHOPS Sfr € US$ GROWTH % CAGR 


Zurich (Bahnhofstrasse) 8,500 7,062 874 5.5 6.3 

Geneva (Rue du Rhône) 4,000 3,323 411 2.7 0.0 

Basle (Freie Strasse) 2,900 2,409 298 3.0 3.6 






Zurich (Bahnhofstrasse) 4.40 4.50 4.50 5.00 4.00 

Geneva (Rue du Rhône)* 5.00 5.00 5.00 5.75 5.00 

Basle (Freie Strasse) 5.10 5.20 5.60 5.75 5.10 





Switzerland 5.30 5.30 5.50 6.00 5.25 

Note: * Yields in Geneva are quoted Net. 






8.00% 

7.00% 

6.00% 

5.00% 

4.00% 




15.0% 

10.0% 

5.0% 

0.0% 

-5.0% 

-10.0% 

-15.0% 










MARKETBEAT 


TURKEY 


OVERVIEW 

As widely anticipated, the Turkish economy 

slowed towards the end of 2011, with GDP 

expanding by an adjusted 4.7% year-on-year 

and 0.6% on the previous quarter. Although 

Turkish retail data is often subject to 

significant revisions by the Turkish Statistical Institute, the latest 

figures prolonged the double-digit upward trend seen in previous 

quarters, with retail sales growing by 12.6% in Q4 2011 on the 

same period in 2010, albeit lower than the 16.8% recorded in 

Q3. 


While most retailers have adopted a ‘wait and see’ policy with 

regard to expansion, occupier demand for high quality prime high 

streets and shopping centres continues to exceed supply. In 

Istanbul, a city with a population of approximately 17 million, 

there are only three high street locations and one shopping 

centre which fit this category fully. Consequently, the limited 

supply of such space has translated into less favourable terms for 

potential tenants in the form of higher rents and key money 

demanded. Indeed, the demand/supply imbalance has resulted in 

strong double-digit growth over the quarter in prime high street 

locations, and a rise of almost 10% in prime shopping centres 

across the country. 

The provision of high quality prime space will however improve 

as the prime locations of yesterday are gradually transformed into 

the high quality prime locations of tomorrow. In the shopping 

centre market, supply will also be boosted by the addition of 

another 82 new schemes scheduled to open by the end of 2014. 


The first quarter of the year proved to be another subdued 

period for the investment market, with no retail transactions 

taking place. Activity centred entirely on office products, with 

other sectors highly illiquid. Prime yields adjustments were 

somewhat mixed as high street units in select locations softened 

by 25 bps and shopping centres hardened by 25-50 bps. 

OUTLOOK 

A slowing economy, concerns about the current account deficit 

and political instability in the region will present the country with 

some challenges ahead. Nevertheless, positive signs are also 

evident, with unemployment still low and consumer sentiment 

bouncing back to a nine-month high in March. Hotspots of 

growth will include the high quality prime locations, the new 

shopping centre in Beylikduzu and several smaller regional 

schemes near planned train stations. 






Prime Rents: Despite recent rises, some falls are expected 

in the year ahead. 

Prime Yields: Yields to remain stable, although corrections 

cannot be ruled out. 

Supply: Substantial new supply in the pipeline, but 

availability of prime space is low. 

Demand: Strong interest in prime locations to offset 

slower activity elsewhere. 


HIGH STREET SHOPS US$ € US$ GROWTH % CAGR 


Istanbul 350 3,154 390 n/a n/a 

Izmir 85 766 95 n/a n/a 

Ankara 90 811 100 n/a n/a 






Istanbul 7.25 7.25 7.50 14.50 7.25 

Izmir 10.50 10.50 10.75 14.50 10.50 

Ankara 10.25 10.25 10.50 15.50 10.25 





Istanbul 7.25 7.75 8.25 14.50 7.00 






12.00% 

10.00% 

8.00% 

6.00% 

4.00% 




30.0% 

15.0% 

-15.0% 

-30.0% 









0.0% 


MARKETBEAT 


UNITED KINGDOM 


OVERVIEW 

Bolstered by good weather and fuel panic 

buying, retail sales in March recorded their 

highest uplift in over a year, rising by 3.3% 

on the same month in 2011. The overall 

rate was supported by strong growth in 

specialised stores selling automotive fuel (7.2%) and non-food 

shops (4.6%). In contrast, food stores continued to lag behind as 

sales eased back by 0.6%. 


