European Retail Guide Shopping Centres November 2014 2 | European Retail Guide – Shopping Centres // Introduction

European Retail Guide Shopping Centres November 2014 2 | European Retail Guide – Shopping Centres // Introduction Welcome to our third edition of ‘European Retail Guide - In this context, pipeline of shopping centres is expected to The European Shopping Centre investment Shopping Centres’. This guide provides high-level data on rebound in the short term, with 9 million of sq m to be delivered market has changed considerably in the last year. the European shopping centre industry. It is designed as a in 2015 and 2016. In this new guide we assess socio-economic Investment market conditions in several countries reference document for comparing shopping centre provision trends, as well as trends in the retail market in order to provide have improved significantly. The boom in Shopping across major cities and identifying hotspots for future areas of our view on the adequacy of current levels of shopping centre Centre investment, representing 47% of all retail development. The information provided is similar for all cities in provision and identify main hotspots for future opportunities. investment so far this year, is significantly higher order to facilitate comparison. than in 2013. We hope you enjoy this publication! The guide includes: Trading in many European countries remains tough » statistics on the major cities and their respective national for retailers but South European countries such economies, including GDP growth, earnings and retail sales as Spain and Italy have seen retail investment figures volumes increase by 15 and 315% respectively. Shopping Centre investment volume in Southern » information on shopping centre provision, including number Europe is currently higher than Germany or France. of existing schemes, as well as those in the pipeline Other markets such as Ireland have seen a huge » information on rents, lease structures and legal aspects turnaround of investor sentiment with transaction volumes increasing sharply. » a list of the five largest schemes in operation in each city, as well as a map locating them Magali Marton Head of In core markets of UK, France and Germany EMEA Research listed companies have continued to reshape their The European economy is gradually recovering after five portfolios. Within these core markets domestic challenging years. However, the pace and size of this recovery investors and cross border investors are almost is contrasted across the Region, which continues to suffer equal in their transaction market share. from a high level of unemployment. Despite remaining degree of uncertainty, developers and landlords are willing to develop Shopping Centres remain core to DTZ’s Retail more new shopping centres. business and DTZ are well placed to support and advise throughout Europe on asset management, refurbishment and extension, high quality research, valuations, leasing and advisory based on a deep understanding of markets where we are committed to our clients. We hope that it will encourage all those involved in shopping centres to look with us for fresh initiatives for to do business together. Adrian Powell Head of EMEA Retail European Retail Guide – Shopping Centres | 3 // Table of content Belgium ____________________________ Lithuania ___________________________ Brussels 10 Vilnius 56 Czech Republic _____________________ Netherlands ________________________ Prague 12 Amsterdam 58 Denmark ___________________________ Rotterdam 60 Poland _____________________________ Copenhagen 14 Estonia _____________________________ Warsaw 62 Portugal ____________________________ Tallinn 16 Finland _____________________________ Lisbon 64 Romania ___________________________ Helsinki 18 France _____________________________ Bucharest 66 Spain ______________________________ Lille 20 Lyon 22 Barcelona 68 Marseille 24 Madrid 70 Paris 26 Sweden ____________________________ Greater Paris 28 Stockholm 72 Germany ___________________________ Turkey _____________________________ Berlin 30 Cologne 32 Ankara 74 Düsseldorf 34 Istanbul 76 Frankfurt 36 United Kingdom _____________________ Hamburg 38 Leipzig 40 Birmingham 78 Munich 42 Bristol 80 Stuttgart 44 Cardiff 82 Edinburgh 84 Hungary ____________________________ Glasgow 86 Budapest 46 Leeds 88 Ireland _____________________________ London 90 Greater London 92 Dublin 48 Manchester 94 Italy ________________________________ Ukraine ____________________________ Milan 50 Kyiv 96 Rome 52 Latvia ______________________________ Riga 54 4 | European Retail Guide – Shopping Centres // European Retail Guide – Shopping Centres A recovering market with opportunities in various cities » The European economy is gradually recovering after six years of slowdown and challenging conditions for retailers, landlords and developers. Forecasted