Experian and commercial real estate firm Jones Lang LaSalle have launched the 2009 European Retail Centre Rankings, which for the first time shows the relationship between consumer spending in European cities and prime retail rents. The new rankings have been designed to equip investors, developers and retailers with crucial insights into the best European location opportunities.
London and Paris are clearly the place to be in Europe, as the cities occupying the first and second positions in the rankings in terms of consumer spend have some of the highest prime rents. Italy, Germany and Spain all have two centers each that make the top 10 of the European Rankings. Moscow is the only city in Central and Eastern Europe to break into the top 10.
Rome, in third place, edges Milan as the top Italian location, largely thanks to its importance as a tourist destination and the relative lack of competition to its downtown retail offer. In both cites rents for super-prime units can reach levels commonly found in London and Paris, although their general rental level is much lower.
The dominance of London on the UK retail landscape is evident, with Glasgow being the only other top 20 entrant. Going against preconceptions that the UK is an expensive occupier market, locations away from London have prime high street rental levels that are comparable to those in the wider European pack, although UK rents are currently lower than they normally are relative to other European cities, due to recent exchange rate fluctuations.
In Germany, whilst overall spend is highest in Berlin, rental levels are much higher in Munich and Frankfurt. This reflects strong occupier demand and a high quality mix of retailers, and for this reason Munich is widely considered to be the top retail location in Germany. Likewise, Dusseldorf, ranked 43rd in terms of spending, has a strong luxury retail offer with the 13th highest rental level in Europe, and has a spend per capita to match. This highlights the importance of analyzing both spend and rental levels when assessing a city's retail potential. The Euro Retail Rankings are the first rankings to combine both spend and prime rental levels to understand the quality of a city's retail provision and the turnover levels that retailers can achieve.
Locations from Central & Eastern Europe account for only 10 per cent of the top 50, demonstrating that despite a boom in retail development over the last few years, downtown areas still generally lack the quality and quantity of retail stock found in Western European cities. Relative disparities in spend per capita are also a major factor in the limited number of CEE cities entering the top 50. Despite this, Prague, Istanbul and Budapest all rank highly thanks to their strong downtown shopping center offer.
Stockholm (26th position) and Helsinki (27th) have comparatively lower rents than their peers in mainland Europe, due in part to historically weaker demand from international retailers (largely for logistical reasons) although this is now changing.
There is little to separate many of the locations outside the top 25, with Warsaw (52nd) and St Petersburg (65th) for instance having a similar catchment spend to higher ranked cities such as Antwerp (50th) and Bordeaux (46th). They only fall short of the top 50 due in part to the comparatively lower downtown retail space provision and heightened competition from out-of-town shopping centers.
Jonathan de Mello, director of Retail Property Consultancy, commented: "Our pan-European retail rankings, with the addition of rental data from Jones Lang LaSalle, will provide retailers and property investors with unique insight into the best retail centers in Europe. Our rankings are gravity modeled rather than drive-time based, and as such take into account the effect of competition crucial in markets with significant out-of-town retail such as Berlin, Madrid and Lisbon. Our rankings provide the most comprehensive overview of retail centers across Europe ever."
James Dolphin, head of Pan-European Re
