Europe’s most supply-constrained retail warehouse markets revealed as occupier demand outpaces supply
According to new Savills research, Europe’s retail park market is increasingly developing at two speeds, with rapid expansion across parts of Central and Eastern Europe contrasting with increasingly constrained availability in a number of mature Western European markets.
New analysis from Savills shows significant differences in how retail park supply has evolved across the continent. Since 2020, retail park provision per capita has increased by 123% in Poland, 56% in Romania and 31% in the Czech Republic, while falling by 9% in Ireland, 3% in the UK and 2% in the Netherlands.
Despite significant development in some markets, occupier demand remains strong across Europe. Availability is below 3% in Ireland and 4% in the UK, while vacant units are often effectively non-existent in smaller Polish schemes, according to Savills.
Across Europe, retail park density has risen from 100 sq m per 1,000 inhabitants in 2020 to 109 sq m today, still substantially below the 261 sq m per 1,000 inhabitants recorded for shopping centres. Provision varies considerably by market, ranging from 57 sq m per 1,000 inhabitants in Portugal to more than 330 sq m in Sweden.
In supply-constrained markets, low vacancy and limited occupier churn can restrict the availability of high-quality space, reducing the amount of transactional evidence available to drive headline prime rents. Meanwhile, CPI-linked leases are supporting income growth within existing leases even where prime estimated rental values have seen little movement.
Limited availability is creating particular rental tension in mature markets such as Sweden and the UK. Across Central and Eastern Europe, Spain and France, elevated levels of new supply in recent years have provided retailers with more opportunities to expand, easing some of the rental pressure that strong demand might otherwise create.
Chris Nichols, European research analyst at Savills, comments: “Europe’s retail warehousing market is increasingly becoming a story of scarcity versus expansion. In mature markets, healthy occupier demand is running up against limited opportunities for new development, placing greater emphasis on evolving existing stock through subdivision, extension, redevelopment and reconfiguration. By contrast, markets such as Poland remain in expansion mode, with new development responding to demand and establishing retail parks as the primary retail destination for many smaller, underserved catchments.”