Saudi Arabia







Where next for Russia,

India and China?


A focus on Brazil’s

retail scene

























SOUTH afrIca



















Welcome to the second edition of ShopFront, CB Richard Ellis’ annual review of retail markets

across Europe, Middle East and Africa (EMEA) and beyond.

ShopFront reports on 13 more countries than the previous edition, including nine reviews from

the Americas and Asia Pacific. Contributions from outside EMEA really bring home what a small

world retailing can be. The challenges and opportunities are often alike regardless of whether a

retailer is based in Toronto, Tokyo or Turin.

Something else that shines through clearly this year is confidence. Nobody is about to claim

that the boom times are back; indeed several countries profiled in ShopFront continue to face

serious macro economic problems. However, consumer confidence does seem to be slowly

returning. Many of the sharp declines in retail sales we reported last year have now levelled off

and in some markets turned back into positive territory.

Ambitious retailers are also exploring international opportunities with renewed confidence,

recognising that successful entry into new territories is vital to continued growth, especially when

home markets become saturated.

At CBRE we have anticipated this growing trend towards globalisation. In response we have

created a new Retail Consultancy team, to work with retailers on benchmarking and evaluating

global markets so they can make informed decisions on where to expand. We have also

strengthened our retail teams across EMEA, notably in Sweden and throughout Scandinavia, a

region we think will have significant potential for our clients in the years to come.

The business of retail has changed enormously in recent years. It’s more dynamic, more

challenging and certainly more global. But it still rewards those who can anticipate consumer

trends, develop enticing retail environments or simply give shoppers what they want at a price

they want to pay. I hope that by highlighting the trends, concepts and developments that matter in

the world today, ShopFront 2010/11 will help you to achieve success in your chosen area of this

hugely exciting and rewarding business.

Malcolm Dalgleish

Chairman, EMEA Retail


acrOSS bOrdErS

MacrO EcOnOMIc



















SOUTH afrIca

































czEcH rEpUblIc













& cOnSUlTIng



Of rETaIl





















Arn Willems

e: arn@cbre.hr


Meet the team

Malcolm dalgleish

e: malcolm.dalgleish@cbre.com


Carlos Récio

e: carlos.recio@cbre.com


Matt Jay

e: matthew.jay@cbre.com


CB Richard Ellis | ShopFront 2010/11

Peter Gold

e: peter.gold@cbre.com


Ole Hammershøj

e: ole.hammershoej@cbre.com


Karim Beqqali

Luis Llaca

e: luis.llaca@cbre.com


e: karim.beqqali@cbre.com


Ciaran Bird

e: ciaran.bird@cbre.com


Maksim Mankevich

e: maksim.mankevich@cbre.kz


Birhan Yildiz

e: birhan.yildiz@cbre.com.tr


Vladimir Mijatovic

e: vladimir.mijatovic@cbre.co.rs


Tomas Beranek

e: tomas.beranek@cbre.com


James Ward

e: james.ward@cbre.gr


Anthony Buono

e: anthony.buono@cbre.com


Stuart Smith

e: stuart.smith@cbre.com


Martin Biro

e: martin.biro@cbre.com


dave Bennie

e: dbennie@broll.co.za


dominic Stead

e: dominic.stead@cbre.com.hk


Stewart Tudor

e: stewart.tudor@cbre.co.jp


Luiza Moraru

e: luiza.moraru@cbre.com


Magda Fratczak

e: magda.fratczak@cbre.com


Nanne Nanninga

e: nanne.nanninga@cbre.com


Mimi Belcheva

e: mbelcheva@mbl.bg


Niels-Andreas Lundheim

e: nal@ncmd.no


Chris Igwe

e: chris.igwe@cbre.fr


Caren Leon

Karsten Burbach

e: karsten.burbach@cbre.com


e: caren.leon@cbre.com


Michael Kamnik

e: michael.kamnik@cbre.com


Anders Lillsunde

e: anders.lillsunde@cbre.com


Manish Kashyap

e: manish.kashyap@cbre.com


Alex Barbany

e: alex.barbany@cbre.com


Anna Paltrinieri

e: anna.paltrinieri@cbre.com


Patrick Tacq

e: patrick.tacq@cbre.com


Anna Shiryaeva

e: shiryaeva@magazinmagazinov.ru


Marcos Cesar

e: mcesar@cbre.com


Richard Leech

e: richard.leech@cbre.com.hk


Joshua Loudoun

e: joshua.loudoun@cbre.com.au


A : Part of the CB Richard Ellis Affiliate Network


Retailers may choose to focus on opportunities where

the potential and risks can be more fully appraised.

Across Borders

As the global economy begins to recover

some of its poise, the message we’re

picking up in our daily conversations with

retailers and landlords is one of

consolidation. Retailers are looking to

play to their existing areas of strength,

whether that’s filling specific gaps in their

store estates, building on successful

launches into certain markets or further

developing sub-brands. This is

particularly true within the EMEA region,

as highlighted in the new edition of the

CB Richard Ellis report ‘How Active Are

Retailers in EMEA?’ which is being

launched in November 2010.

The same principles apply to developers

and landlords, many of whom are focusing

on managing their existing assets rather

than risk launching new schemes into

markets where retailer and consumer

appetite is lacking. Asset management

can take many forms, but activities such

as refreshing a shopping centre’s tenant

mix to entice repeat visits and improving

the public realm to boost dwell times are

growing in importance all the time.

That’s not to say global expansion is

off the retail agenda. On the contrary the

economic slowdown has forced many

retailers to spread their reach in order to

keep growing. Our report ‘How Global is

The Business of Retail?’, published in

April this year, revealed that even in the

tough trading environment of 2009 the

rate of internationalisation among retailers

continued to increase, albeit at a slower

rate than before.

This year things have stepped up again.

We’ve seen several major retailers making

headlines away from their home markets,

notably UNIQLO, Hennes & Mauritz (H&M),

Forever 21 and the Inditex Group. For many

the draw of Asia remains strongest, with

China still a top target, but retailers have

also seized opportunities within the Middle

East and in selected Eastern and Western

European markets. Meanwhile the world’s

biggest retailer, Walmart, is preparing to

enter South Africa while continuing to

progress its strategy for India.

Looking ahead, this trend towards

globalisation seems certain to continue.

The economic

slowdown has

forced many

retailers to

spread their

reach in order to

keep growing

Indeed the latest ‘How Active Are Retailers

in EMEA?’ report reveals that retailers are

intending to expand even more aggressively

in 2011 than they have this year.

Another tipping point that appears to

have been reached in 2010 concerns

internet retailing. We have seen an

unprecedented number of fashion brands

launch global retail portals, including H&M,

Zara, Gap, Ralph Lauren and

Banana Republic. Of course such sites

also enable retailers to sell their full

ranges in cities or even countries where

they’re not operating physical stores. If it

gains traction this latter development

could have massive consequences for

retail real estate markets, particularly in

secondary or tertiary locations that have

already suffered greatly during the tough

economic climate.

Meanwhile, the retail world is only just

beginning to wake up to the importance of

social networking websites, particularly

for brands that need to reach out to the

younger generation.

Finally ownership and partnership are

two interlinked themes that have cropped

up time and again this year. We’ve seen

businesses suffer due to the nature of

their ownership structures, particularly

those forced to carry a large burden of

debt. The traditional franchise/joint venture

model of entering a new market has

also been eroded as retailers prefer the

additional control that comes with taking

full ownership of a new market.

That said, a lack of transparency in many

markets, even some well-established ones,

can make a unilateral approach a risky one.

Until such issues are resolved retailers

may choose to focus on opportunities

where the potential and risks can be more

fully appraised.

These are just some of the talking

points you’ll find inside ShopFront 2010/11.

There are many more, befitting an industry

as dynamic and fast-moving as global

retail. As a specialist in the business of

retail CB Richard Ellis is out in the market

doing deals and gathering insight every

day. To share in some of that insight, talk

to any of the professionals whose names

you’ll find throughout this report.

Peter Gold – peter.gold@cbre.com

Head of Cross-Border Retail, EMEA

ShopFront 2010/11 | CB Richard Ellis


Most European economies

came out of recession in

the first quarter of the year,

with EU-27 countries

growing by 0.4% in Q1

2010. In the second quarter

of this year the expansion

rate of the Eurozone economy

accelerated to 1.0% and is now

around 2% ahead of its position a

year ago. Germany (2.2%) and Sweden

(1.9%) saw particularly strong growth in the

second quarter, with the UK (1.2%) also posting above

average growth. By contrast, Greece saw its sharpest

quarterly fall (-1.8%) for a year, Ireland contracted (-1.2%) after

having grown sharply in Q1, and Italy and Spain both recorded

only modest increases.

In October of 2010 the German government sharply raised

its 2010 economic growth forecast to 3.4%. At the same time,

the UK Government announced that the economy had grown

by 0.8% in Q3, well above expectations. Although this points

to a sustained economic recovery, evidence of continued

weakness in some of Europe’s major economies – along with

the likelihood that tighter austerity measures will rein back

some of the stronger performers – continues to cause

widespread nervousness. Against this, monetary policy

remains highly supportive, with near-zero interest rates

remaining in place both in the UK and the Eurozone.

Economic growth in Central and Eastern Europe (3.7%)

is expected to be double the Western Europe growth rate

(1.7%) in 2010.

Unemployment rates vary hugely by country, but the

overall level of unemployment in Europe has stabilised.

According to Eurostat, The EU-27 unemployment rate

has stayed the same in the seven months to

August. The major exception is Spain where the

proportion of people out of work has risen by

CB Richard Ellis | ShopFront 2010/11




1.5% since the end of 2009 and now stands at 20.5%, the

highest level in Europe. Unemployment has also risen in

Greece and Ireland and is at a 10-year high in both countries.

Confidence levels across Europe have been a little shaky

in 2010 but have shown marked improvements since last year.

The EU consumer confidence indicator is approaching its

long-term average level, having moved up by 20 points since

its low point in early 2009. Retailer confidence has entered

positive territory for two consecutive months – the first time

since early 2008. It has not been a smooth ride however, with

sentiment dipping in the second quarter as the reality of

planned austerity measures hit home. In spite of the

uncertainty that this brings to the retail sector, both consumer

and retailer confidence improved again in Q3.

Retail sales held up relatively well in the first of half of 2010,

on the back of improving consumer sentiment, with a number

of major European retailers reporting solid like-for-like sales

growth. In the third quarter, retail sales growth was less strong

and is forecast to moderate further in the coming months

as Government austerity measures kick in. Christmas sales

are expected to increase slightly on last year, with online

sales expected to account for much of the growth over

the festive period.

In spite of these concerns, Europe remains an attractive

target for international retailers. Best Buy opened its first UK

stores in 2010, whilst others, including Hennes & Mauritz

(H&M) and Aldo, expanded aggressively throughout the

region. Retailers are planning to increase the number of stores

they open in 2011, but they are also looking to minimise risk

and will focus more on entering new cities in countries where

they are already present. For prime pitches in the best

locations occupier demand is strong, vacancy rates are low

and footfall is holding up. In contrast, demand for secondary

retail space has fallen further and vacancy levels are at all time

highs. The flight to quality continues, and has exacerbated

the polarisation between the best and the rest.

Tough negotiations between retailers and landlords were a

theme throughout 2009 and this continues in some markets as

retailers look to secure better terms, including longer rent-free

periods and fit-out contributions. Levels of key money have

also reduced and are now paid in relatively few locations, most

notably in Paris, London and Munich.

The CB Richard Ellis EU-27 Retail Rent Index,

which reflects the rental value of prime

retail units, fell by 0.6% in Q3 and

by an annual rate of 0.7%. In the

majority of markets rental levels

remain stable, although Vienna,

Helsinki, The Hague and

Edinburgh all witnessed rental

increases in the third quarter. In

contrast, rents fell in Madrid by

14% contributing to the quarterly

decline. Low vacancy levels in

the top locations and the lack of

new space coming on stream is

helping to maintain prime rental

levels in the core markets,

whereas rents in many secondary

locations are still falling.

Average weighted retail yields,

based on CBRE EU-27 Retail Yield

Index, decreased by 7 basis points

in quarter three and by 30 basis

points on the same period last year,

which reflects the continuing strength

of investor sentiment towards the retail

sector. Although generally stable, yields have fallen in some

markets. London, Rotterdam, Brussels and Vienna all saw

yields fall by 25 basis points in the third quarter. Retail

investment activity in Q3 was concentrated in only a handful

of markets, with 90% of all activity in the top five countries.

The historically more liquid markets, the UK and Germany,

continue to dominate, reporting a quarterly increase of 22%

and 30% respectively, and accounting for 70% of the Q3

European total. In contrast to H1 2010, there were only

a few large transactions in the UK this quarter, with the most

significant deal being the €1 billion+ sale-and-leaseback

of Tesco supermarkets. France, Poland and Spain were

the second tier of markets to see robust activity levels, each

reporting retail investment volumes of over €450 million in

the third quarter.

Investor demand is almost exclusively focused on prime

product in core markets, with little interest in more secondary

product in sight, which means that quarterly investment

volumes are likely to remain in the €7-9 billion range for some

time to come.

Neville Moss – neville.moss@cbre.com




The UK retail sector as a whole has

performed remarkably well in 2010.

Retailers have responded to the tough

market conditions by cutting costs,

streamlining their operations, optimising

their supply chains and improving their

merchandising and marketing.

The success of these efforts can be

seen by the fact that many top retailers,

including Sainsbury’s, Morrisons, Tesco,

John Lewis Partnership, Next, Boots,

Marks & Spencer, Pets at Home and

New Look, have all continued to grow

sales and profits despite the challenging

environment. In addition, there have been

few of the failures that blighted the sector

in 2009.

However, as we move into 2011 new

threats are emerging in the form

of tax increases (UK VAT rises

to 20% on January 4),

widespread budget cuts in

the public sector plus

upward pressure on inflation

and mortgage rates. At best

these challenges will subdue

retail growth; at worst there’s a

risk of contraction.

Retailers are already coping with

increased raw material and commodity

prices, rising transport costs and wage

inflation – particularly in low-wage

manufacturing bases such as China.

An economic downturn or double-dip

recession would be a worrying

development for many. Even if the

economy avoids this worst-case

scenario, landlords with property in

locations where there’s no pent-up

retailer demand may have to accept that

there will be less potential for rental

growth, as retailers struggle to balance

their income and costs in order to

maintain or grow profitability.

RetaileR activity

In the past few years the UK has

welcomed a large number of overseas

retailers, in particular a strong influx of

high performing US brands aiming to use

the UK as a launch pad to expand into

Europe as their domestic market

matures. Anthropologie,

Urban Outfitters, Best Buy,

Hollister, Abercrombie & Fitch

and Apple are all established

and growing; meanwhile

Victoria’s Secret is opening its first

store on Bond Street in 2012 and

is expected to have a major

impact on the UK lingerie

market. In addition, The North

Face, Vans and Nike are all looking

to acquire further sites.

It’s not all one-way traffic, though:

Arcadia and Tesco are both looking to

establish themselves in the US market,

while a number of other UK retailers are

actively pursuing overseas

opportunities, including the

fashion brands All Saints and

Superdry, plus Marks & Spencer,

Mothercare and Boots.

From a sector perspective,

supermarkets continue to perform

strongly, driven by growth in non-food

sales. The major groups continue to

broaden their non-food offer as

well as rolling out smaller,

convenience store formats

within high street locations

– the latest group planning

to enter the convenience

market being Morrisons.

The UK’s biggest retailer,

Tesco, continues to expand

at home and overseas,

while elsewhere the merger of The

Co-operative Group and Somerfield

is now working well. Sainsbury’s has

signalled its continued resurgence by

opening its largest UK supermarket, a

10,000 sq m store in the London suburb

of Crayford. It is also exploring overseas

markets including China.

The luxury goods sector has

performed particularly well, with strong

trading at Harrods and among the luxury

brands owned by LVMH and Richemont.

This is a trend that US retailer Coach

hopes to capitalise on with its first UK

stores, on London’s Bond Street and

at the Westfield London shopping

centre, both of which will be open

by the end of 2010.

Another recent trend is for retailers

to enter into joint ventures. They

include Waitrose and Mothercare at

Boots, Waitrose and Starbucks at

motorway service stations, Currys and

Phones4U, plus a combined HMV and

Waterstone’s superstore concept that has

concessions for Paperchase, Starbucks

and Orange. In addition, there’s been a

In the past few years the UK has welcomed a large number of overseas

retailers, in particular a strong influx of high performing US brands

aiming to use the UK as a launch pad to expand into Europe.

new trend for department stores to target

specialist markets, an example being

Selfridges’ recent opening of its Shoe

Galleries, the world’s biggest shoe

department containing more than

55,000 products.

One of the sectors to watch in the

coming 12 months is discount general

merchandise, in particular brands such

as Poundland, Home Bargains and B&M

Retail. These are typically low margin

operators that tend to take space

vacated by retailers which have failed or

downsized. However, it is yet to be seen

whether all of these retailers will stand

the test of time. With tough

competition for the limited

amount of suitable units

currently available, plus the

impact of rising commodity

prices to contend with, some

may find their already slim profit

margins coming under pressure.

Shopping centReS

The economic downturn has seriously

affected the supply of new shopping

centre space. This year’s only major

openings are The Rock at Bury and

One New Change in the City of London.

Next year will see the opening of

Westfield Stratford City in London, Trinity

Walk in Wakefield, Yorkshire, plus a few

smaller schemes. A sign of returning

optimism is highlighted by Leeds where

Land Securities and Hammerson are

ShopFront 2010/11 | CB Richard Ellis



progressing with plans to deliver their

respective schemes. Land Securities

is first on site with Trinity Leeds, due

to open in Spring 2013.