growth is encouraging, although a certain degree of uncertainty prevails in retailers’ confidence levels, making their decision to expand across the region still difficult and leading resulting in a high degree of selectivity both in location and quality of shopping centres. » A brighter outlook in terms of GDP and retail sales growth in some countries has led to a rebound of retailers’ demand for shopping centre space. This is particularly true in prime, mature and dominant schemes where opportunities remain for retailers wanting to expand. Secondary centres, on the other hand, are bearing the brunt of the downturn, with falling demand and increasing vacancy. This is reinforcing polarisation in many markets. » Shopping centre development and supply per capita ratios vary greatly by country and city across the region. Compared to the European average of 436 sq m, Tallinn has the largest stock per inhabitant in Europe, whilst Stuttgart has the lowest. The lack of shopping centre development in some markets can be due to an historical cultural preference for other retail formats (i.e. some German cities or Paris) or to difficulties in obtaining government permits (i.e. Brussels, Milan). » As a result of a dynamic economic environment, development activity is rebounding and the number of openings is expected to be above average in the coming years. The most dramatic increases in modern shopping centre space will take place in the less developed CEE cities and Istanbul or Ankara, where the relative undersupply of space is being addressed. Whilst in more mature markets, the focus will be on upgrades, extensions and regenerations rather than on new developments. » Our European retail guide on shopping centres assesses the socio-economic dynamics, as well as the strength of current shopping centre provision across 42 cities in order to form a view on future growth prospects both for existing schemes, as well as potential new developments. » We have identified the future hotspots as being those cities which offer strong economic growth and which are currently undersupplied in shopping centre stock. These include Ankara, Istanbul, Bucharest but also London, Manchester or Edinburgh on the back of a strong economic recovery in the UK market. European Retail Guide – Shopping Centres | 5 // European Retail Guide – Shopping Centres A recovering market with opportunities in selective cities » On the other hand, southern European cities (Milan, Lisbon, Rome and Barcelona) as well as French and German major cities are forecast to underperform the European average over the next five years, with growth below 2%pa forecast. Madrid is the only southern European city Two speed economic recovery across the region: CEE, Baltic, Turkey and UK on top while Germany forecast to record GDP growth (2.4%pa) in line with the European average. and France are expected to underperform. » Whilst retail sales growth is expected to be more positive for the medium to longer term, big » The European economy is gradually emerging from the 2008 financial crisis and key economic differences between regions are apparent (Figure 2). The European average for retail sales indicators (GDP, retail sales and consumer spending) are now forecast to return to positive growth forecasts for 2015-2019 is 2.5%pa. A growth higher than average is expected in CEE territory over the next five years. The speed and the size of this recovery will be contrasted, both and Baltic cities along with the majority of the UK cities covered in our guide. The strongest across countries and the major European cities. growth is forecast in Vilnius at 7.3%pa, following by Riga at 6.4%pa (Figure 2). » Central & Eastern European (CEE) cities, the Baltic capitals, Istanbul and Ankara are forecast to » These figures contrast sharply with the modest forecast growth in retail sales expected in show the strongest GDP growth over the next five years. Vilnius is forecast to show growth of German and French cities, with figures below 1.5%pa over the five next years. The uncertainty 6.7%pa, followed by Riga, where GDP is forecast to grow 5.4%pa. The GDP forecast growth of the European recovery has negatively impacted their local economies and retail sales growth ranking is dominated by these cities, while the UK economy performs well with most cities forecasts are now more in line with the Southern European economies. expected to enjoy growth above the European average over the same time period, with London (3.3%pa) leading this trend (Figure 1). Figure 1 Figure 2 GDP growth forecasts in selected European cities (2015-19), in % Retail sales growth forecasts in selected European cities (growth 2015-19), in % Vilnius Vilnius Riga Riga Tallinn Ankara Ankara Istanbul Istanbul Tallinn Kyiv Warsaw Bucharest Prague London London

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