Retail market back to pre-pandemic levels

RETAIL
Tim Harrup

As the second half of the real estate year is just getting underway, it is once again pertinent to see how the market performed during the first half of the year. This time we look at one of the sectors to have been most immediately affected by the pandemic retail and we give the results of the analysis by real estate advisor CBRE for the Belgian market.

CBRE starts by saying that retail take-up in 2022 so far has been in line with the multi-year average, coming in at just over 223,000 m. Take-up for high streets and shopping centers was strong with 54,837 m and 27,016 m in transactions respectively. While still the largest retail segment in terms of take-up, out-of-town retail was unable to keep up with the strong performance in previous years. After years of strong retail park development and marketing, development has been slowing down recently. Urban planning is becoming more difficult, and retail park development will likely decrease in the coming years.

Where large transaction are concerned, the three largest transactions so far in the market have been DIY store Hubo letting 4,773 m in Shopping Pajot, Peek & Cloppenburg setting up shop in 4,515 m of space in Westland Shopping and OLearys occupying 4,000 m in the TT Center in Hasselt. Other notable transactions include fashion chain Zara switching locations in the Steenstraat in Bruges, moving from numbers 25, 2, and 90-94 and centralizing in number 29 on a surface area of 3,800 m.

During the first 6 months of 2022, the most expansive retailers have been Jumbo, opening another 4 stores (total 8,180 m), Basic Fit with 5 new gyms (7,392 m), Jysk with 3 new stores (4,111 m) and JBCwith 4 new stores (3,952 m).

Rents in the retail sector have seen downward corrections over recent years mainly as a consequence of the pandemic and e-commerce competition. Prime high street retail rent is currently at 1,700 /m/year in Brussels on the Rue Neuve and 1,650/m in Antwerp on the Meir. Shopping centers in Brussels and Antwerp are currently both at the 1,050/ m/year level, which represents a slight increase of 50/m for Antwerp in comparison to the first quarter. Prime out-of-town retail parks can be leased at around 180 /m/year for typical sizes of 1,000 m. Smaller retail units might be more expensive.

Vacancy in the Belgian retail market currently stands at 11.6%, according to figures from Locatus. It is the first time in over 10 years that the retail vacancy rate has decreased in Belgium. The main reasons for the decrease in voids are strong demand small local convenience stores (most likely as a result of Covid-19) and a reconversion trend of structural retail voids into offices or housing. Based on CBREs own calculations, Brussels downtown and Antwerp city-centre have a vacancy rate of 15% and 16% respectively. By contrast, Brussels Uptown (3.3%) and Ghent city-centre (5.9%) have far lower void numbers.