The limited development pipeline is

unlikely to satisfy growing retailer

demand for modern, flexible space,

forcing retailers to explore new format

stores with which to continue expanding.

It will also increase competition for prime

space, which in turn should push up

rents in top-performing centres. Indeed

we are already seeing intensifying

competition for prime space in Central

London, major metropolitan cities and

super-regional shopping centres. As a

result of this competitive pressure, lease

terms in some instances have moved out

from 10 years to 15 years.

The situation for shopping centres in

secondary and tertiary locations is very

different. Retailer demand has been

exceptionally poor, though as ShopFront

went to press some interest has been

rekindled where rental terms are

sufficiently favourable. This has impacted

on the investment market, where sellers

have had to reduce the price of assets to

offer higher yields in order to attract buyers.

high StReetS

A further impact of the decline in new

shopping centre development is that

retailers are once again looking to the

high street to fulfil their needs for space.

However, to capitalise on this landlords

must reconfigure their properties to meet

what now looks to be a permanent shift

in demand towards larger (500 sq m to

2,500 sq m) units, driven in most part by

fashion brands such as Next, New Look,

CB Richard Ellis | ShopFront 2010/11

Hennes & Mauritz (H&M) and Republic,

plus department store groups looking

to downsize.

With its sizeable local catchment

boosted by millions of overseas tourists,

Central London remains the UK’s premier

high street location. This year rents in

Oxford Street have reached a new record

high of £7,640 per sq m, per year

(In terms of Zone A*), and Primark has

acquired a second store on the street.

In addition, international retailers

including New Yorker, Blanco, G-Star

and Custo Barcelona are all looking for

space to open flagship stores in the

West End. Covent Garden is also set

to benefit from Apple’s newly-opened

second London store in King Street.

Given the strengthening demand

for Central London space, some retailers

have moved to guarantee their futures

by buying freeholds. So far Hermès

and Max Mara have both purchased

freeholds for stores in Bond Street.

In future, new developments such as

Park House on the western end of Oxford

Street should provide additional

opportunities for international brands

seeking to enter the Central London

market. In the meantime retailer demand

is providing a boost to other Central

London locations, such as King’s Road

and Kensington High Street.

Outside London the secondary and

tertiary high street markets find

themselves in a similar situation to their

equivalent shopping centres, with high

vacancy levels in many towns across the

country. The government’s austerity

measures are expected to hit areas

including Wales, Scotland and Northern

England particularly hard, since all

have a relatively high proportion of

employment provided by the public

sector. However, high streets located

within London’s M25 orbital motorway

are considered to be less reliant on the

fortunes of the UK public sector, so

retailer demand has held up better there

than elsewhere.


Retail paRkS

As with shopping centres, the UK’s

out-of-town sector suffers from a limited

development pipeline, due predominantly

in this case to a restrictive planning

environment. Although it’s a mature

market, it has been boosted by growing

interest from major department store

groups that have become frustrated by

lack of new shopping centre supply. The

John Lewis Partnership is rolling out its

Home format within retail parks, while

other companies that have initiated

out-of-town strategies include

Debenhams and House of Fraser.

In the fashion segment, a number of

retailers have followed the lead of Next,

Arcadia, River Island and New Look in

targeting retail parks. They include

TK Maxx, H&M and Republic. In addition,

Pets at Home and Hobbycraft are both

expanding their store estates.

A further major growth area looks

likely to be homeware, as high street

retailers look to continue their growth by

focusing on this market segment.

Formats already launched include

Next Home, TK Maxx’s HomeSense and

Asda’s Asda Living concept. We anticipate

that other retailers with homeware operations

will look at similar standalone concepts.

These developments reflect a growing

realisation among major retailers that

meeting their future growth ambitions

will require an integrated market strategy

covering high streets, super-regional

shopping centres, retail parks and

the internet.

Ciaran Bird – ciaran.bird@cbre.com

* Zone A (ITZA) is an approach which places a higher

value on certain parts of a shop over others. The number

reported is the value placed on the most expensive part of

the shop and will therefore be much higher than the average

per sq m value for the entire unit.


CB Richard Ellis | ShopFront 2010/11

After suffering declines

believed to be in the region

of 5-10% during 2009,

retail sales in France have

stabilised this year in

pretty much all sectors.

The consumer has made

a cautious return to the

market, in particular during

the winter sales period, but

with a focus on quality,

niche items that offer

genuine inspiration rather

than mass-market goods.

Prime retail rents in

both the high street and

shopping centres have

generally remained stable

throughout the year, but

there’s been an accelerated

fall in rents in secondary or

tertiary locations: anything

from 20-50% in the very

worst cases.


What in 2009 was becoming very much a tenant’s market

became far more balanced this year. Key money levels have

steadied but some retailers looking to rationalise their store

portfolios throughout 2010 have been forced to offer discounts

of 10-20% or more against established levels in order to get

the deal done within their self-imposed deadlines.

It’s worth remembering, however, that any commentary

of this type about the French retail property sector is

compromised to an extent by the ongoing lack of statistical

transparency that characterises this market. Instead, we

must gather information from our extensive network of

clients and contacts across the country. The good news in

2010 is that this issue is finally making its way onto the

agenda of influential groups including the Conseil

National des Centres Commerciaux (National Council of

Shopping Centres), which is keen to champion a broader

flow of rental and transactional information.

The outlook for 2011 is still very much open to

question. This year has seen a number of retailers

looking for good space which has been limited by

too few sellers coming forward. Next year,

particularly if the all-important Christmas trading is

poor, we might find more retailers closing stores,

leading to oversupply dragging the market

downwards. That said, we don’t anticipate any

major corporate failures, since the market overall

is in better shape than it was in the immediate

aftermath of the credit crunch. Unlike other

markets, France has not seen any major collapses,

more a restructuring of portfolios.

RetaileR activity

The food segment – both retailers and

restaurants – is still the most energetic in the

market and demand for new space looks

likely to remain strong into 2011. Domestic

supermarket chains including Casino Group,

Carrefour, Monoprix and Auchan are

leading the way, aggressively hunting space

from 80 sq m up to 4,000 sq m to suit their

various store formats. The intensity of this

home-grown competition has led to a

slowing in the growth of the two most

prominent international players in the

sector, Germany’s Aldi and Lidl.

Within the largest retail segment,

apparel, the youth-focused fast fashion

area has suffered worst, owing not least

to the continuing arrival of new players

to chip away at the market shares of

existing brands. New and exciting

young brands entering the market

include the American retailers Hollister

and Forever 21, while others seeking

to grow their existing store estates

include Desigual, G Star, Guess and

Tommy Hilfiger. In addition, Hennes & Mauritz (H&M) and the

brands of the Inditex Group remain active.

We’ve seen UNIQLO come out of the box very strongly,

cleverly building up great anticipation for its first Paris store,

which opened in October 2009. We understand that the store

has proven very busy and popular with French consumers,

whetting UNIQLO’s appetite for further expansion in Paris and

then elsewhere in France.

Two of the more hotly-anticipated fashion brands entering

France are Abercrombie & Fitch (A&F) and Banana Republic.

A&F is opening a store in March 2011 on the Champs Elysees,

which might just be the biggest retail event of next year.

Banana Republic is still seeking the optimal space for its market entry.

Outside of fashion, Apple now has a fifth French store up

and running, with genuine excitement surrounding its future

growth prospects. It is possibly the biggest phenomenon in the

market today.

two of tHe moRe Hotly-anticipated faSHion bRandS enteRing

fRance aRe abeRcRombie & fitcH (a&f) and banana Republic

HigH StReetS

The biggest positive change to the high street is the ongoing

transformation of municipal transport infrastructures, coupled

in many cities with a redevelopment of the public realm.

New and extended tramways, bus routes and cycle paths

are being installed in cities including Paris, Lyon, Marseille and

Mulhouse. Meanwhile, the Vélib’ public cycle hire scheme,

which launched in Paris in 2007 (although a similar version has

been operating in Lyon since 2005), is regarded as a big success.

The aim with all these initiatives is to create more integrated

travel and transport systems, in turn making town and city

centres more accessible and pleasant places to visit. Early

indications are that these programmes are on the right track.

SHopping centReS

The pipeline of shopping centre development (see table) has

slowed further since last year, with several opening dates

having been pushed back. The reason for these delays is that

developers with the financial capacity to do so are postponing

schemes for an extra year or more in the hope that the leasing

environment will have improved.

Some of the more speculative schemes have even been

abandoned entirely. In the long run this is likely to be good for

the market, as news of centres struggling after opening tends to

damage sentiment.




(sq m)

Odysseum Montpellier Ségécé 2011 n/a n/a

Gare de St


Paris Ségécé 2011 10,000 80

Confluence Lyon Unibail – Rodamco 2011 52,000 80

Parly 2


Les Portes

de Gascogne



Unibail – Rodamco 2012 n/a n/a

No. of


Toulouse Simon Ivanhoe 2014 66,100 160

source: CB Richard Ellis

But tough environments also offer a chance for the best players to shine, and we

think that Unibail-Rodamco has the creativity and financial strength to recapture the

retailer’s and consumer’s imagination in the larger, regional shopping centres that are its


out-of-town/Retail paRkS

Having been the worst performing retail environment since its peak in 2008, the

out-of-town sector has this year shown signs of a revival, judging by the growing

numbers of developers who tell us they’re looking to build new parks or extend

existing ones.

The ‘big box’ retailers are once again in the market for space from 1,500

sq m right up to 6,000 sq m, so there is always demand whenever units in

popular parks crop up. Rents are still some way off their peak, perhaps by as

much as 30-40% in some cases. Today levels of €80 per sq m per year are

achievable in retail parks, rising to approximately €120 per sq m per year at

the top end. This is in sharp contrast to figures of €800-€1,600 per sq m

per year for similar unit sizes in shopping centres.

Landlords of secondary schemes are proving more willing to offer

substantial rental discounts to entice retailers into vacant space, so as to

avoid total loss of income.

It is noteworthy that retailers seeking to take space in retail parks tend to

be those whose operating margins are thin and who therefore cannot find

the footprint they need at affordable rental levels in city centres and

shopping centres. These include home furnishing, DIY and garden centres,

value clothing, children’s wear and baby wear, toys and restaurants. With

the exception of IKEA and the fast food chains, the tenant line up is mainly

made up of national chains.

legiSlative enviRonment

The fallout continues from France’s wide-ranging economic liberalisation

law – the so-called LME (loi de modernisation de l’economie).

This law is particularly affecting the following areas of retail:

• The planning approval process remains complex, time consuming

and open to political agendas. There are rumours that the whole

structure may be abolished, which we think is unlikely. At the very

minimum, some radical change is to be expected, however.

• The liberalising of store sales periods appears to have merely

confused consumers and disturbed the retail market’s

equilibrium. We may see retailers taking matters into their

own hands and working together to ensure sales periods

correspond, so that shoppers don’t require frequent trips to

high streets or shopping centres to take advantage.

Significant lobbying has occurred to at least agree what the

fixed and floating periods should be, together with their duration.

• The Sunday trading policy, while now more flexible, is

confusing in respect of what constitutes a tourist zone (and

therefore enjoys even more relaxed hours) and what doesn’t.

The winner is undoubtedly the Champs Elysées, now

officially and finally deemed a tourist zone. However, the

big Paris department stores, despite heavy tourist footfall,

do not qualify as tourist zones so their Sunday opening

hours are restricted. In addition, some shopping centres

are opening on Sundays only to find several of their

tenants keeping their shutters closed, since opening is not

compulsory. Further refinement to this policy may be required.

Chris Igwe – chris.igwe@cbre.fr



CB Richard Ellis | ShopFront 2010/11

Though German retailers, especially

those at the smaller end of the spectrum,

are notoriously secretive about their

sales figures, our market intelligence

points to a solid performance overall in

2010. By the end of the year we expect

total sales to be up by around 2% year-onyear,

helped by strong performances in prime

high street and shopping centre locations.

Consumer sentiment has improved

on the back of positive news about

unemployment and economic prospects

generally. Even last year consumers kept

on shopping despite the uncertain

environment, helping Germany to

maintain its place as Europe’s number

one retail market by volume, according

to figures from Hauptverband des

Deutschen Einzelhandels (Association

of German Retailers).

Germany’s top 10 cities for retail are

led by Berlin, which has more than three

million inhabitants. Although Berlin’s

residents have less spending power than

the average German citizen, the city’s

status as Germany’s capital plus a very

healthy tourist trade keep it at the top

spot. In second place is Hamburg, based

on its huge market potential, while

Munich comes third thanks to its citizens’

purchasing power, which is per capita

the highest among Germany’s major cities.

However, some of the most exciting retail

environments are outside the established

top 10. For example university cities like

Muenster and Freiburg have youthful

populations that are hugely attractive to

trendsetting labels such as Adidas

Originals or Bench. Meanwhile Leipzig’s

size ranks it out of the top 10 but its

attractively refurbished city centre makes

it a magnet for retailers.

From a leasing perspective the market

has drifted in favour of the tenants.

Retailers no longer take any store that’s

available, instead spending much more

time assessing each opportunity with no

compromises accepted.


In some cases landlords have become

more open to the idea of incorporating

a sales turnover element within the total

rent, while the top brands can also obtain

contributions towards store fit-outs and

other start-up expenses. Key money

has all but disappeared, with only truly

exceptional spaces still attracting

this premium.

For 2011 and beyond we expect the market to

continue growing steadily, with a trend towards

further internationalisation.

For 2011 and beyond we expect the

market to continue growing steadily, with

a trend towards further internationalisation

of the retailing offer. German shoppers

are hungry for new brands and new

concepts, particularly within the

specialised fashion/accessories segment.

We’ve already seen concepts such as

Fossil, Anouk, Monsoon, Accessorize and

Urban Outfitters enjoy good success in

Germany to date, but they represent the tip

of the iceberg, as German consumers have

welcomed more than 70 new retailing

concepts since late 2007.

REtailER aCtivity

The fashion segment has led the way

in terms of retailer activity this year.

Domestic brands that have expanded

their estates include Gerry Weber, C&A

and Ernsting’s Family. They have been

looking to fill gaps within the top ten cities

as well as focusing on smaller cities of

around 50,000 people where they have

not previously been represented.

New colour has also been brought to

this segment by a number of overseas

entrants, in particular Next (UK),

Desigual (Spain), Gina Tricot (Sweden),

Hollister (USA) plus two key sub-brands

of Sweden’s Hennes & Mauritz (H&M):

Monki and Weekday. In fact H&M now

has no fewer than seven different retailing

concepts active in Germany.

For us, though, the biggest future

impact may be made by Primark, which

currently has stores in Bremen and

Frankfurt and is actively looking for more.

Primark’s value for money approach suits

the German way of consumption and the

CB Richard Ellis | ShopFront 2010/11

company’s focus on city centre locations

gives it more visibility than budget

fashion rivals such as KiK or Takko which

tend to locate in retail parks.

Outside of fashion the grocery and

pharmacy segments have also

performed strongly, particularly REWE

and EDEKA for supermarkets plus

dm-drogerie markt and Rossmann for

drugstores. Furniture and home

accessories retailers have been active

in the market, too. On the flipside, the

boom times for mobile phone retailing

seem to be over, with very little leasing

activity so far this year.

Germany has seen some retailers

struggling, though only one major name,

Hertie, has disappeared completely.

Others such as Woolworth and Keilbach

have been bought out by rival retailers

with some stores and jobs preserved,

while Germany’s highest profile

department store chain, Karstadt, was

rescued by the billionaire investor Nicolas

Berggruen in June of this year.


Munich remains Germany’s most

expensive high street location for

retailers, with top rents there touching

€3,600 per sq m per year, against a

national average for prime locations

of around €3,000 per sq m per year.

Smaller but dynamic cities including

Aachen, Bonn, Muenster and Freiburg

have all seen rents growing faster than

average, as retailers compete for limited

high street space.

Overall, the high street has lost a little

market share to shopping centres, but

this is more to do with expansion in the

latter area, which has made it easier for

retailers to find appropriate space for new

or expanding concepts.

SHoppinG CEntRES

After the large numbers of new shopping

centres that were unveiled in 2009, the

pipeline slowed a little, with the most

prominent new schemes being Louisen

Center Bad Homburg (10,000 sq m retail

space), Rathaus Galerie in Leverkusen

(22,600 sq m) and Rhein-Galerie

Ludwigshafen (30,000 sq m).

Next year sees the 70,000 sq m

Boulevard Berlin open in the capital. This

scheme is in something of a challenging

location so its initial performance will be

viewed with interest by the market. Also

due to open in the next two to three years

are the 35,000 sq m Skyline Plaza and

31,000 sq m Honsell Dreieck, both in

Frankfurt, plus Munich’s 23,000 sq m

Pasing Arcaden.

out-of-town/REtail paRkS

A restrictive planning regime at federal

(state) level remains a hurdle for further

development in this sector. However, the

federal Supreme Court in North Rhine

Westphalia has this year cancelled two

planning codes that restrict out-of-town

development. North Rhine Westphalia

tends to be the trendsetter for Germany’s

federal planning environment so it’s

expected other states will follow its lead.

Within the parks themselves there’s

been a distinct trend towards a

‘softening’ of the offer, with the budget

fashion brands looking to expand their

store estates via retail parks and some

landlords completely reconfiguring them

into ‘light shopping centres’.

