AEW, a global real estate investment and asset manager, has published its latest European research report: ‘European Retail Parks & Shopping Centres are Back.’
Hans Vrensen, Head of Research & Strategy Europe at AEW, commented: “In our latest research report, we take a look at the European retail market, a sector that has experienced the most improvement in recent manager sentiment ahead of the other four core real estate sectors. This is after its substantial and long-lasting re-pricing that began much earlier than in other sectors in 2017. The macro-economic drivers for retail have become more supportive, and European retail sales are projected to grow by 1.5 percent p.a. over the next four years. We project that core retail yields will tighten 10 to 30 bps by 2030. Retail parks are expected to have the best total returns at 9.1 percent p.a. for 2026-30, followed by shopping centres at 8.6 percent and high street retail at 7.2 percent. While capital returns for prime retail are expected to be more moderate than other sectors, the rental growth picture is more positive. At 6.4 percent and 6 percent respectively, shopping centres and retail parks offer higher current income yields compared to the 5 percent average for non-retail sectors.”
Highlights:
Macroeconomic drivers for retailers have become more supportive, as Eurozone 2026–30 real retail sales are projected to grow by 1.5% p.a. Even if consumer confidence remains below pre-COVID levels, it has improved from 2023 lows and remained stable during recent challenging geopolitical uncertainties.
In-store retail sales are forecast to grow by a modest 0.4 percent p.a. over the next five years, an improvement from the zero growth in 2016–2020. E-commerce penetration is still projected to reach 19 percent of Eurozone retail sales by 2030, but the pace at which it negatively impacts in-store sales is expected to slow down.
Retail vacancy rates have moderated in varying degrees across sub-sectors from their 2020–21 COVID-related highs, with shopping centre vacancy at 6 percent, high street retail at 4 percent, and retail parks at 4 percent for Q2 2025.
As a result, 2026–30 rental growth across retail sub-sectors is projected to be positive, with shopping centres, high street retail, and retail parks expected to have increases of 1.2 percent, 1.6 percent, and 2.7 percent p.a., respectively.
Transaction volumes for European retail came in at €31bn in 2025, still well below their €78bn peak in 2015. Concerns about e-commerce and interest rates drove a significant repricing. However, a recovery is now emerging as the share of retail within total transaction volumes has recovered to 16 percent in 2025 from a low of 10 percent in 2021.
Retail transaction volumes can be expected to increase further as manager sentiment for retail has improved in Q4 2025. Over the last 3 years, retail has shown the biggest sentiment improvement among all four core sectors.
In terms of projected 2026–30 returns, retail park returns are 9.2 percent p.a., exceeding our projected 8.7 percent p.a. for non-retail sectors, while shopping centres and high street retail trails behind at 8.6 percent and 7.3 percent p.a., respectively. Projected retail capital returns are more moderate than for non-retail, emphasising their focus on current income.
Finally, our relative value framework shows that Spanish shopping centres rank top with the highest risk-adjusted return across all country‑sector segments. German and Italian shopping centres also feature in the top five, followed by Spanish high street retail in sixth position. Retail parks are not yet part of this framework.