In-town occupier demand in the wider UK market remains weak 

as retailers rationalise exposure and focus their attention on their 

more profitable stores, predominantly in the South East or large 

cities, where footfall and consumer spending remain resilient. 

Prime rents in the South East were stable; however, they are 

coming under increasing pressure, with fewer retailers looking to 

expand. Out-of-town occupier demand for prime open A1 

schemes remained unchanged, but with supply still low. In prime 

bulky goods retail parks there has been an increase in incentive 

packages by three to six months, but headline rents appear to 

have maintained their values. The softening in incentives is even 

more pronounced for secondary stock, highlighting the 

downward squeeze on rents which persists for locations with 

very low demand and plenty of available space. 


Prime high street assets held up well over the quarter, primarily 

due to a shortage of supply. The larger institutional funds are still 

active, but without any pressure to spend. Investment demand for 

secondary products remained sporadic at best, with limited intent 

to invest other than from opportunity funds. The majority of 

stock which is coming to the market is principally within the 

smaller sub £5 million category. Meanwhile, demand for prime 

shopping centres continued to be sustained by international 

players; however, both prime and secondary witnessed a fall in 

interest. Demand is coming primarily from opportunity funds, but 

they are also finding it increasingly difficult to obtain debt. Supply 

has also deteriorated, with vendors discouraged by the long list 

of schemes withdrawn from the market. 

OUTLOOK 

The occupier market may remain subdued but stable, despite a 

mixed outlook for the rest of 2012. Nationally, demand for 

secondary retail units will be under pressure, and locations 

outside Central London may see further rental declines and 

softening incentives. The investment market picture also remains 

mixed, with the potential for significant downside in secondary 

markets. However, demand will remain robust for prime, core, 

secure income assets in strong centres and cities. 






Prime Rents: Prime values largely unchanged, but under 

increasing pressure in some areas. 

Prime Yields: Stable, but with potential softening in high 

street and shopping centre yields outside 

Central London and strong retail centres. 

Supply: Limited in prime locations; but rising in 

secondary areas. 

Demand: Demand to remain selective. 


HIGH STREET SHOPS ZONE A £ € US$ GROWTH % CAGR 

SQ.FT/YR SQ.M/YR SQ.FT/YR 5YR 1YR 

London (City) 230 1,515 187 -2.4 4.5 

London (West End) 985 7,632 944 6.3 3.7 

Manchester 250 1,647 204 -5.1 0.0 

Birmingham 250 1,647 204 -4.8 0.0 

Leeds 250 1,647 204 -3.9 0.0 

Cardiff 225 1,482 183 -5.6 0.0 

Edinburgh 200 1,776 220 0.0 0.0 

Glasgow 255 2,264 280 -1.0 2.0 

RETAIL WAREHOUSING £ € US$ GROWTH % CAGR 

SQ.FT/YR SQ.M/YR SQ.FT/YR 5YR 1YR 

London (Bulky goods) 32.50 420 51.9 -1.5 8.3 

Edinburgh (Bulky goods) 20.00 258 32.0 -7.8 -7.0 






London (City) 5.25 5.25 5.50 6.50 4.75 

London (West End) 3.00 3.00 3.00 5.00 3.00 

Manchester 5.25 5.25 5.25 6.75 4.25 

Birmingham 5.75 5.75 5.75 6.75 4.25 

Leeds 5.25 5.25 5.25 6.25 4.25 

Cardiff 5.25 5.25 5.25 6.50 4.00 

Edinburgh 5.25 5.25 5.50 7.00 4.00 

Glasgow 5.00 5.00 5.00 6.75 4.00 

RETAIL WAREHOUSING 




Solus – Bulky goods 6.00 6.00 6.00 8.50 4.50 

Park – Open consent 5.25 5.25 5.25 7.25 4.00 





Regional Centre 5.50 5.50 5.50 7.00 4.50

European Retail Marketbeat Snapshots Q1 2012 - SPG Intercity

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