Flagship stores boost rental demand

Rising interest among international retailers and higher demand for flagship stores is helping to bolster retail demand and maintain rents in prime shopping locations in the Netherlands

According to Savills latest retail report on the Netherlands, the likes of Starbucks, Triumph, Desigual and Apple have all recently entered the Dutch retail market, while existing overseas retailers such as H&M, C&A, Esprit, Score and Bestseller are seeking opportunities to expand their presence including opening larger flagship stores.

Even local retail brands, such as G-Star and Scotch & Soda are seeking flagship outlets.

Of the current 27.2 m sq m (293 sq ft) sales areas, on average 7.5 per cent is vacant against seven per cent last year.

Demand from large national and international retail chains has now become predominant. Currently around 59 per cent of all stores belong to a retail group – a figure which rises to 90 per cent in high street locations.

Retail investment transactions in 2008 will exceed the figure in 2007, but the Savills report explains that this is due to three significant deals, the largest being the Unibail-Rodamco portfolio which transacted at £651 million.  

In terns of yields, on the high-street they have moved out 150 bps to 6.5 per cent, while in the shopping centre sector the increase was 130 bps to 6.8 per cent. In addition, prime rental warehouse yields have moved up to 7.5 per cent, an increase of 125 bps.

Jan Peter Hebly, Managing Director of Savills retail in the Netherlands, said, ‘Overall activity on both the investment and the leasing markets has weakened considerably over the year.

'On non-prime locations both rent and yield levels are therefore under considerable pressure. On high-street locations rent levels remain stable, due to strong national and international demand. We expect prime retail to keep on outperforming the property market.'

Source: www.propertyweek.com