The study notes that fashion brands have remained the cornerstone of the industry, accounting for around 40% of the total contracted floor space in Europe. Brands owned by Italian retail giant Calzedonia, as well as Polish brands owned by LPP, were particularly active fashion retailers in 2023.
Rob Travers, Head of EMEA Retail at Cushman & Wakefield, said: "The upturn in consumer confidence, combined with easing inflation and improving tourist volumes, have contributed to positive growth in retail activity in 2023".
On the other hand, the Food & Beverage (F&B) sector maintains its position as the second most active sector in terms of transaction volume, accounting for 16% of the total number of completed transactions and 8% of the total leased space volume. Some big names in the industry, such as Burger King and Starbucks, showed strong activity throughout 2023, joined by fast-growing chains such as Taiwanese bubble tea operator Gong Cha, US chicken chain Popeye's and Belgium's Hawaiian Poke Bowl.
Health & Beauty operators, with leading brands such as Rituals, Rossman, Kiko and Douglas, showed strong signs of activity in 2023. The sector accounted for 10% of the transactions and 7% of the order intake in 2023, doubling the area occupied in 2022 and experiencing a 57% increase in the number of transactions.
Last year, Mixed Goods retailers also took up 35% more floor space compared to 2022, with Danish brand Normal, along with Miniso and Pepco/Dealz, driving activity across the sector.
Approximately 10% of transactions were by premium brands, an increase of 15% over the previous year and an increase in take-up of more than 60%. Luxury retailers experienced an increase in transactions of 6 percentage points, and focused on major luxury destinations such as London and Paris.
Deceleration of large format
The Cushman & Wakefield report shows that the retail real estate market has seen a 20% increase in the number of transactions for the medium-sized format (600 - 1,000 sqm), driven mainly by the activity of Mixed Goods operators. Spaces of less than 600 sqm represent 83% of the registered transactions, showing a clear trend towards smaller spaces.
The number of transactions in spaces of less than 2,000 sqm increased in 2023, while transactions in spaces of more than 2,000 sqm experienced a year-on-year decline of 30%. The slowdown in these large-format spaces can be attributed to the post-pandemic slowdown in the Home & DIY sector, which saw a 19% drop in deal activity compared to 2022.
Spanish retail is still booming
Spanish retail has registered a similar performance to that recorded in Europe. The Fashion sector accounted for 24% of the transactions carried out in Spain. The Food & Beverage segment accounted for 21% of the transactions, and recorded growth compared to 2022, when it accounted for 17% of the transactions recorded. Personal Goods accounted for 15% of retail transactions, Mixed Goods 14% (vs. 9% in 2022) and Health & Beauty 8% (vs. 5% in 2022).
As in EMEA, Spain has registered an increase in the weight of the total number of closed transactions below 600 m2 compared to the previous year, accounting for 83% of the transactions.
Consumer confidence improved last year, and this is expected to continue through 2024. However, the pace of improvement will remain moderate as consumers feel the impact of persistent cost-of-living pressures, geopolitical tensions and broader economic concerns.
The outlook remains cautiously optimistic, with retail sales volume growth expected to pick up in the second half of 2024, although growth is expected to remain modest. At the same time, retailers will continue to grapple with near-term margin pressures, especially with the additional challenge posed by recent cost increases.
The report details that retailers and owners have renewed their focus on making the most of their shops, with omni-channel selling accelerating the need for continuous improvement. In this regard, Travers added: "Of course, there are challenges. Margin erosion is a real concern, as concerns about consumer spending are compounded by ongoing stress on both supply chains and rising operating costs. This has led to volatile competitive tension and some retailers reneging on deals when conditions tighten".
Robert Travers, Head of EMEA Retail at Cushman & Wakefield, said: "What is clear is that real estate is at the forefront of retailers' performance and getting it right has never been more important. As a result, retailers are more demanding than ever on the requirements of their physical shops".