Rents overall have been pretty stable

this year, at around €240 to €300 per sq m

per year, but can vary considerably

depending on the location and age of

the park. Even ‘big box’ centres being

built look likely to take the form of

neighbourhood schemes focusing on

everyday household items, rather than

purely DIY and bulky goods.

Karsten Burbach –



For Spain’s retail industry, 2010 has so far

been a year of slow and steady recovery.

Although figures covering the complete

market are not readily available, CB Richard

Ellis manages sufficient numbers of Spanish

shopping centres to make credible analysis

of footfall and sales turnover. From January

to July we’ve seen footfall at schemes within

our management portfolio up slightly (0.2%)

on the same period last year, while average

turnover has risen by a healthy 4% year-on-year.

It should be remembered that 2009 saw

turnover in these centres falling by around

5-6% so the market started from a lower

base; also the overall 4% increase this year

covers wide differences in individual sector

performance. However, the figures achieved

so far are undoubtedly encouraging.

For the high street we believe a similar

picture has emerged this year, with some


reversing of the downward trends in retail

sales experienced during 2009. It’s still very

much a tenant’s market though, in all but the

very best locations. Landlords have been

deluged with retailer requests for lower

rents, many of them sent quite speculatively,

so they’ve needed to exercise great discipline

and accuracy in assessing each case in

order to protect the value of their investments.

Looking forward, we see the market

continuing in the same vein through 2011

and beyond. The best estimates for the

Spanish economy are that further downturns

are not imminent but there’s little prospect of

significant growth for several years to come.

Thus retailers will continue to be very

choosy, focusing only on the best locations,

using their bargaining power to the

maximum and taking their time over the

decision-making process.

RetAIleR ActIvIty

Retailers and in particular, international

retailers, have been active throughout

2010, especially in the two main shopping

cities of Madrid and Barcelona.

In the fashion segment the key

brands now working on market entry

include Abercrombie & Fitch (A&F) and

Forever 21, while the Canadian shoe

retailer Aldo has opened its first high

street store and two shopping centre

stores, all in Madrid.

More established fashion chains

such as Blanco, Hennes & Mauritz

(H&M), Primark and C&A all continue

to expand, though quite selectively in

terms of locations. Meanwhile Portugal’s

Sonae Group is rolling out the three

retail brands it launched into Spain

last year, namely Sport Zone (sporting

goods), Worten (electricals) and

Zippy (children’s clothing).

One country whose retailers are making

notable inroads into Spain is Germany.

Last year Deichmann announced

ambitious plans for up to 100 Spanish

shoe stores, whilst this year two more

German retailers are on the lookout for

CB Richard Ellis | ShopFront 2010/11

space. First, the METRO GROUP is

extending its Saturn electronics format

from ‘big box’ outlets into high street

units of around 10,000 to 15,000 sq m.

Secondly, the fast-expanding home

accessories retailer Butlers has now

entered the Spanish market in both high

street and shopping centre locations.

Butlers’ timing appears to be good,

with the Spanish household segment

having rebounded from its depressed

state in 2009. During the residential

property crisis sales of furniture and

other household items shrank very

significantly; now there are opportunities

for retailers to fill the gaps. Aside from

Butlers the French furniture chain

Conforama and Denmark’s JYSK are

also seeking new stores.

Next year we think the prevailing

economic conditions will play into the

hands of value brands across the retail

spectrum. Fashion retailers Primark, Kiabi

and C&A all stand out as examples of this.

The greatest excitement in the market,

however, surrounds Apple and Hollister.

Both are very exclusive and attractive

brands right now and both have the

ability to change consumers’ shopping

habits. For example, Spain’s two Apple

stores both saw massive queues hours

ahead of opening for the first time.

Meanwhile Hollister is set to reignite the

fashion segment with its newly-opened

stores in Madrid and Barcelona.

HIgH StReetS

As already mentioned the primary high

street shopping locations in Madrid and

Barcelona have remained popular

with both retailers and consumers. More

than 54% of the retailers currently present

in both cities are international brands,

most of them from Germany and France.

Store space most in demand is

between 100 sq m and 300 sq m.

However, it is worth noting that the most

aggressive retailers in the market are

looking for space between 2,000 sq m

and 5,000 sq m. Most of these are

brands that are new to Spain, such as

Forever 21, Apple and Abercrombie & Fitch.


Spain’s shopping centre development

pipeline has found something of a

ottleneck in the form of the smaller

retailers which are vital to filling out

schemes once the more acquisitive

brands have taken units. With bank

financing remaining very difficult to

obtain, these smaller players simply do

not have the resources to take up space

in new developments, a problem serious

enough to cause some projects to be

delayed or even shelved altogether.

For example, of the three most

important schemes expected to open in

2011, only the 180,000 sq m centre in La

Coruña being developed by Invest Cos

group is still on track. Development has

paused on both British Land’s scheme in

Zaragoza and LSGIE’s development

in Madrid.

That said, shoppers in Mallorca look

set to get their prestigious new shopping

and entertainment centre, Aqua Mágica,

as soon as the lead developer Riofisa

finally secures the necessary permits.

Construction of the 60,000 sq m gross

lettable area (GLA) centre might begin

next year.

There are also two development

groups which we think will be particularly

active in Spain in the coming years. The

first is Inter IKEA, which builds schemes

with IKEA as their anchor. This group has

just completed the 150,000 sq m GLA

LUZ Shopping project in Jerez, southern

Spain, with a further 100,000 sq m GLA

development set to open in Valladolid

in 2012.

Also very strong in the market today

is Carrefour Property, which has

consents to build further retail within its

existing hypermarket-anchored schemes.

These extensions typically range from

20,000-40,000 sq m and allow for

considerable improvement in the retail

offer around the hypermarket.



The out-of-town segment has been

slow to adopt a more mixed offering for

consumers, still being led predominantly

by bulky goods. One or two fashion

brands, including Kiabi and C&A, are

taking space but there’s little movement

beyond that. Thankfully the rebound in

consumer demand for household goods

and furniture has helped the bulky goods

retailers that proliferate in these parks to

keep their existing units trading while in

some cases looking to get back on the

expansion trail.

legISlAtIve cHANgeS

Though Spain has now adopted the

EU’s Directive on Services (known as

the Bolkestein Directive) the federal

government has left it to the autonomous

regional authorities to implement it in the

area of planning.

So far the regional governments have

managed to find excuses to maintain

their traditional approaches in this area.

This means we are likely to see little

change to the present inconsistencies in

the planning environment, characterised

by the flexible and relaxed approach that

prevails in areas like Madrid, Valencia

and Murcia against the much tighter

regime in Barcelona and the Balearic


Alex Barbany – alex.barbany@cbre.com

ShopFront 2010/11 | CB Richard Ellis

The minor slowdown experienced by the Chinese retail sector

from mid-2008 through 2009 proved to be just a temporary blip

and this year the market has once again been strong and active.

Despite a burgeoning development pipeline, retail stock in

first-tier and second-tier cities remains tight, allowing rents to

continue growing. The market is still tilted very much in favour

of landlords, with lease terms mostly around three years and

no security of tenure.

That said, some international fashion anchors have been

able to secure 10 year leases. Some strong retailers are also

looking to landlords to share the risk or the potential upside,


pushing for leases with either base rent or a turnover

percentage, whichever is highest.

China’s top four cities for retail, Beijing, Shanghai,

Guangzhou and Shenzen, between them provide access to

retail markets totalling more over 50 million consumers. These

markets have become wealthier and more sophisticated –

Greater Shanghai alone supports three Louis Vuitton flagships

with another one to open by 2013 – as a new breed of youthful

entrepreneurs make their fortunes and restrictions on travel and

outward investment prevent that money being spent overseas.

Secondary cities, including Ningbo, Hangzhou, Nanjing and

Wuhan, are also seeing rapid growth as luxury retailers in

particular look to expand from their established bases in the

primary locations.

REtailER aCtivity

Retailers – both domestic and international – have continued

to expand throughout 2010, although with a slightly more

cautious approach than in previous years. The strength of

some domestic players can act as a hindrance to new

entrants from overseas; in addition some of China’s most

powerful retailers, such as Suning (electricals) and Li Ning

(sportswear), are starting to look at international markets

for expansion opportunities.

Among the international players present in China fashion

brand UNIQLO is perhaps the star performer, closely followed

by Hennes & Mauritz (H&M). UNIQLO has got its product, store

design and marketing exactly right for the Chinese market. It has

almost 60 stores already trading in China, including a recentlyopened

3,600 sq m flagship store in Shanghai, and it is the

retailer all landlords are chasing.

It was notable too that Levi Strauss recently chose Shanghai

to launch its new global brand, dENiZEN, with a first store

opening on Nanjing Road West.

Looking further ahead, we’ve seen the UK’s supermarket

chain Sainsbury’s install a team in Shanghai to assess

opportunities in the Chinese market. Meanwhile Gap is

expected to expand rapidly from its existing base and the

Korean department store group Lotte has plans for a second

Chinese store to open in 2011. European and US retailers

across all sectors are actively pursuing entry strategies to take

advantage of the substantial growth opportunities represented

by the Chinese market.

City PRojECt dEvELoPER sizE (sq m)

Shanghai IFC Sun Hung Kai 110,000

Shanghai SML ASE Group 148,000

Hanghzou MIXC China Resource 240,000

Nanjing DEJI Plaza Nanjing Deji Property Ltd. 85,000

Beijing Sanlitun

Village North

Swire Properties 75,000

Beijing Olympic Plaza Beijing Xinao Ltd 173 ,000

Guangzhou Tai Koo Hui Swire Properties 120,000

Guangzhou One Link Walk Wong Sung Hing 230,000

Guangzhou Seasons Mall

(Phase one &

Phase two)

JT Land 100,000

Chendu Yanlord


Yanlord Land Group Limited 27,350

Chendu Galleria GTC Real Estate China 50,000

source: CB Richard Ellis


Although shopping centres dominate in terms of new retail

development, the high street plays a prominent role in

Shanghai, where three major streets form the centrepiece of

all retail environments. The high street is also important in a

number of second-tier cities, including Wuhan and Hangzhou.

International fashion and luxury brands looking to gain a

foothold in some of the secondary and tertiary markets will often

take space in one of the department stores that still dominate

these markets, especially if that space comes with some high

street frontage.

SHoppinG CEntRES

The shopping centre is still the most exciting retail environment

in China, and one that is set to be strengthened further as a

significant pipeline of new schemes comes onto the market in

the next two to three years. There have been many large scale

shopping centre openings during 2010 (see table).

While unlikely to satisfy the ever-growing retailer demand,

this impending surge of new stock is forcing existing shopping

centre landlords to raise their game, leading to a noticeable

maturing of this sector.

That said, shopping centre ownership remains exceptionally

fragmented and the competitive prices domestic investors are

prepared to pay means the investment market is a very difficult

one for international groups to enter. Around two-thirds of the

existing development pipeline is the responsibility of local

developers, while the remaining third is primarily being

developed by firms from Hong Kong, Singapore and Taiwan.

Less than 10% belongs to overseas players.

out-of-town/REtail paRkS

Whilst retail parks are still not widespread, there is set to be

significant growth in the factory outlet sector due to an

exponential growth in car ownership and a planning

environment that is significantly looser than in the mature

markets of the West.

Two of the most successful existing outlet centres include

Beijing’s Yansha Outlets and Shanghai’s Qingpu. There are

several high profile projects in the pipeline over the coming

few years that will provide European/US standard outlet

centre accommodation.

Dominic Stead – dominic.stead@cbre.hk


got its product,

store design and

marketing exactly

right for the

Chinese market

ShopFront 2010/11 | CB Richard Ellis



The Russian market hit its lowest point in the first half of 2009

and since then the trend has been positive. Retail sales have

been encouraging, up 3.4% for the first half of 2010 compared

with the same period in 2009 and up 6.6% July to July, with

seven consecutive months of sales growth.

As ShopFront went to press retail development and expansion

had recovered its losses and was back to its mid-2008

levels. However, these expansion plans are proving more

responsible second time around, with retailers being

choosier about locations and willing to negotiate more

aggressively than before.

What is clear is that two retail property markets have

emerged: prime locations and everything else. For prime

shopping centres and central locations – particularly in

Moscow – landlords can still command strong rents,

with some rental values back to pre-crisis levels,

although not at their absolute peak. However, away

from prime territory it is very much a tenant’s market.

REtailER aCtivity

A general trend in Russia is that the larger retailing

groups are getting stronger while weaker ones

continue to struggle. Among the major domestic

groups X5 Retail Group, Magnit and OK have all

expanded within the supermarket sector, while in

the consumer electricals and electronics area

Eldorado and M.Video have both extended their

store portfolios.

The weaker retailers which have collapsed include

Grossmart, ALPI, Betalink, Arbat-Prestije and

Banana Mama. In addition, the hypermarket

operator Mosmart has needed the support

of its banks in order to survive, while the

consumer electricals retailers Mir and Technosila

are both struggling: the former was declared

bankrupt in May 2010 and the latter faces a

bankruptcy hearing in December this year.

The larger

retailing groups

are getting

stronger while

weaker ones

continue to


CB Richard Ellis | ShopFront 2010/11

The luxury sector has also struggled, although lately there have

been some signs of recovery. Fast fashion has continued to

perform well, however a number of international brands operating

in that sector have paused their expansion plans, due to concerns

about the wider economic problems in Russia.

International retailers are still targeting the Russian market. They

include Carrefour, which is evaluating the acquisition of a local

player to make what would be its third attempt to become

established. Walmart is also actively seeking an opportunity to

break into the market, while Marks & Spencer has arrived via a

franchise arrangement with a Turkish company. Meanwhile Auchan is

looking to expand its presence.

SHoppinG CEntRES

Last year shopping centre development fell by 29% year-on-year, with

1.8 million sq m built compared with 2.5 million sq m in 2008. Today

development is focused on the primary markets and those with

consumers possessing the highest disposable incomes, such as

Moscow, St Petersburg, Ekaterinburg and Novosibirsk.

Moscow in particular has seen a significant number of new schemes

completed in the past 12 months. These include the 170,000 sq m gross

lettable area (GLA) Golden Babylon on Prospekt Mira, which is Europe’s

largest city centre shopping scheme and features the first Moscow

hypermarket of the St Petersburg-based chain O’KEY. Other recent

Moscow openings include the 111,000 sq m GLA Gorod shopping centre

and the 130,000 sq m GLA Vegas ‘super mall’ in the south of the city.

Current development activity, outside of Moscow, is strongest in the cities of

Novosibirsk and Ufa. In Novosibirsk three projects with a combined GLA of

150,000 sq m will be delivered during 2010/11, while in Ufa two centres with a

combined GLA of 120,000 sq m will also open in 2010/11.

In addition, property development group AFI Development has announced that

its 180,000 sq m (114,000 GLA) Mall of Russia project in Moscow will open in

December 2010. This scheme, which is AFI’s largest, has tenants including X5

Retail Group, Marks & Spencer, Gap, Hennes & Mauritz (H&M), Zara, Next and Mango.

We are also seeing a thawing of the frozen development pipeline, with some

projects that had been on hold getting back under way. This is being partly driven

by Russia’s banks, which have stepped back into the market by creating their own

investment vehicles to take co-developer roles.

However, the rate of new development is likely to remain steady rather than spectacular

for the foreseeable future, which will satisfy demand in the next two to three years but

could lead to a shortage of suitable space in the longer term.

HiGH StREEtS/out-of-town

Russia’s high streets are under-developed compared with their equivalents in

Western Europe. Space is in short supply in major cities, including Moscow, with

vacancy rates of only 1-2%. Consequently average high street rents are increasing by

as much as 20%, though they remain below their pre-crisis levels.

In the out-of-town sector, IKEA is completing the roll out of new ‘big box’ stores, including

its MEGA development projects that incorporate other retail brands. IKEA has, however,

become more cautious about the Russian market and no further expansion is currently

planned. Germany’s METRO Group is continuing to expand its consumer electricals

brands Media Markt and Saturn through ‘big box’ locations.

Anna Shiryaeva A - shiryaeva@magazinmagazinov.ru


CB Richard Ellis | ShopFront 2010/11

Calling the bottom of any market is a dangerous game, but

2010 may well be looked back on as the year the Irish retail

sector got over the worst. The initial shock of recession certainly

appears to have passed and consumers seem to be accepting

their reduced circumstances, generating some degree of stability.

Two positive macro economic factors have also helped this

year. First, the euro has weakened from its highs against

sterling. At the point when the two currencies almost reached

parity, Irish shoppers flocked to Northern Ireland and to the UK

mainland to take advantage. That leakage of consumer

spending was exacerbated for a time by a wide differential in

VAT (consumption tax) rates, with the UK VAT rate temporarily

lowered to 15% while the rate in Ireland stood at 21.5%. From

January 1, 2011, this gap will close to just 1% as UK rates go

up to 20% while Irish VAT has already been trimmed to 21%

and is not expected to change in the forthcoming Budget.

That said, perhaps the biggest ongoing drag on the market

is the uncertain outlook for the banking sector. With Irish banks

weighed down by property-related loans, the Government

has moved to free up their balance sheets by creating

a state-owned workout vehicle entitled the National Asset

Management Agency (NAMA).

Loans of more than €20 million made by Allied Irish Bank

and Bank of Ireland for development land and associated

commercial property are being transferred to NAMA. However,

this process is proving far from smooth and public sentiment

towards the banks is very poor. Many people feel that the Irish

economy can’t move forward until this issue is resolved.

REtailER aCtivity

If 2009 was characterised by the knock-on effects of UK

retailers failing in Ireland, 2010 has seen the first significant

domestic players close their doors, including fashion brands

Jean Scene, Sasha and the franchise operator of Vero Moda

and Jack & Jones stores.

On a more positive note, IKEA’s first store in Ireland, at

Ballymun, close to Dublin’s M50 orbital motorway, is trading

strongly, while the successful arrival of upmarket US cosmetics

retailer Kiehl’s to Dublin City Centre supports our view that

exciting and aspirational retail brands can succeed in this

market, even at the luxury end of the spectrum.

Elsewhere, we’ve seen Cult Clothing open its first Irish store,

in Dublin’s Sussex Street, with fashion brands Republic,

Sketchers and Forever 21 making their first forays into the

market, the latter as part of a significant expansion into Europe.

The US toy concept Build-A-Bear recently opened its second

Irish store, in the Blanchardstown Shopping Centre just outside

Dublin City Centre.


Dublin’s City Centre prime retailing pitch spans both sides of

the River Liffey. To the south is Grafton Street, which has been

traditionally focused on the aspirational shopper; Henry Street

to the north, with its mix of department stores complemented

by mass market fashion brands, is thought of as Ireland’s

‘Oxford Street’.

Recently Henry Street and its neighbours have held up

notably well, buoyed by a greater availability of larger units

compared with Grafton Street. This was emphasised with the

recent redevelopment of the former Arnott’s department store

at Jervis Shopping Centre into two units, the larger at 70,000 sq ft

going to Forever 21 and the remaining 40,000 sq ft becoming

a city centre flagship store for New Look.

As ShopFront went to press, though, Grafton Street made

a splash of its own as a deal was finally completed for a new

flagship Disney Store on the site of the former Laura Ashley

outlet on the street.

Exciting and


retail brands

can succeed

in this market.

SHoppinG CEntRES

Given the uncertain outlook for the banking sector and the

mixed performance of schemes that opened during the final

boom years, it’ is no surprise that shopping centre development

has virtually ground to a standstill. The major schemes around

the M50 motorway seem to be performing adequately, with the

Dundrum and Blanchardstown shopping centres trading

strongly. However, many schemes that opened in smaller,

provincial towns – particularly those not anchored by a major

supermarket – have struggled, both in terms of both footfall

and sales volumes.

With developers requiring a significant amount of the floor

space to be pre-let in order to secure funding and retailers

naturally very cautious about signing up to new projects, the

project pipeline has a major blockage that looks likely to remain

in place for the foreseeable future.

lEGiSlativE CHanGES

By far the most significant – and unexpected – Government

intervention in the retail market is the banning of upwards-only

rent reviews, which came into effect on February 28, 2010.

Designed to make life easier for retailers, the lack of

retrospective application has in fact trapped a number of

smaller tenants in long leases that are now effectively

unassignable. It has also placed a further barrier in the way

of any recovery in the development market.

In time, retailers will surely benefit from this greater flexibility

in lease negotiation, even if it may not have had the

Government’s desired effect in the short term.

Caren Leon – caren.leon@cbre.com

ShopFront 2010/11 | CB Richard Ellis




The impact of the financial crisis and

subsequent economic downturn has

been limited in the Italian retail sector.

According to the latest data from the

Consiglio Nazionale dei Centri

Commerciali, turnover growth for

shopping centres has been in the region

of 1.7%, whereas hypermarkets and

supermarkets in shopping centres have

registered a decrease of about 0.6%.

Moreover, shopping centres, factory

outlets and retail parks have achieved

stable footfall and relatively low vacancy

rates. Tenants continue to focus on

occupancy costs, particularly in new

openings, expanded schemes and in

under-performing retail centres. However,

high quality new projects are recording

strong tenant demand.

Italy has not suffered a decline in

rental values because supply is relatively

low compared with Italy’s European

peers, a fact which has previously

ensured consistent rental growth.

Therefore the current rental market

outlook remains stable.

Yet in today’s retail market tenants are

in a stronger position than before the

downturn. Negotiations are much longer

and more complicated but the duration

ºof the contracts and break options have

not changed significantly, rather the

attention has focused on rents and

maintenance costs.

REtailER aCtivity

While last year most retailers slowed or

froze development strategies, in 2010

expansion plans have recovered, even if

growth is more cautious and cost sensitive.

Domestic operators such as Gruppo

Miroglio (Motivi, Fiorella Rubino and

Oltre) or Gruppo Calzedonia (Intimissimi,

Calzedonia, Tezenis) plan to both expand

nationally into new locations and to

bolster their positions in their existing

CB Richard Ellis | ShopFront 2010/11

regional markets. Both companies have

also upsized their formats and therefore

their expansion strategies include the

acquisition of larger units for new stores

and relocations.

Gruppo Coin, after the acquisition

of Oviesse and UPIM, is changing the

layouts and formats of the existing

shops. The largest OVS Industry store

recently opened in via Torino, Milan,

replacing UPIM, while a new multi-brand

concept of UPIM (UPIM POP) has opened

in Milan and Rome.

Italy continues to appeal to

international retailers, albeit with a more

cautious approach. Market entry

generally starts from northern Italy to

evaluate the market and to expand

southwards subsequently.

The high street retail market has

undergone a general upturn and

traditional stores have frequently been

replaced with international chains. Milan

remains the pre-eminent commercial hub

for both luxury brands and international

chains, with vacancy rates running at

almost nil. Notable openings include the

second European Abercrombie & Fitch

flagship store, plus new Sephora,

Mango, Bershka and Replay flagship

stores along Corso Vittorio Emanuele. In

addition, Geox has opened a concept

store in via Torino and a Marc Jacobs

store has opened in the Brera district.

By the end of the year, Banana

Republic and Gap will also open their

first Italian stores in Milan on Corso

Vittorio Emanuele. Hennes & Mauritz

(H&M) remains active, while Zara has

concentrated development in the south

after strong expansion in northern Italy.

SHoppinG CEntRES

The development pipeline promises a

number of large shopping centre

schemes by major Italian developers

such as Coopsette with its 86,000 sq m

retail scheme in Parma (opening 2013)

and Immobiliare Europea, which recently

opened Le Porte di Catania in Sicily

(52,000 sq m) and has already planned

the development of two other large projects

in Rome and Bologna. Gruppo Stilo intends

to develop a 150,000 sq m gross lettable

area (GLA) regional shopping centre in Milan.

Inter IKEA has just started its

development with two projects, while the

pipeline includes innovative projects

such as shopping Centre Stadio Torino,

integrated into the new Juventus stadium.

In 2010 some important openings

have taken place, including shopping

The development pipeline promises a number of large

shopping centre schemes by major Italian developers

centres in Sicily (the 52,000 sq m Le

Porte di Catania and 25,000 sq m

Poseidon Carini); Liguria (Molo 8.44

Vado Ligure, 21,000 sq m) and Lombardy

(Le Torri di Stezzano, 45,000 sq m).

Further developments will come on line

in Parma, Forlì, Torino, Pompei,

Caltanisetta and Catania in schemes

backed by the major Italian developers.

Extensions are also an important

element of the current construction

programme and represent approximately

10% by space of the total shopping

centre development pipeline.

REtail paRkS

In the retail parks sector DIY operators

have recorded a few openings, while

brands like Decathlon and Maisons du

Monde (recent arrivals in the country) are

continuing their expansion. Fashion

retailers such as H&M are starting to look

at this format and vacancy rates remain

low thanks to the limited offer.

Anna Paltrinieri –


ShopFront Shopfront 201011 2010/11 | CB Richard Ellis


The maturity of the Austrian retail market leaves limited room for

dynamism, which can sometimes be frustrating. However, it also

means we’ve seen few of the fluctuations that have affected

other European markets throughout the global recession.

According to the Austrian Federal Economic Chamber, overall

retail sales in 2010 have increased by around 1.3% year-on-year.

Most sectors have seen positive performance but the leading

ones have been sportswear, jewellery and food.

Retail sales in 2010 have

increased by around 1.3%


The power in the leasing environment is still with the tenants;

even some relatively small retailers have been able to negotiate

low rents and generous fit-out contributions from landlords.

Minimum lease lengths have now settled at five years, against a

historical standard of 10 years. In addition, popular brands such

as Hennes & Mauritz (H&M) or Media Markt can usually obtain

break clauses after two or three years, if agreed turnover levels

are not met.

Provided the market continues to show its present resilience

we think the situation may become more balanced between

retailer and landlord as 2011 progresses. It should also be

noted that a drastic lack of supply in prime high street locations

has given retailers much less room for manoeuvre to negotiate

aggressively there.

REtailER aCtivity

The most significant news to come out of the Austrian retail

sector in 2010 was the demise of the consumer electronics

retailer Cosmos, which was forced to file for bankruptcy at the

beginning of the year. This has been advantageous to Germany’s

METRO GROUP, which has two brands: Media Markt and

Saturn – that are now the only nationwide chains operating

in Austria.

METRO GROUP is using this market power to extend its

footprint in Austria, with plans to roll out a smaller concept of

around 1,500 sq m in high streets and smaller shopping

centres. It also continues to place Media Markt and Saturn as

the primary electronics outlets in new shopping centre

developments, where it is able to take advantage of being the

only option for landlords who must have a large electronics

store to complete their retail mix.

In terms of new arrivals we’ve seen the fashion retailer

Van Graaf open its first Austrian store in Vienna’s Shopping City

Süd. Van Graaf is a subsidiary brand of the German retailing

group Peek & Cloppenburg KG, which is opening a 12,000 sq m

flagship store of its own in Vienna’s Kärntner Straße next year.

US fashion retailer Forever 21 has included Austria among

the target countries for its pan-European expansion. It has taken

a 3,800 sq m space in Vienna’s Mariahilfer Straße, which is opening

in February 2012 after an extensive reconfiguration. At the same

time, it will open another store of around 1,000 sq m in Vienna’s

Kärtner Straße.

While this may seem like quite a short list of new brands,

the reason is less about retailer appetite and much more about

available opportunities. Many international retailers have shown

interest in Austria, but all require the optimal store configuration in

the best locations, with low rents and no key money. Unfortunately

this combination is particularly challenging to find.


Vienna’s shopping heartland is the combination of streets –

Kohlmarkt, Graben and Kärntner Strasse – known as the

‘Golden U’. Of these, Kohlmarkt is the true luxury street,

featuring brands such as Louis Vuitton, Dolce & Gabbana,

Bulgari and Gucci, while the other two have some more

mid-range brands in the mix too. Meanwhile Mariahilfer Straße

focuses on fashion, footwear and interior design, containing a

host of flagship stores for international brands.

One of the most newsworthy plans announced for Vienna’s

Golden U is a new high-end mall to be located in Tuchlauben, a

street that adjoins Kohlmarkt. This is to be developed by SIGNA

Holding, a dynamic and fast-growing real estate company that

is headed by the entrepreneur René Benko. With a number of

other high profile developments already completed or under

way, SIGNA looks set to become an increasingly important

name within the Austrian real estate sector.

Besides Vienna, Austria has four other prime high street

locations, namely Getreidegasse in Salzburg, Landstrasse in

Linz, Maria-Theresien-Straße in Innsbruck and Herrengasse in

Graz. All of these streets have continued to thrive, although the

picture has not been nearly so good for secondary and tertiary

locations across the country, where store sales and rents have

come under increasing pressure.

SHoppinG CEntRES

Two major regional shopping centres have opened in 2010. The

first was another SIGNA scheme, the Kaufhaus Tyrol in Innsbruck,

the capital city of Tirol, which opened in March. Then in August

the 32,000 sq m VARENA opened in Vöcklabruck, a county

seat of Upper Austria. Developed by SES Spar European

Shopping Centers this scheme includes INTERSPAR, H&M and

Media Markt among its 60 retailers.

Next year marks something of a gap year for the development

pipeline, but in 2012 we should see the opening of the 72,000

sq m shopping centre and retail park in Gerasdorf, north east of

Vienna, which has seen its completion date moved from 2011.

out-of-town/REtail paRkS

No major new out-of-town retail schemes are currently in the

pipeline, although there have been a number of smaller (3,000 to

6,000 sq m) schemes completed. These have often been located

close to older parks, which have suffered accordingly – some

parks in secondary or tertiary locations have vacancy rates of

up to 60%, severely depressing rental levels.

For more successful schemes, rents have been fairly stable,

at around €144 per sq m per year.

Michael Kamnik – michael.kamnik@cbre.com

ShopFront 2010/11 | CB Richard Ellis


There has been a

noticeable shift in

favour of tenants

within the market


Fortunately, most of the worst case scenarios for the Belgian

economy in 2010 seem to have been avoided. The all

important Consumer Index (which dictates salary rises) has

returned to positive territory, easing fears of a deflationary

environment. Indications are that consumer spending has

increased by around 2-3% this year – a moderate amount but

representing good performance within the wider European context.

Belgian consumers do seem to be taking a cautious

approach to the future, however, with anything up to €60 billion

currently held in Belgian savings accounts despite those

accounts’ notoriously poor returns.

As explained in ShopFront last year, Belgium has strict laws

on commercial lease contracts that limit negotiating flexibility

between landlords and retailers. Though there has been a

noticeable shift in favour of tenants within the market. Retailers

have successfully offered minimum guaranteed rents with

additions calculated on sales turnover, while turnover-only

offers are not uncommon in third-tier locations.

For 2011 the outlook is mostly positive, with the general

opinion being that the worst is over and consumers are

continuing to spend, albeit cautiously. However, international

investment flows may be limited while the air of political

uncertainty hangs over Belgium.

REtailER aCtivity

Among Belgium’s domestic retailers, the undoubted star player

has been Veritas, which started out in the accessories sector

but has broadened its offer into affordable fashion with huge

success. The company’s secret appears to be combining

fashionable designs of the moment with clothes that have more

longevity than some of their ‘use once and throw away’ rivals,

appealing to today’s more prudent consumer. Veritas will have

opened around 10 new Belgian stores by the end of 2010 and

is also looking at opportunities in the Netherlands.

The main international influx this year has been from

Anglo-Saxon brands, including the US-owned Forever 21,

which has signed leases on a 1,700 sq m store on Rue Neuve

in Brussels and a 2,400 sq m site on Antwerp’s main shopping

street, The Meir. The UK’s River Island has just opened its first

Belgian store, also on The Meir, with encouraging early results

providing new impetus to seek expansion opportunities


Among the existing international operators, Hennes &

Mauritz (H&M) is still very active, as is the Inditex Group,

which has established its Zara fascia and is now looking at

developing other house brands including Bershka,

Massimo Dutti, Pull & Bear and Uterqüe.

Of the two new arrivals we reported last year, the UK’s

Primark has been hugely successful with its store in Liège,

while Germany’s Tom Taylor is also going strong, having

opened a further three stores.


From a high street retail perspective there’s been a clear

consolidation towards Belgium’s four top tier cities – Brussels,

Antwerp, Liège and Ghent. In these prime shopping locations

rents are holding up to 2009 levels and key money is still

required to secure the best units.

The cities that make up the rest of the top 10 have

experienced declining retailer demand, though not by major

amounts. In Bruges and Hasselt, for example, rents that

peaked at around €1,000 per sq m, and sometimes more, have

now, based on available evidence, dropped by around 10-15%.

The picture is less positive in the rest of the market, where

we’ve seen very little retailer demand and few signs that this

will change in the foreseeable future.

SHoppinG CEntRES

The shopping centre development pipeline remains pretty dry,

with nothing of significant size set to open in either 2011 or

2012. Among existing schemes footfall trends are hard to

establish but indications are that they’ve shown overall

declines in the region of 5-10%.

That said, the stronger centres are performing very well

indeed. For example, the ‘K in Kortrijk’ scheme, which opened

in 2010, has traded very successfully, well above the market’s

expectations. Another top performer has been L’Esplanade in

Louvain La Neuve, whose turnover continues to grow and is in

high demand from retailers keen for a slice of the action.

out-of-town/REtail paRkS

The planning environment remains a huge constraint on this

sector. The authorities that control the French-speaking

territories have long held policies to limit the growth of these

parks. Now their counterparts in the Flemish-speaking region

seem to be going in the same direction, with stated policies

to promote inner-city development and limit new schemes

on city peripheries.

Of the parks that are open and trading, rents have held

close to 2009 levels, with top rents standing at €175 per sq m

per year and lesser schemes operating at rents of €90-100 per

sq m per year.

Patrick Tacq – patrick.tacq@cbre.com

ShopFront 2010/11 | CB Richard Ellis



CB Richard Ellis | Shopfront 2010/11


Although precise retail sales figures are difficult to extract from

the Indian market, indications are that spending in 2010 is up

substantially year-on-year as consumers fill their shopping bags

with renewed vigour.

Consumer confidence has been buoyed by GDP growth

which is forecast to range between 8.5% and 8.8% by year-end,

against figures of around 7-7.5% in 2009. India’s thriving

corporate sector is back on the expansion trail, leading to better

employment and remuneration levels that are feeding into the

various retail environments.

As a result, the landlord/tenant relationship has, as we

forecast, become more balanced after a period when retailers

were very much in the ascendancy. Landlords of units in prime

locations have been able to ask for rents close to pre-recession

levels. Even where the Minimum Guarantee and Revenue Share

model has been adopted the guaranteed rent element is

comparable to prevalent market rents.

Secondary locations, however, are still undergoing a

sustained correction as retailers shift focus to prime areas

despite the premium prices they must pay for space there.

For 2011 we see a promising outlook for India’s retail sector,

with more brands entering the market or expanding within the

country and the landlord/tenant relationship continuing to

mature into a more mutually-beneficial one.

REtailER aCtivity

The improving economic conditions have prompted a huge

amount of retailer activity this year, particularly among the

fast-growing apparel sector.

One of the most active fashion groups has been Bestseller,

which operates brands such as Jack & Jones, Only and

Vero Moda in India. New stores have also been opened by

Zara, Forever 21, Diesel, Ecko, Timberland and Oviesse. Most

of these brands have focused on shopping centres with a few

flagships in the country’s most prominent high streets. Mini

anchor formats such as Zara, Forever 21 and the Bestseller

brands have taken spaces ranging from 1,000 to 1,600 sq m

while other brands have been content to take units of 65-325 sq m.

The luxury segment overall has performed much better in

2010 than 2009, with notably strong performances from brands

such as Louis Vuitton, Burberry, Gucci, Dior and Salvatore

Ferragamo among others.

Looking ahead, the market is closely observing the progress

of Walmart, which operates in India through the joint venture

company Bharti Walmart Private Limited. The US retailing giant

has three Best Price Modern Wholesale cash and carry stores

now open in India, but media reports suggest it could open up

to 200 of these in the coming years.


Prominent high street locations such as New Delhi’s Khan

Market and South Extension continue to be in demand, with

new stores launched by the domestic electronics specialist

Croma plus apparel retailers including Accessorize, Editions

and Daniel Hechter. Retailers also consider it essential to be

seen on Mumbai’s Linking Road even though rents are

prohibitively expensive and Minimum Guaranteed/Revenue

Share deals are all but unheard of. However, the high street

environment as a whole has been adversely affected by the

expansion of shopping centres in recent years, with secondary

streets located close to large, newly opened schemes suffering

particularly badly.

SHoppinG CEntRES

The recessionary phase has been a real learning experience

for all involved with the business of retail in India, but particularly

in the shopping centre environment. Retailers are now acting

much more cautiously as they evaluate new opportunities,

taking account of footfall, tenant mix and conversion rates

(footfall to sales) before committing.

For their part, landlords are recognising the value that

employing specialist managers can add to their schemes, with

many appointing agencies to this role. Tenant mix has become

a major focus, with landlords shortening typical lease terms to

six years (from a previous norm of nine) to give more flexibility

to refresh the mix. We also see a growing use of special events

and festivals to boost footfall.

Shopping centre development got back underway in earnest

this year, with the following malls all set to be open before the

end of 2010:



Palladium Lower Parel,


LoCAtioN GLA (sq m)


The future pipeline is also looking increasingly healthy,

as banks and private equity houses show greater appetite to

finance projects and retailers have renewed confidence to book

space in schemes due for delivery two or three years time.

lEGiSlativE CHanGES

India’s government is currently debating further relaxation of

the country’s strict laws on foreign direct investment (FDI) in

the retail sector. The changes could allow international retailing

groups to launch multi-brand outlets (such as supermarkets)

that they own 100%, whereas today the ceiling is 51% FDI and

that is only for single-brand outlets (with the exception of B2B

cash-and-carry stores). However, the government is treading

cautiously on what would be a momentous policy decision,

so no news is expected in the short term.

Manish Kashyap – manish.kashyap@cbre.com


27,870 January 2010

Mantri Mall Bangalore 85,840 March 2010

Express Avenue Chennai 83,600 April 2010

Ambience Mall Vasant Kunj,


102,194 August 2010

Pacific Mall Khayala, Delhi 35,300 December 2010

source: CB Richard Ellis.

ShopFront 2010/11 | CB Richard Ellis




Retail sales in the Netherlands started

the year with the same steady decline

that was a feature of 2009, but since the

summer the market seems to have

turned and we’ve seen consumer

spending increasing again. This has also

led to a rise in confidence among

landlords and retailers.

The investment market has been

particularly active, not least with the

disposal by Unibail-Rodamco of several

Dutch shopping centres, which raised

net proceeds of €758m. These deals,

which were concluded in the first half of

2010, are part of a wider programme to

divest non-core assets so

Unibail Rodamco can focus on its

portfolio of large-scale regional shopping

centres across Europe. They’ve been

followed more recently by sales of prime

high street units in cities across the

Netherlands, at gross investment yields

of around 4-5%.

Rental levels for prime high street

sites are on the rise again

Turning to other issues in the

marketplace, we have seen a continuing

interest in leases with a turnover rent

even though the Dutch legislative

environment restricts further flexibility in

lease content. Key money is hard to

realise, but some landlords have been

able to improve rental income by buying

out existing tenants and then remarketing

the units at higher tariffs.

In future, the leasing regime may well

shift in favour of the landlords. Current

legislation was originally put together in

an era when retail was the preserve of

small, family-owned businesses, whereas

now the market is dominated by large

domestic and international groups who

enjoy stronger negotiating positions.

REtailER aCtivity

The Netherland’s domestic retailers have

had a relatively quiet 2010. Activity has

centred on the fashion segment, in

particular WE Fashion and The Sting,

CB Richard Ellis | ShopFront 2010/11

both of which have expanded their store


The Sting is also making waves overseas,

having opened a 3,000 sq m flagship

store on London’s Regent Street. If that

store proves successful The Sting hopes

to extend its brand into other major

global cities.

One less positive development was

the decision by the Dutch retailing group

Coltex to close its Forecast chain of jeans

stores. Coltex now intends to focus its

energies exclusively in womenswear

(Forecast previously catered for men and

women), where it operates the brands

Didi, Superstar and Steps. The Forecast

store closure programme is expected to

be complete by early 2011.

International retailers have been active

in the Netherlands, most notably Primark.

The value fashion chain is opening two

further Dutch stores next year, in

Nijmegen and Hoofddorp, following its

hugely successful entry into Rotterdam.

The UK’s New Look also entered the

market via Rotterdam and it continues to

look for appropriate locations through

which to expand.

Other retailers which have been

particularly successful this year include

Spain’s Desigual and Inditex Group, while

Starbucks is actively looking for more

stores. In the luxury segment Burberry is

to open a store on P.C. Hoofstraat,

Amsterdam’s top luxury shopping



Rental levels for prime high street sites

are on the rise again, particularly larger

(200 sq m upwards) units in the country’s

most important shopping cities:

Amsterdam, Rotterdam, The Hague,

Utrecht and Maastricht.

This is not the case in secondary and

tertiary high street locations, leading to

two quite distinct retail real estate

markets forming. On the one hand is a

landlord’s market in prime pitch, where

competition – particularly among

international retailers – outstrips supply;

on the other is a tenant’s market for less

popular locations, where some good

deals can be struck by retailers willing to

take the plunge.

CBRE doesn’t foresee the tight supply

of larger spaces in prime locations

easing any time soon, since ownership of

these streets is very fragmented, making

it difficult for landlords to create bigger

store spaces by combining adjoining


SHoppinG CEntRES

Tight zoning restrictions in Dutch cities

mean large malls like those of the UK and

US do not exist within city boundaries;

instead the regional centres of around

40,000 sq m are situated in suburbs

while the smaller city centre schemes

take on many of the characteristics and

trends of the high street environment.

In general it’s the schemes serving

larger cities that are performing best,

while those situated in smaller markets

are doing less well. That said, the

food-driven neighbourhood centres are

performing very solidly.

The biggest shopping centre project

in the pipeline is the redevelopment of

the Ringerscomplex and Noorderarcade

shopping centre in Alkmaar. This

mixed-use scheme, by MAB Development,

includes 37,000 sq m of retail and is due

to open in 2014.

out-of-town/REtail paRkS

The retail park sector, still relatively new

to the Netherlands, continues to steadily

develop with a number of smaller parks

under construction but no real blockbuster

schemes in the pipeline.

There’s been considerable appetite

among the international investment

community for existing parks, with

several being bought by UK or German

investment funds (both open and closed

ended) at good prices. Notable deals in

2010 include the acquisition by

Rockspring of the 37,000 sq m

De Bossche Boulevard in Den Bosch;

also the purchase by HSH of the first

(28,000 sq m) phase of the A2 Borghese

development in Amsterdam.

The largest new retail park in the

pipeline is the 20,000 sq m Park

Boulevard in Rotterdam, which is due to

open in 2012. This scheme is already fully

let, despite restrictions which mean

fashion retailers are not allowed to take

space in Dutch retail parks.

Nanne Nanninga –


ShopFront 2010/11 | CB Richard Ellis



The major suburban shopping centres have, to some extent,

benefitted from the difficulty of accessing the centre of

Athens, because they are perceived as safer and calmer

environments, which can be driven to when public transport

strikes are on.


The Greek retail scene is dominated by the wider economic

troubles facing the country and the subsequent policies aimed

at addressing these issues have impacted the country hugely.

This scenario is likely to continue for some years.

A new government took over a year ago, only to find that

the deficit would, by year-end 2010, reach a higher level than

previously thought – up from the already revised circa 8% of

GDP to 13.6% of GDP (Office of National Statistics).

This more negative economic assessment triggered a run

on Greek government bonds and the crisis was broadened

by the German government’s initial reluctance to back any

EU-sponsored support. Finally, Greece agreed a package

of financial help with the IMF and the EU. As part of the

remediation process, significant steps have been taken to

reduce the deficit, including a reduction in public sector

spending and tax increases, as well as restructuring of the

welfare system and employment laws.

Not surprisingly, these moves have had a significant effect

on the Greek economy with a predicted 4% decline in GDP

by the year-end. These trends will continue into 2011 and for

the foreseeable future.

The government’s actions have also caused social

unrest, although at levels notably less than expected. Public

transport strikes are commonplace, as are demonstrations

in Central Athens.

HiGH StREEt anD SHoppinG CEntRES

The high street remains an important part of the retail mix

in Greece, but rental prices even for some prime sites are down

about 20% from their peak in late 2007 and could conceivably

see a further downward adjustment next year, as retailers

renegotiate their leases. In secondary and tertiary locations

and smaller shopping centres these rental drops are likely

to be even greater.

By contrast, the major suburban shopping centres have,

to some extent, benefitted from the difficulty of accessing the

centre of Athens, because they are perceived as safer and

calmer environments, which can be driven to when public

transport strikes are on.

In addition, there are only a handful of modern shopping

centres in Greece, typically of about 30,000 – 50,000 sq m.

Because of this limited availability, vacancy rates are very low,

which in turn means that rental rates have slipped typically by

only 10-15% and few stores have changed hands.

Two shopping centres are planned for late 2010 and 2011.

The 25,000 (sq m) Metro Mall in south east Athens will open late

in 2010 or early 2011 and at 25,000 sq m is in a strong retail

location with good access and an adjacent metro station. It has

been leasing well and it should prosper in an area where there

is little retail competition. Another 25,000 sq m shopping centre

next to IKEA on Kifissou Avenue is finally due to open in

March 2011 after long delays.

Lease agreements for all types of retail location tend to

favour retailers quite heavily, with typical terms of 12 years with

a tenant option to extend by four years. If landlords want to

terminate an agreement early, they must give 24 months notice

and pay the tenant a penalty equivalent to one year’s rent.

On the tenant side, retailers can break the lease after one

year, giving three months notice and with a payment equivalent

to one month’s rent. Consequently, retailers are proving tough

negotiators in the current environment and, as a result, key

money is often requested by landlords in strong retail locations

as a way of ensuring retailer commitment.

REtailER aCtivity

Domestic retailers have had a very tough time across all

sectors. Automotive, furniture and big ticket retail have been

particularly hard hit, while fashion, health and beauty and even

grocery have all seen sales downturns. National fashion

retailers GLOU and Ridenco and supermarket chain Atlantic

are among those which are struggling at present.

International retailers are currently very cautious about the

Greek market. Fnac exited Greece this year, while Aldi is trying

to sell its Greek operation. However, Spanish fashion retailer

Blanco has opened and Gap, Inditex Group and Hennes &

Mauritz (H&M) are all expanding. Apple has also opened two

stores under franchise with a trading name ‘I-store’, while

Max Mara and related brands are starting operations in new

locations under two new franchisees.

Certain local wholesalers are moving downstream by

establishing or expanding their retail networks. Typical of this

is Elmec Sport which is expanding its Nike, Juicy, Links and

recently acquired Ermenegildo Zegna operations, while it

is scaling back its Coach operation, which has not proven

popular with the Greek market.

Most new retail is heading for the high street as the

availability in the top three or four shopping centres in

Greece for suitably-sized units is very low.

out-of-town anD REtail paRkS

Retail parks have fared a little better than other retail property

types but this is again mostly because supply is limited and

rental rates started from a lower base. Tenant negotiating

positions are not as strong because there are not many

opportunities for a retailer to relocate to another park.

McArthurGlen is developing an outlet centre in Yallou to the

east of Athens, which is due to open next year, adding to future

supply. Leasing is progressing although it is a challenging

environment to attract international retailers into Greece.

James Ward A – james.ward@cbre.gr

ShopFront 2010/11 | CB Richard Ellis




Poland’s economic performance continues to improve, with growth

of at least 3.2% forecast for full year 2010, rising to 3.7% in 2011.

In addition, consumer sentiment, as recorded by Główny Urząd

Statystyczny (Poland’s Central Statistical Office), has seen a major

improvement in recent months and is currently back to Q4

2008 levels.

However, the improving market conditions have created a major

imbalance between retail space supply and demand, since a

large proportion of retail development has been on hold for the

past 12-18 months due to the uncertain economic outlook in

Europe. Though development is now accelerating, it will take time

for supply to catch up with demand.

SHoppinG CEntRES

The Polish retail market is dominated by shopping centres, because

the high street environment is restricted by lack of suitable space,

the severity of the winter weather and the fact that many cities,

including the capital Warsaw, do not have recognised centres.

The dearth of shopping centre construction in recent years

can be illustrated by figures for Warsaw which show that, when

combined, 2008 and 2009 saw only 36,800 sq m of gross

lettable area (GLA) developed, while a still insufficient 28,000

sq m GLA will be completed this year.

CB Richard Ellis | ShopFront 2010/11

As a result, Warsaw continues to boast retail vacancy rates of

close to 0%. In fact the most successful of the city’s shopping

centres operate waiting lists for new tenants. In addition, average

rents for prime shopping centre locations are twice the national

average, at around €720-€960 per sq m per year, while top rents

for smaller units have touched €1,440 per sq m per year. Typical

lease lengths are five years with a five year extension option.

Among the new space that has opened in Warsaw in 2010 is

an 8,000 sq m GLA shopping centre in Fieldorfa Street, which

features a Tesco hypermarket plus additional retail including

Poland’s first Peacocks fashion store. Meanwhile construction

continues on the Wolf Bracka department store, with completion

scheduled for Q4, 2010.

Polish banks are beginning to lend for shopping centre

development again but finance is only being granted to schemes

that have already achieved around 60% pre-lets and have robust

business strategies. As a result there will be an inevitable lag

between schemes getting under way again and their completion.

With little additional stock due in 2011 vacancy rates are

expected to stay extremely low throughout the next two to three

years, while the gap between supply and demand is likely to see

rents start to increase in 2011 after a period of relative stability.

Meanwhile prime investment yields are heading in the opposite

direction, and currently stand at around 6.5%.

Outside of Warsaw there is around 500,000 sq m of retail

space under development, but completion dates are still some

way off and retailers are again finding little availability, particularly

for those with requirements for stores larger than 900 sq m.

One further result of the shortage of new space is a major

focus on refurbishing and re-fitting older shopping centres and

those in secondary locations. Landlords hope that by making

these investments, their schemes might attract international

retailers who would otherwise be targeting new developments.

With demand for quality space not likely to be satisfied for the

foreseeable future, there’s a significant opportunity for some well-

located older schemes to improve their performance in this way.

REtailER aCtivity

A number of international retailers have entered the Polish

market this year, including TK Maxx, which has opened stores

in both the DT Centrum and Blue City shopping centres in

Warsaw. Other arrivals include New Look and Lindex, while

there’s been notable interest from the luxury/upscale segment,

including Pandora, Agatha, Ann Christine (the New Yorker

concept) and Guess.

However, not all retailers have been successful and in the

past few months the Danbalt group’s fashion brand Danija has

The improving market

conditions have created

a major imbalance

between retail space

supply and demand

closed some of its stores, while the UK retailer Bhs has closed

its store in Warsaw’s Arkadia shopping centre.

A number of Poland’s domestic retail groups have also

struggled during the economic downturn and many have

started to downsize to smaller shopping centre units as they

manage their cost bases.

out-of-town/REtail paRkS

This sector has really begun to emerge in the past seven years,

with 14 retail parks now up and running across the country.

Many of the first parks to be built are expanding through the

construction of additional phases.

The parks initially focused on bulky goods, but fashion

retailers including TK Maxx, C&A and Hennes & Mauritz (H&M)

are now looking at opportunities to expand into this

environment. Factory outlet centres are also growing in

popularity, with seven open and potential for more.

Magda Fratczak – magda.fratczak@cbre.com

ShopFront 2010/11 | CB Richard Ellis


CB Richard Ellis | Shopfront 201011

Next year should see some genuine excitement

return to the market with the arrival of some

large international brands


The Romanian retail sector has stabilised after a difficult 2009,

to the extent that 2011 should see some genuine excitement

return to the market with the arrival of some large international

brands and the expansion of other important retailers.

The market survived a rise in consumption tax to 24% (from

19%), which caused an initial drop in retail sales, though they

subsequently recovered. More recently, government austerity

measures have cut 25% from public sector salaries and 15%

from public sector pensions, the effects of which may not be

fully felt until the end of this year or early next.

Retail rents generally have dropped by a much smaller amount

than was the case in 2009, leading us to think the worst may be

over for the market overall. In Bucharest, which is far and away the

leading retail destination, economic conditions remain favourable

with unemployment around 2.5% and consumption holding up

well. However, the gap is growing between the capital city and

the rest of Romania, particularly the smaller cities of around

200,000 inhabitants where circumstances are more challenging.

REtailER aCtivity

As already mentioned, the Romanian market is excited by talk

of several significant new ventures by international brands. In

particular Hennes & Mauritz (H&M) has secured more than five

new store leases and is set for a ‘big bang’ entry into the country

in April 2011. We’ve also seen the Inditex Group almost double

its presence in Romania during the past 18 months, with Zara

leading the way but other house brands such as Bershka and

Pull & Bear also making inroads.

Elsewhere, the supermarket/hypermarket sector is becoming

more dynamic and competitive, with a host of international names

jostling for position including Auchan, Carrefour and Kaufland.

The hard discount segment is also strong, in particular Plus,

Lidl and Penny Market, all of whom are looking for opportunities

across the country, from small towns of 10,000 inhabitants through

to the major cities.


Victoriei Avenue in Bucharest is Romania’s principal high street

location. Outside of the capital, many other cities are unable

to support significant high street style shopping due to their

pedestrian-unfriendly layouts. Excess capacity in the high street

in 2009 saw rents fall sharply, which prompted a number of high

end retailers to take space at favourable rates. These include

Emporio Armani, Gerard Darel and Montblanc, plus stores

offering several luxury brands under one roof.

Bucharest’s historic heart has also undergone a major

refurbishment programme to make it a more attractive leisure

destination offering bars, cafes and restaurants. Unfortunately,

fashion and service retail has been left out of this programme,

an omission which might limit the area’s further development

until this issue is rectified.

SHoppinG CEntRES

Shopping centre development is enjoying something of an upturn,

with several schemes that had been put on hold due to financing

issues now looking likely to go ahead. They include AFI Golden

Palace, Electroaparataj Shopping Center and Park Lake Plaza

(all in Bucharest), plus Cora Brasov (in Brasov).

Cocor Department Store in Bucharest has just opened its

doors, while Gold Plaza Baia Mare (in Baia Mare) should be

open by the end of 2010. Meanwhile, Polus Center Constanta

(in Constanta) is expected to open by Spring 2011.

Of the raft of shopping centres which opened during the

construction boom, performance is proving to be very much

dependent on the quality of centre management, especially

when the scheme doesn’t have a good quality anchor tenant to

bolster it. Good promotions and events have kept footfall levels

up in schemes such as Baneasa Shopping City (Bucharest),

Iulius Mall (Timisoara) and Arena Mall (Bacau), while rival

schemes with less effective management teams have suffered.

Luiza Moraru – luiza.moraru@cbre.com

ShopFront 2010/11 | CB Richard Ellis



The Middle East

unitED aRaB EmiRatES

Despite the widely-reported problems of

the past 18 months there is now far more

positive news from the emirate of Dubai,

which appears to have seen off the worst

of the recession. In addition, neighbour

Abu Dhabi has emerged as the main

focus for many developers and retailers

in the United Arab Emirates (UAE).

High-end retail suffered the most

during the downturn but even in this

sector there are signs of recovery. In

addition Dubai ran some very successful

tourism campaigns during the hot

summer months to attract both regional

tourists and those from Europe.

Some of the other emirates, notably

those in the northern UAE such Ajman,

Sharjah and Ras al Khaimah have been

less impacted by the downturn because

they are less dependent on tourism.

SHoppinG CEntRES

Despite the increasing interest in Abu

Dhabi, Dubai still captures most of the

headlines. When the landmark Dubai

Mall shopping centre opened in

November 2008 it was far from full, but

since the Spring leasing has picked up

and a number of new stores have

opened. As a result of this and other

mega-mall openings in Dubai over the

past five years, smaller and older centres

have been feeling the impact on footfall.

This situation has been intensified by

the introduction of a major luxury area

called the Fashion Dome at the Mall

of the Emirates. Fashion Dome has

attracted an impressive new line-up

of high-fashion brands including

Christian Louboutin, Cartier, Paul Smith,

Galliano, Versace, See by Chloe,

Diane von Furstenberg and the largest

D&G boutique in the region. Some of

the mall’s existing brands, such as

Louis Vuitton, Christian Dior and Gucci,

have expanded into bigger units within

the Fashion Dome.

As a consequence, malls well known

for their luxury brands such as Deira City

CB Richard Ellis | ShopFront 2010/11

Centre and Burjuman have had to

re-evaluate their positioning. Next year

we are likely to see these and some other

malls adjust their offer to find a new niche

in a changing retail scene.

Dubai seems to have reached

saturation point in terms of new schemes

and those shopping centres scheduled

to open over the next few years within the

UAE tend to be focused on Abu Dhabi.

In October this year the first of these,

the 200,000 sq m Dalma Mall, opened

and CB Richard Ellis calculates that there

is approximately 1 million sq m of retail

floor space due to come on line in the

next three years. Projects include Yas

Island, Reem Mall, 9712 Mall, Bawabat Al

Sharq Mall, Emporium, Mushrif Mall,

Deerfields Town Square, Mazyad Mall

and Arzanah Project.

There is also the proposed opening

of the 30,000 sq m Fujairah City Centre,

located in the emirate of Fujairah, as well

as a mall extension for Al Ain Mall in

Al Ain, Abu Dhabi, both of which are

scheduled for completion during 2011.

The retail scene continues to be

dominated by shopping centres, largely

because of the extremely hot climate,

which makes air conditioning essential.

This makes retail parks unsuitable and

‘big box’ retail also remains fairly

immature, although IKEA is to open a

‘big box’ unit at Yas Island in Abu Dhabi

in 2011.

REtailER aCtivity

French grocery retailer Carrefour, which

operates through local partner Majid Al

Futtaim (MAF), has been very aggressive

in its growth plans for the UAE. Its focus

is on both hypermarkets and its smaller

format Carrefour Express stores as part

of neighbourhood schemes.

A number of new entrants have come

into the market, many brought by the

largest mid-range fashion franchise

operation, MH Alshaya. American Eagle,

Pottery Barn, Pottery Barn Kids,

Pinkberry and PF Changs have all opened

stores in the UAE this year, while Majid

Al Futtaim’s Mirdif City Centre has been

the chosen location for many of these

new entries.

Value fashion retailer Matalan has

entered Dubai and also Abu Dhabi, while

Crate & Barrel has taken a 2,500 sq m

store in the Mall of the Emirates through

franchisee Al Tayer Group, its first store

outside of the USA.


The first mall in Cairo opened in 1989

and some 27 others have followed,

including CityStars, currently the largest

in Egypt. Cairo has around 400,000 sq m

of gross lettable area (GLA), which

reflects massive under-supply relative to

the market’s potential and has spawned

a major building programme.

Until the addition of new retail space,

rents are expected to hold up as

vacancies remain minimal. Filling the

vacuum, hypermarkets have become

major retail development drivers.

Under-supply of retail has prompted a

spate of developments, notably Cairo

Festival City being developed by

Al-Futtaim, which is now under

construction and on target to open in

January 2012. It is modelled in part on

Dubai Festival City complex, also by


Leasing of the stores began in the late

autumn and the 140,000 sq m, three-level

shopping centre will host 250

international and regional retail brands,

as well as a hypermarket, a multiplex

cinemas, and food and beverage outlets.

IKEA, Marks & Spencer and Carrefour

are secured as anchors.

Majid Al Futtaim Group is likely to

invite bids for its 160,000 sq m Mall of

Egypt project, one of the largest

shopping centres in North Africa, in

November. Plans include an indoor skiing

facility by Ski Egypt similar to the one

in Mall of the Emirates, plus 350 stores,

a 17-screen cinema complex and an

outdoor plaza and dining.

Despite the widely-reported problems of the past

18 months there is now far more positive news from

the emirate of Dubai, which appears to have seen off

the worst of the recession.


SauDi aRaBia

CB Richard Ellis’ How Global is the

Business of Retail? report this year

revealed that the Kingdom of Saudi

Arabia KSA was now attracting 43%

of all international retail brands surveyed

and had overtaken better known retail

destinations like Hong Kong, Russia

and Japan.

The retail market is characterised by

a strong presence from major retailers

including local players such as

Al-Azizia Panda and Al Othaim; regional

operators such as Al Bandar Trading

and MH Alshaya; and international

companies such as Carrefour,

Géant, Debenhams and IKEA, which

mainly operate through regional or

local franchisees.

In 2009, Al-Azizia Panda strengthened

its lead in this market, benefiting mainly

from acquisitions made by the company

during 2008/2009, which included the

operations of Giant Stores and Géant.

Carrefour continues to expand

throughout the country.

CB Richard Ellis | ShopFront 2010/11

The retail scene is dominated by shopping

centres, although IKEA is established as

a ‘big box’ retailer in the KSA.

A lack of high quality retail space has

deterred international brands from

entering KSA, but the opening of several

new, Dubai-style shopping malls, such

as Jeddah’s Mall of Arabia, should

present more opportunities. UK retailer

Alliance Boots opened there through

MH Alshaya in March and retailers such

as Hennes & Mauritz (H&M), Debenhams,

Foot Locker, Mothercare, Starbucks and

Topshop are all present in the market.


Retailers have undoubtedly been hit by

last year’s downturn but retail sales are

improving. However, retailers continue to

push landlords for concessions including

long rent free periods, break clauses,

help with fit-outs and turnover rents or

low base and turnover rents. The prime

malls can afford to be tougher in their

negotiations and lease lengths have

remained at three to five years.

Although Kuwait already had a

number of shopping centres, the opening

last year of two high profile projects,

Tamdeen Shopping Centers’ 360°

Kuwait, anchored by Kuwait’s first Geant

hypermarket, and The Avenues Mall,

enabled a number of international brands

to enter the market for the first time.

Many of these have been brought by

the largest mid-range fashion franchise

operation in the region, MH Alshaya,

After years of massive development, the pipeline

has all but frozen and there are few schemes under

construction at present.

which also happens to be based in

Kuwait. American Eagle, Pottery Barn,

Pottery Barn Kids, Pinkberry and

PF Changs have all opened stores in

Kuwait this year at The Avenues Mall.

In 2011, UK fashion department store

Harvey Nichols will open as anchor to the

third and final phase of The Avenues Mall

through a franchise deal with MH Alshaya.

Matt Jay – matthew.jay@cbre.com



There is a tremendous opportunity

to negotiate some very favourable rents

and terms and conditions for the current

period, which will provide a cost-effective

platform for any upturn.


To consider the current health of the US market we have to

start with the consumer and 2010 has proven a rocky road for

shoppers. Retail sales year-on-year have been positive but this

has weakened slightly in recent months, underlining that the

consumer recovery remains fragile.

Retailers have not been as acquisitive of new or vacant space

this year as was first anticipated and it looks as though we will

have to wait until 2011 before vacancy rates begin to drop overall.

However, there has been no further contraction in the market and

it would appear that at worst the US retail economy has reached

the bottom.

Some areas of the US have seen particularly strong property

recovery, with Los Angeles, Chicago and New York rents all going

up, a trend seen in most of the main high street retail locations

across the country. Meanwhile, Canada’s retail market has

been stable throughout the downturn and has not been party

to the recession. To the south of the United States, both Mexico

and Brazil are attracting more retailer interest from American

store chains.

SHoppinG CEntRES

There has been virtually no new retail development in 2010 and

it seems likely that it will take until 2015 for the annual addition of

retail space to begin again. Those schemes which have opened

have tended to be smaller scale retail projects addressing specific

local needs; broken development deals which have been reignited

or longer term developments that took many years to complete,

such as City Center in Las Vegas which opened earlier this year.

But even high profile projects have not escaped the downturn.

The 55,000 sq m, Macerich-owned Santa Monica Place, a lifestyle

centre redevelopment anchored by department stores Nordstrom

and Bloomingdales, is a good example. It was expected to be

completed in 2008 but in fact was not finished until this year.

However, there are signs that this moratorium in shopping

centre development may be about to change. Many of the public

property companies have spent the past 12-18 months cleaning

up their finances by deleveraging and positioning themselves

to become acquisitive again. There have been surprisingly few

mergers and acquisitions in the Real Estate Investment Trust (REIT)

market, for example, and few transactions closed as companies

instead built up their cash reserves.

It remains a tenant’s market for most sectors, with retailers

holding a lot more arbitrage on their negotiating position in most

shopping centres and downtown main streets. In the grocery

sector in particular there has been a lot of expansion activity

among specialists, including Tesco, Sprouts, Whole Foods

and Sunflower, plus market leader Walmart.

On the property acquisition side, prime shopping centres are in

high demand and it has become a seller’s market. Valuations for

the core sector are back to 2006 and 2007 pricing. For secondary

shopping centres the process is taking longer and these are

proving the last properties to record a recovery in capital values.

Some of those on long-term sale may well be acquired in 2011

amid a return to some stability. However, for the weakest shopping

centres in tertiary locations it is a longer climb, especially as some

of these developments have been particularly exposed to the

ill-effects of the recession.

CB Richard Ellis | ShopFront 2010/11

out-of-town anD REtail paRkS

The difficulties experienced by secondary shopping centres

have been emphasised by the success of ‘big box’ retail, notably

through top operators Walmart, Kohl’s and Target. These retailers

have dominated the retail arena with an aggressive cost control

strategy and with a strong quality/value proposition which has

played very effectively to the US consumer.

Typically they tend to negotiate for ‘box and shell’ units so that

they can pay the minimum amount of rent, conducting their own

fit-outs from the bare units. In many cases they own their own

sites. This strategy works for the retailers as the cost to them of

obtaining capital in their cash-positive businesses is often lower

than for property owners, which need to access the debt markets.

But for landlords it means that the retailers achieve the lowest cost

structure and pay the least rent or even that they are negotiated

out of ownership.

Next year will see further remodelling work across the retail

property spectrum, particularly in the outlet market. The expansion

of the Houston Premium Outlets centre is due for completion

before year-end and the Las Vegas Outlet Center, due to

complete next March.

REtailER aCtivity

The grocery, drugstore, and fast food and beverage sectors

have all performed strongly, while the higher end and luxury

sectors have found life tough in 2010. However, in food and

beverage there has been a trend towards slightly more

upmarket versions of fast food dining, such as Five Guys

Burgers and Fries plus a number of other similar niche players.

In the mainstream retail sectors there have been few new

entrants or major expansions this year, though value fashion

retailers Ross, TJ Maxx and Nordstorm Rack have been pushing

forward with more stores and fast fashion retailer Forever 21 is

opening more, larger stores. Forever 21 has also been adapting

its offer for former department store sites and outside of the US

has opened its first European stores, as has lingerie retailer

Victoria’s Secret.

From the UK, fashion retailer All Saints has opened in

Los Angeles and Chicago with a very strong brand proposition,

while Topshop opened a flagship in New York late last year

and has confirmed plans for a Chicago store in 2011. Spanish

fashion retailers Desigual and Zara have also been looking for

further store locations.


There has been a return to core property across the board,

which means that main streets around the USA have been

resilient and in 2011 it is likely that high street voids in most

major US cities will reduce.

For those retailers who have been able to operate without

scaling back their store portfolios, their strategy will pay dividends

in the future. There is a tremendous opportunity to negotiate

some very favourable rents and terms and conditions for the

current period, which will provide a cost-effective platform for

any upturn.

Anthony Buono – anthony.buono@cbre.com

ShopFront 2010/11 | CB Richard Ellis



South Africa

South Africa’s retail sector continues to feel the strain from

weak consumer spending as many households grapple

with high levels of debt. However, the situation is showing

an improvement on 2009, with the economy growing again

after dipping into recession last year and retail sales as

at July showing a 4.9% year-on-year increase, according

to research conducted by Broll (Part of the CB Richard Ellis

Affiliate Network A) on its portfolio of shopping centres

under management.


jAN 10 fEB 10 mAR 10 APR 10 mAy 10 juN 10 juL 10

1.37% 3.77% 14.13% 5.46% 5.50% 11.52%* 4.90%

source: Broll A

*The strong growth in June 2010 could be attributed to the effect of the FIFA World Cup.

New shopping centres that opened during the downturn

are taking longer to establish themselves and retailers in those

centres are taking the strain. The high street has also been

affected – for example prime units of 80-100 sq m in Cape

Town have seen rents per sq m per year fall from ZAR 4,500

in 2008 to ZAR 2,940 this year # . Johannesburg has fared

slightly better, with equivalent annualised rents down from

ZAR 3,600 to ZAR 2,100.

Rental levels for shopping centres have varied enormously

depending on location. Rents have been depressed in Cape

Town, falling from ZAR 5,700 per sq m per year in 2008 to ZAR

3,540 this year. However Johannesburg’s shopping centres

have on average been able to increase rents during the same

period, from ZAR 3,600 to ZAR 4,740 per sq m per year.

Without doubt the most significant event in South Africa this

year was the 2010 FIFA World Cup – the first to be held on

African soil. From a retail perspective the tournament had a

variable effect: great news for food and beverage, sports

Without doubt the most significant

event in South Africa this year was

the 2010 FIFA World Cup

CB Richard Ellis | ShopFront 2010/11

# All rent figures taken at end Q2 – source: Broll A

clothing and memorabilia, less good for other sectors, such as

durable goods, that suffered as football-related spending

soaked up large proportions of people’s disposable incomes.

Looking ahead to 2011, South Africa’s Bureau for Economic

Research forecasts GDP growth of 3.5%, against an expected

figure of 2.7% for full year 2010. The general consensus is that

retail will be among the first sectors to benefit from this

increased pace of economic recovery.

REtailER aCtivity

Retailing in South Africa is still dominated by domestic

companies, of which the biggest food retailers are Shoprite

Checkers and Pick ‘n Pay. Fashion retailers include Woolworths,

Foschini Retail Group, Mr Price, Truworths and Pepkor

(clothing/footwear). Some of the major retailers have been in a

consolidation mode in recent times. For example the Pepkor

subsidiary Ackermans has closed the previously standalone

Ackermans Baby and Ackermans Home Comforts stores and

has reincorporated them into their ‘parent’ department stores.

The Foschini Group is also choosing to cluster house brands

such as TotalSports, Sterns and Foschini within single

shopping centre units of around 3,000 sq m, instead of

taking separate units of around 250 sq m for each brand.

One domestic player that is in expansion mode is

Cape Union Mart, the specialist outdoor retailer. It has split

out its women’s fashion brand Poetry and leisure clothing

brand Old Khaki into standalone stores, part of a strategy

to actively grow these newer brands’ presence in the market.

September saw South Africa’s biggest retail story of 2010

with Walmart’s proposed $4.1 billion takeover of Massmart,

a retailing group with interests in a wide variety of sectors

including electronics and DIY. If successful the deal would give

Walmart a significant foothold in sub-Saharan Africa; it could

also lead other international retailing giants to take a fresh look

at their strategies for the continent.


With consumers and retailers generally preferring the

shopping centre environment, South Africa’s high streets

continue to struggle. We’ve already highlighted the drop in

rental levels experienced in the prime markets of Cape Town

and Johannesburg; this is likely to continue in future years as

retailers are put off the high street environment by their

inability to source suitably-sized (1,000 sq m or more) units.

In Cape Town the issue has been further exacerbated by

a recent influx of Chinese traders, who have filled high street

units vacated by traditional booksellers and antique shops

that were unable to survive the downturn. The full impact of

this development is difficult to predict at this stage.

SHoppinG CEntRES

After a big expansion of space in 2008 and 2009, this year

has seen a slowdown in new shopping centre developments.

The largest scheme to open is the 85,000 sq m Galleria Centre

in KwaZulu-Natal, but other projects have been put on hold

until the present oversupply is reduced and rents begin

to stabilise.

In the meantime the present conditions mean most new

schemes will take around four years to fully establish

themselves with their consumer base, whereas in the past

they could have hoped to achieve this in half the time.

With major developments on hold, landlords are instead

diverting their financial resources to improving and upgrading

their existing facilities. Cape Town’s Blue Route Mall is one

example – its current redevelopment programme, which started

in April this year, will create a completely new retail environment

around the retained Checkers hypermarket. Other smaller

schemes are focusing on details such as improved toilet

facilities and public spaces that make the overall shopping

experience a more pleasant one.

out-of-town/REtail paRkS

While out-of-town retailing is still to take off in South Africa,

this will be a future growth area and developers continue

to investigate the feasibility of small regional and community

centres in areas like Welkom in the Free State, where the

34,000 sq m Goldfields Mall opened in October 2010. Other

examples of these out-of-town centres include Mafikeng Mall,

Kathu Village Mall, Weskus Mall (Vredenburg), Fountains Mall

(Jeffreys Bay) and Nongoma Shopping Centre.

That said, consumers on upper income levels tend to drive

to the bigger city schemes for much of their discretionary spending,

leaving these community centres at the bottom of the table

when it comes to Cap rates (the ratio between an asset’s net

operating income and its capital cost) as the table below shows.


Super regional >100,000 sq m 7.50

Regional 50,000 – 100,000 sq m 8.00

Small regional 25,000 – 50,000 sq m 8.75

Community centres 12,000 – 25,000 sq m 9.50

lEGiSlativE CHanGES

In the short term a 0.5% interest rate cut made in September

could improve consumer spending in the run up to Christmas.

However, in the longer term retailing could be majorly affected

by government plans to create a national health insurance

scheme aimed at improving healthcare for the poor. Such a

scheme would have to be funded by higher taxes on those at

middle to upper income levels, who also happen to be the

largest consumer spending group. A decision on this keynote

policy is expected by the end of 2012.

Dave Bennie A – dbennie@broll.co.za

source: Broll A

ShopFront 2010/11 | CB Richard Ellis




Economic stimulus measures introduced by the Mexican

government, some of which were highlighted in this

publication last year, have helped the economy to settle after

the twin threats of global recession and the H1N1 flu pandemic.

In particular, government support for construction of new

housing has become a keynote policy, as has aggressive

expansion of oil exploration and production, including the

building of a major new refinery. This should help Mexico to

capitalise on growing US demand for South American oil

following the Gulf of Mexico disaster.

The economy has also been boosted by an upturn in

remittances from Mexicans living and working in the US – still

the country’s second largest source of income. The result of all

this is that national GDP has recovered from its significant falls

during 2009, with consumer spending also picking up.

One of the most notable beneficiaries has been the US retail

giant Walmart, which continues to grow its presence in Mexico

at a phenomenal rate. Earlier in 2010 Walmart reported sales up

18% year-on-year.

Other sectors that seem to be particularly active include

casinos, where six or seven national players are vying for

supremacy; also fitness centres, where the traditional dominant

player, Sport City, now finds itself competing with new brands

including the US powerhouses Bally Total Fitness and Gold’s Gym.

REtailER aCtivity

Last year we reported car dealerships as being among the

poorest performing sectors. This year there have been some

star performers within this sector, in particular Mazda, which

is growing tremendously, plus the US brands Infiniti and Acura.

Porsche has also had success with its new dealership serving

the wealthy south area of the country in Merida.

While Porsche’s success underlines the continuing

prosperity of Mexico’s wealthy elite, those at lower income

levels have undoubtedly tightened their belts this year.

One result of this is the growth of ‘cash conversion’ stores

that purchase goods for cash then sell them on to thrifty

consumers looking for a bargain. Mexico already has

15 franchises of this concept and all seem to be doing well.

The expansions of US brands Best Buy and

Bed Bath & Beyond, which we noted last year, have continued

in 2010. In addition, Burberry is growing fast, while Nike,

Kingdom (children’s concept), Nokia, Adidas and Gandhi

bookstores have all been active.

One of the most exciting sectors recently has been

restaurants. We’ve seen openings for Morton’s, the renowned

Chicago steakhouse, also Nobu, France’s Brasserie Lipp

and PF Changs.

CB Richard Ellis | ShopFront 2010/11


Avenida Presidente Masaryk in Mexico City remains South

America’s premier retail destination, but the high street

environment is also maturing in Monterrey and Guadalajara,

which are (with Cancun and Puebla) the country’s other primary

retail markets.

Rents in Masaryk have hit all time highs of $90 per sq m and

the street continues to attract major brands, with openings this

year by Brioni and a relocation to bigger space for Ferragamo,

which enabled Montblanc to upgrade its own space to the

vacated Ferragamo premises.

One of the street’s biggest events in recent years was the

opening of Spain’s Tous jewellery brand in November 2009,

which was graced with the presence of Salvador Tous and wife

Rosa Oriol.

SHoppinG CEntRES

In future, we believe shopping centre development will focus on

smaller ‘neighbourhood’ schemes in cities with populations up

to 100,000 inhabitants. The majority of these schemes will not

be anchored by one retailer, instead offering entertainment in

the form of a cinema plus a range of 20-25 outlets covering

retail, food and beverage. In this way landlords can get around

the lack of available land for larger schemes and also

avoid having to offer generous terms in order to secure the

all-important anchor tenant.

There is still a pipeline for fashion malls in Mexico, with

six major schemes currently under construction. The Mexican

department store group Liverpool remains the most active

developer in this sector, accounting for three of the schemes

under construction with a further five in the initial planning stage.

There has also been good news from GICSA, one of

Mexico’s leading shopping centre developers which, as we

reported last year, had suffered financial problems. After

entering into partnership with another leading developer,

E-Group, the firm’s five major pipeline schemes, including

the 1.4m sq ft Interlomas retail and entertainment destination,

are back under construction.

lEGiSlativE CHanGES

As predicted in last year’s ShopFront, the split of Congress and

the presidency between Mexico’s two main political parties has

resulted in something of a legislative logjam. Presidential

elections are due in 2012, so 2011 will see the pre-election

process begin as candidates vie for selection. This will

inevitably have an impact on the property development and

investment market, as the key players wait to see which political

and legislative agendas emerge as the most popular.

Luis Llaca – luis.llaca@cbre.com

National GDP has recovered from its significant falls

during 2009, with consumer spending also picking up.




Although Serbia continues to face challenging economic

conditions with many retail expansion plans on hold, other

retailers are taking this opportunity to capture market share,

expand their existing retail networks and position themselves for

better times.

With only two regional shopping centres open and trading,

the Serbian retail market is not as advanced as some of its

Central and Eastern European (CEE) neighbours. This lack of

modern retail space has helped the high street to remain robust.

This has also meant that high street rentals are high by CEE

standards, with prime space at a premium.

However, last year retailers began to negotiate much harder

and high street vacancies have increased. Landlords were not

comfortable about offering discounts but eventually they

conceded and from the second half of last year onwards,

reductions from a peak of about 15-20% have been agreed. In

addition, landlords have been prepared to offer rent free periods

of between three to six months. Typical lease lengths are

unchanged at five years with a five year option to extend.

SHoppinG CEntRES

Benchmarked against other European countries, Serbia’s retail

provision in sq m per 1,000 inhabitants is very low. This is

particularly evident in capital Belgrade where it is just 90 sq m

per 1,000 inhabitants, compared with a national average of

between 180-200 sq m. Nonetheless, this leaves room for growth

in Serbia, with untapped investment potential.

In 2007 Delta City became the first major regional shopping

centre to open and last year it was joined by USCE, which at

50,000 sq m gross lettable area (GLA) is now the largest mall in

Serbia. Both are trading strongly and footfall is high.

These two shopping centres and the other smaller malls in

Serbia have had to asset manage their properties, with a number

of them splitting up or reorganising units to allow struggling

tenants to trade from less space. At the same time, this has

opened up opportunities for brands to enter these malls.

Although there is a considerable shopping centre development

pipeline, most of the scheduled projects have been pushed back

until 2011 or later.

REtailER aCtivity

Of the international retailers, German footwear retailer

Deichmann is expected to open a flagship store in Serbia

before the end of the year and has intimated that it may open as

many as 20 stores in Serbia. In addition, DIY retailer OBI and

supermarket chain Carrefour are also actively looking for retail


CB Richard Ellis | ShopFront 2010/11

Germany’s METRO Cash & Carry has been

operating in Serbia for several years now and

has established five stores, with plans for another

by the end of 2010.

This year luxury brands Burberry and Emporio Armani

both opened stores in Belgrade’s city centre of

290 sq m and 270 sq m respectively, demonstrating the

attractiveness of the Serbian capital to high fashion

retailers. Conversely, affordable fashion, pharmacies and

bakeries have been some of the most successful retail

sectors in 2010.

Some local retailers have also been expanding their

networks in the past year. Real’s 22,000 sq m Hiper Cort is

situated along the Belgrade-Zagreb highway and is the biggest

hypermarket in Belgrade. Novi Sad-based Univerexport also

opened its first supermarket in the capital, a 2,000 sq m store

located in New Belgrade. It is looking for further opportunities to

expand this store format across the city.

Furniture and homewares retailer Forma Ideale is continuing to

expand, having performed strongly last year with a well-priced,

mid-quality offer. It is likely to open more stores and has created a

smaller format suitable for city centre locations. Two of these stores

are currently open, of about 250 sq m each.

However, middle-tier fashion retailers have struggled, with the

relatively high cost of retail space and limited revenue opportunities

making it difficult for many such retailers to trade profitably.

REtail paRkS anD out-of-town

Aviv Arlon has opened its first retail park in Pancevo, anchored by a

4,500 sq m Dis hypermarket. The second phase will include a further

5,000 sq m of retail space in a project scheduled to open in six phases.

However, BIG CEE has postponed plans to start construction of its

first retail park, a 32,000 sq m scheme in Novi Sad, due originally to

open at the end of 2010.

While finance is more readily available for retail parks than last

year, banks tend to require pre-lets of 50% or above before they

will agree to provide funds for construction.


Because of the low availability of modern shopping centre

space the Serbian high street has been very robust. As a

consequence, most international retailers have started with

flagship stores on the high street rather than in malls.

Last year vacancy rates for larger city high streets

remained low but vacancies have increased in 2010 and

prices have come down, with some retailers taking the

opportunity to relocate to take larger, better placed units.

Although the top rental levels achieved have come down,

they remain at circa €100 per sq m per month.

Vladimir Mijatovic A – vladimir.mijatovic@cbre.com.rs

Finance is more readily available than last year

but banks tend to require pre-lets of 50% or above

before they will agree to provide funds for construction.



Turkey’s economy has rebounded strongly this year, after a

difficult 2009 in which GDP contracted by 8.63%. Government

figures for the first quarter of 2010 showed that GDP was

growing at its fastest pace for some six years, while the most

recent year-on-year growth figures of 11.7% place Turkey second

only to China during this period. Independent analysts as well as

government officials agree that Turkey seems to have turned

the corner and has recovered from the global economic

downturn. The retail property sector has also stabilised after a

challenging previous year. Rental levels in prime shopping

centres have been stable since Q3 2009 and range between

$240-1,800 per sq m per year depending on the size, location

and type of unit. Vacancy levels, which peaked in 2009, are

also expected to continue falling as retailer demand picks up.

The high street environment has also seen rents level off.

In Istanbul’s prime streets of İstiklal Street and Nişantaşı, rents

currently stand at $1,800 per sq m per year and $2,400 per

sq m per year respectively.

REtailER aCtivity

Several of the international retailers tipped to enter the Turkish

market in ShopFront last year have now opened their first

stores. They include the French DIY retailer Leroy Merlin,

which has opened in the Anatolium Shopping Centre in Bursa,

as well as the Austrian DIY chain bauMax, which has opened

standalone stores in Samsun and İzmit.

CB Richard Ellis | ShopFront 2010/11

In the apparel sector a first Hennes & Mauritz (H&M) store

in Turkey will be ready in November in Forum Istanbul Mall. A

second is planned for İstanbul Sapphire, a mixed-use scheme

currently under construction. Decathlon has opened its first

shop as a standalone store in Forum Istanbul Mall. Meanwhile

the Inditex Group operates most of its brands in Turkey,

including Zara (inc Zara Home), Pull & Bear, Bershka,

Stradivarius and Uterqüe.

The franchise model for market entry by international brands

is still quite common, despite some problems that occurred

during the downturn. The major franchise holders are:

• Alshaya Group, which operates brands including:

Debenhams, Topshop, Starbucks, Clinique and

The Body Shop.

• Unitim Holding, which operates Accessorize, G Star and

Ralph Lauren among others

• Demsa Group, which has Harvey Nichols,

Dolce & Gabbana, Guess, Laura Ashley and Mothercare

among its brands

• Fiba Group, which holds Marks & Spencer, Gap and

Banana Republic franchises.

Of the retailers that own their Turkish operations outright,

IKEA has four stores that are all considered to be trading

well. It is opening its fifth store, in Ankara, by the end of Q2

2011. In addition, Carrefour, Tesco, Media Markt, Darty and

Mango are all active in the market.

The most recent

year-on-year growth

figures of 11.7% place

Turkey second only to China.

SHoppinG CEntRES

By the end of 2010 the number of shopping centres in Turkey

is expected to grow to more than 300, representing a total

gross lettable area (GLA) of 8.16 million sq m. Much of this

development is focused on the major cities – İstanbul alone

accounts for 40% of total GLA in Turkey.

Some of the most significant schemes to open in İstanbul

during the past 12 months are shown in the table below.

There is still considerable scope for further supply of modern

shopping centre space, given that Turkey has 82 sq m GLA per

1,000 capita (as at H1, 2010) compared with a European average

of 163 sq m/1,000 capita.

As in retailing, international companies are entering the shopping

centre development and investment market in Turkey. Among

them is Corio of the Netherlands, which acquired a 46.92%

shareholding in local real estate operator Akmerkez and has

also recently paid €176m for the 84,000 sq m Anatolium shopping

centre in Bursa.

out-of-town/REtail paRkS

Large retail parks are relatively new in Turkey and there are

currently only two schemes up and running, one in İstanbul

and the other in Ankara. This situation is expected to change

in the next few years as hypermarkets and DIY operators start

to show a greater interest in the model. Several operators such

as Carrefour, Electroworld and Media Markt are undertaking

their own developments, in conjunction with local land owners

and developers.

The ‘outlet’ concept has become more popular and is gaining

an increasingly significant share of total retail stock. One example

is Via Port Outlet Center, located in Kurtköy. Featuring a variety

of stores and a food court, this scheme, which opened in

August 2008, has become one of the most popular outlet

centres in İstanbul’s ‘Asian side’. Another is Star City Outlet

Center, which opened in April 2010 in Yenibosna, on the

‘European side’ of İstanbul. It has a total GLA of 44,000sq m.

Birhan Yildiz A – birhan.yildiz@cbre.com.tr

PRojECt LoCAtioN GLA (sq m) oPENEd iN mAjoR tENANts

Star City Outlet Yenibosna 46,000 April 2010 Teknosa, Mango, Forever New

Ataköy Plus Ataköy 27,000 April 2010 Beymen, DKNY, Lacoste, Migros, Marks & Spencer, Teknosa

Kozzy Kozyatağı 12,500 April 2010 Mudo, Mango, LCW, Koton, Teknosa

Forum İstanbul Bayrampaşa 175,000 Q4 2009 Real, Boyner, Saturn, YKM, Tepe Home, H&M (in November), Decathlon

212 Power Outlet Bağcılar 70,000 Q3 2009 Carrefour, Praktiker, Media Markt, Adidas, Cacharel, Mudo

Neo Marin Pendik 36,000 Q2 2009 Deichmann, LCW, Teknosa, Carrefour

Pendorya Pendik 31,000 Q4 2009 Tesco Kipa, Media Markt, Koton, Mango

M1 Merter Merter 30,000 Q3 2009 Real, Media Markt

source: Turkish Shopping Centres & Retailers Association

ShopFront 2010/11 | CB Richard Ellis



Many retail brands continue to eye opportunities to enter

Morocco, which is a very new market with just a few modern

shopping centres available for international retailers and a complex

ownership structure for much of the older retail space.

In fact, modern malls are a new phenomenon for Morocco,

which aside from the souks and traditional shopping areas,

has only seen a number of ill-conceived shopping galleries

constructed. In many of these, each individual store is available

only to buy rather than to lease, because landlords are concerned

about the advantages that leasing agreements can offer tenants.

This means that ownership within the galleries is highly fragmented

and that rental levels for those stores available to lease are high

by regional standards.

This situation has had the knock-on effect of making prime

space expensive and has acted as a barrier to market entry.

Consequently, most major chain retailers are awaiting the arrival

of larger, modern shopping centres before they push for expansion

in the country. Once they are open, rents should revise downwards.

The lease situation tends to follow the French model, with

leases in multiples of three years. On a nine year lease the retailer

has the right to sell on the lease to another retailer in the same

sector after two years and there are break clauses after three

years and in the sixth year.

REtailER aCtivity

Few strong domestic retailers exist, with franchisees operating for

those retailers which have decided to start trading in Morocco,

such as Zara, Mango, Aldo and Carrefour.

International retailing tends to be dominated by French retailers,

with the franchise partners for Celio, Jules, André, Etam, 123 and

Kookai among those with stores in Morocco. However, consumers

still tend to be very price sensitive and while mass market retailers

are doing well it is questionable whether Morocco will provide

a good market for luxury retailers.

New openings have concentrated on four Moroccan cities:

Casablanca, Rabat, Marrakech and Tangier. Casablanca is home

to many of Morocco’s international corporate headquarters and

has a young and relatively affluent population, while Marrakech

remains a major tourist draw for both international and domestic


A number of domestic retailers have performed strongly in

2010. Supermarket/hypermarket retailer Groupe Label’Vie has

continued to build on a successful 2009 when it signed an

exclusive franchise agreement with Carrefour to represent the

French grocery retailer. Local retailer Confarma, which operates

hypermarket chain Marjane and supermarket group Acima, has

maintained a market-dominant position for more than 15 years.

2010 saw the debut of the first modern shopping mall

to open for five years… It is performing reasonably well.

Consumer electrical, white and brown goods retailer

Electro Planet has opened more stores while Kitea Group has

continued to operate multiple concepts, from its 1,000 sq m

K-Medias stores to its larger 10,000 sq m homewares stores.

SHoppinG CEntRES

April 2010 saw the debut of the first modern shopping mall

to open in Morocco for five years. Al Mazar in Marrakech

has a gross lettable area (GLA) of 40,000 sq m and includes

anchors Carrefour and Virgin Megastore. It is performing

reasonably well and footfall is improving gradually.

There are no further openings scheduled for 2010 but two

substantial shopping centre projects are in the pipeline for 2012.

Anfaplace and Morocco Mall, both in Casablanca, will represent

the first wave of modern shopping centres in Morocco’s most

important retail city, hopefully stimulating international interest

in the country. Morocco Mall will include more than 150 stores,

including the first Galeries Lafayette department store in Africa

as its anchor.

Meanwhile, Anfaplace is part of a mixed-use project including

residential apartments, a hotel, a beach club and 16,000 sq m of

offices. Although the shopping centre has attracted international

operators such as Marks & Spencer, Virgin Megastore, Habitat

and Carrefour, the vision for this project is much broader and is

intended to create an iconic destination for Casablanca. It was

designed by UK architect Foster & Partners.

Port city Tangier is the venue for the development of Tangier

City Centre, close to Tingis Mall, with completion likely in 2011/12.

REtail paRkS

Elsewhere, development is largely driven by the grocery sector

although Kitea Group has created what is arguably the first

retail park in Morocco, with ‘big box’ retail such as a Kitea,

Géant and a Mr Bricolage DIY store.

Grocery group Marjane has also developed Marjane Square

outside Marrakech. This ‘big box’ retail park is close to one of the

retailer’s hypermarkets and includes brands such as Springfield,

Celio and Maxi Toys.

Karim Beqqali – karim.beqqali@cbre.com

ShopFront 2010/11 | CB Richard Ellis

CB Richard Ellis | ShopFront 2010/11


Retailer demand for prime high street premises and primary

shopping centres in Portugal remains high, although the level

of entry fees and key money demanded by tenants for existing

leases has fallen. Because of the competitive nature of stronger

centres, prime rental levels are being maintained, despite pressure

by tenants for rents to fall.

With a large pipeline of new centres opening, oversupply

is inevitable in some locations. The Portuguese market suffers

from a lack of new brands and the offer in most major schemes

is identical. This shortage of new concepts represents a challenge

for developers, while it also represents an opportunity for retailers

looking to enter the market.

In shopping centres the regular lease term is six years. Anchors

and larger fashion occupiers take longer leases because of the

capital investment involved. On the high street the common lease

length is five years but under new legislation, 10-15 years can be

agreed. The maximum length of contract is 29 years.

REtailER aCtivity

New Yorker, OVS Industry and Muji have all entered the market in

2010, while Leroy Merlin, Decathlon and Starbucks have opened

new stores. IKEA is trading well, with three stores open and two

more in development, but the general furniture sector has come

under increased pressure with the slowdown in the housing market.

After a difficult start to the year, fashion sales increased marginally

over the summer.

Portugal’s Sonae has been active throughout 2010 with all of

its brands in shopping centres, retail parks and on the high street.

Its fascias include Modelo, Worten, Vobis, Sport Zone, Maxmat

and Modalfa, plus small concepts like Loop, Book.it and the new

Continente Ice.

Other active domestic brands include Seaside, Espaço Casa,

Parfois, Deborla and Radio Popular. The supermarket chain Pingo

Doce from Jeronimo Martins, has also grown its portfolio this year.


While shopping centres are the dominant retail environment in

Portugal, there are a few high streets in Lisbon and Oporto that

appeal to an international audience. Europe’s best known luxury

brands such as Louis Vuitton, Loewe, Hugo Boss, Emporio Armani,

Longchamp and Prada are located on Avenida de Liberdade,

Lisbon’s famous main street.

Supply along key big city high streets remains limited and as

a result tenants often seek key money when selling their lease.

Rents have not fallen in prime locations.

SHoppinG CEntRES

A few retail developments have been postponed because of

access to finance and market conditions. Although some developers

with planned projects have been tempted to form joint ventures

to focus on delivering their developments.

The fact that the shopping centre market has reached maturity

has forced developers to adapt. For example, last year Spazio and

Península Boutique Center, formerly know as Olivais Shopping

and Galerias Península, refurbished and repositioned their offer.

out-of-town anD REtail paRkS

The out-of-town retail park format expanded substantially from

2004-2008, with many developers viewing this as a quicker route

to market. However, an oversupply in this sector in some areas,

plus current market conditions, has seen rents fall. Another

problem facing retail park developments is the smaller pool

of potential tenants.

Unlike some other European markets, retail parks have not

made major inroads into the fashion sector and Page One is



(sq m) (1)

Barreiro Retail Planet (1) Barreiro Milligan 35,000

Espaço Oriente (1) Moscavide Obriverca 31,300

Gaia Retail Park


Gaia Doururbano *7,800

M Retail Park Maia Redland 6,000

Parque Nassica

Retail Park

Vila do Conde Neinver 22,000

TOTAL 102,100

source: CB Richard Ellis.

(1) Total GLA including the area that is functioning.



(sq m) (1)

Alegro Maia

(SC Jumbo expansion)

Fórum Sintra

(Feira Nova Gallery


Galeria Central

(ex Central Shopping)

Leiria Shopping

(SC C Sierra

ontinente expansion)

one of the few fashion fascias to have retail park stores.

On secondary retail parks some tenants have been able to

agree turnover-only deals and fit-out contributions. Turnover

rents have only emerged in the last three years but usually

contain a minimum rent provision. Rents have fallen on retail

parks over the past two or three years, typically by about 20%.

For the second consecutive year retail park development has

registered a drop in new gross lettable area (GLA). In 2009, five

developments of this type were completed, totalling 44,000 sq m,

representing a decrease of 14% compared with 2008. Five new

retail parks are expected to open this year, comprising a total of

around 100,000 sq m GLA, almost tripling the supply in relation

to last year. However, this GLA figure includes shopping centre

developments within these schemes.

Two such projects are Barreiro Retail Planet and Espaço Oriente

in Moscavide, both of which will combine a retail park and a

shopping centre within the same development.

Although developer and fund manager Neinver has announced

its intention to build an outlet centre on the periphery of Faro, this

is still at a preliminary study phase. Likewise plans for an outlet

at Alcantarilha, also on the Algarve, were approved at the end

of 2008 but there has been no confirmation as to whether the

project will advance.

lEGiSlativE CHanGES

Sunday trading laws look set to be relaxed, with legislation

restricting units with a total area of over 2,000 sq m from opening

on Sunday afternoon now handed to the municipalities to decide.

At present, all-day Sunday trading is allowed only during November

and December.

Carlos Recio – carlos.recio@cbre.com

Maia Auchan 46,100

Sintra Multi Development 40,300

Porto Soares da Costa 12,000

Leiria Sonae Sierra 43,200

TOTAL 141,600

source: CB Richard Ellis.

*Expansion GLA.

(1) Developments that aggregate a retail park and a shopping centre within the same complex.

ShopFront 2010/11 | CB Richard Ellis




The recession has not yet fully released

its grip on Denmark, despite some fiscal

stimulus from the government in the form

of tax incentives and low interest rates.

Unemployment remains a big fear,

leading consumers to put their money

away in savings and pensions rather

than spending it in high streets and

shopping centres.

Consequently retail sales this year

have fallen by around 0.6% compared

with the same period in 2009 and by

5.6% from their highs of two years ago,

according to figures from Statistics

Denmark. The year-on-year decline has

certainly flattened out compared with

2008 and 2009, encouraging the more

optimistic commentators to predict rises

above trend in 2011.

In terms of the leasing environment,

the market is tilted in favour of tenants.

However, the interpretation of what

constitutes a ‘market’ rent has created

a major complication. The boom period

saw rents rise to record levels, which

landlords tried to maintain even as the

market fell back. As is their right, retailers

in Denmark have mounted legal

challenges to what they saw as overinflated

rents. Some judgements have

CB Richard Ellis | ShopFront 2010/11

sided with the tenant but have since been

appealed by the landlord, with secondary

judgements still awaited. Other judges

have tried to strike a balance between

both parties so a deal can be made. All this

leaves the overall picture still very uncertain.

The issue is not just about high rents

either; some properties are under-rented

and if the court decides to impose an

increase this can be backdated by years

in some cases, leaving the retailer with a

massive amount of money to find.

Naturally some have chosen to surrender

their leases to avoid such a consequence.

This confusion and uncertainty over

market rents seems sure to affect the

retail sector in both 2011 and 2012.

REtailER aCtivity

Among Denmark’s domestic retailers

the star performer is the supermarket

group Dansk Supermarked, which

owns the brands Bilka (hypermarkets),

Føtex (supermarkets) and Netto (hard

discount stores). Of the three, Netto has

recently lost some market share but

remains the number one player and

is more profitable than its rivals.

Domestic competition in this segment

comes from Coop and SuperBest, while

international groups who are active in

the market include Aldi and Lidl from

Germany plus Norway’s Rema 1000. The

intense battle for market share coupled

with planning constraints on new sites

make this very much a landlords’ market.

Several retailers are looking to get

around planning issues by taking space

under 500 sq m (gross), which is much

easier to achieve within the planning system.

The biggest hype in the retail sector

currently concerns Abercrombie & Fitch

(A&F), which is finally fitting out its

much-delayed store in Copenhagen.

The store’s performance will have

considerable influence – positive or

negative – on the capital city’s retail

property market, not least because of the

raft of vacant units nearby that landlords

are holding onto in the hope of a ‘halo

effect’ from A&F driving up rents.

Denmark’s main high street retailing

is located in the two biggest cities,

Copenhagen and Aarhus. Copenhagen’s

prime shopping destination is Strøget

and its neighbouring smaller streets. At

1.1km Strøget is one of Europe’s longest

pedestrian shopping streets.

These areas are still characterised by

smaller (less than 1,000 sq m) units. We

also find quite a few empty shops in high

streets, as landlords try to wait out the

tougher times in order to set rents when

the general market environment is

healthier. This is potentially a risky

strategy and it will be interesting to see

how many hold their nerve if the market

fails to pick up noticeably in 2011.

SHoppinG CEntRES

The leading manager of larger (above

10,000 sq m) schemes in Denmark is

Steen & Strøm. In the first half of this year

the company reported footfall levels

close to those in the first half of 2009,

but sales turnover for the first half of 2010

was down 3% year-on-year. We think

similar results will have been recorded

in other schemes across the country.

The Danish shopping centre

development pipeline is yet to resume,

with several existing schemes still under

pressure and retailers there reportedly

being offered significant incentives just

to keep their stores open rather than

creating excessive voids.

Happily, the two pipeline schemes

scheduled for this year – Aalborg’s Friis

Citicentre and the Sillebroen shopping centre

in Frederikssund – both opened on time.

out-of-town/REtail paRkS

Denmark’s retail parks are still dominated

by furniture and bulky goods. The sector

has been energised somewhat by the

continued expansion of IKEA, which now

has five stores either open or at fit-out

stage within Denmark, including two in

Copenhagen and one due to open in

Aalborg at the end of this year or

beginning of 2011.

Local competition to IKEA comes

from IDdesign, which owns the brands

IDEmøbler and ILVA, as well as the

discount furniture chain BIVA. It’s fair to

say that all these brands have had their

difficulties during the economic slowdown.

lEGiSlativE EnviRonmEnt

Those who oppose excessive

bureaucracy have had a new cause to

champion with the situation that arose

over planning permit quotas, which are

set every four years for each municipality.

In 2006 a new quota period began at the

height of the consumer boom, with

retailers keen to capitalise by rapid

expansion of their store estates. As a

result all the permits for some cities were

rapidly taken up, creating a situation

where units previously occupied by

banks or restaurants had to sit empty

because no further permits could be

issued to change their use to retail.

This year a new quota of permits has

been put in place, with very few of these

being taken up as retail expansion has

slowed along with consumer spending.

The good news is that through their

efforts to raise awareness of this issue

among municipal authorities, market

professionals, including CB Richard Ellis,

have helped to ensure that licensing

bottlenecks do not reoccur in future.

Ole Hammershøj –


The biggest hype

in the retail sector

currently concerns

Abercrombie &

Fitch (A&F), which

is finally fitting out

its much-delayed

store in Copenhagen.

ShopFront 2010/11 | CB Richard Ellis




The global economic crisis seemed to hit

Croatia very late and its effects only really

became apparent in 2009. Consequently,

the impact has spilt over into 2010, with

a decline in retail sales and retailers

continuing to struggle.

Stabilisation and recovery is likely

to start in the next six to twelve months

and retail sales appear to have bottomed

out, although at what point they start to

pick up again is hard to predict.

Increasing competition among

developers and landlords to secure

tenants has led to some very tough

negotiations and shopping centre

operators have had to offer discounts,

turnover rents and fit-out contributions

to entice retailers, especially given the

power held by popular international

retailers. The influence of franchisees

has waned as more international retailers

open directly-owned stores.

Developers with a number of schemes

have been offering packages for retailers

to occupy space in a mixture of their

older and new schemes, which has

made it increasingly challenging for

developers with only a single new

scheme to lease.

SHoppinG CEntRES

At market peak at least a dozen shopping

centres were planned for the capital

Zagreb but this has shrunk to a handful,

with the banks unable and unwilling

to finance many of them. In the future

it is likely that only the best planned

schemes will progress. In secondary

towns, such as Split and Osijek,

a number of schemes currently in

construction started when times were

better and consequently some poor

schemes will be delivered.

Several new developments have come

online, notably the 100,000 sq m

Westgate Shopping City, Zagreb which

opened at the end of last year. The

260-store shopping centre signed

retailers with some very attractive terms

and conditions. Zara, New Yorker,

Peek & Cloppenburg, Marks & Spencer,

C&A, Humanic, Mueller, Intersport,

CB Richard Ellis | ShopFront 2010/11

Technomarket, Mercator, Massimo Dutti,

Stradivarius, Parfois, Högl, Coin Casa,

Crocs and Sportina all have units within

the scheme. It remains to be seen how it

will fare when other schemes closer to the

city centre open.

The delayed opening of what will

become Croatia’s largest shopping

centre, Zagreb East, is now anticipated

for 2012. It will be anchored by Croatia’s

first IKEA and will feature 320 stores, plus

a hypermarket, across 140,000 sq m gross

lettable area (GLA).

In 2009 approximately 190,000 sq m

of retail space was added and this year

should mirror this growth, which is

adequate for current demand. However,

it is evident that Zagreb’s shopping

centre stock is reaching a very high per

capita provision rate and it seems

inevitable that some schemes will suffer

as a result of over supply.

REtailER aCtivity

A number of international retailers have

been expanding strongly. Zara, C&A

and New Yorker are performing well,

as is the health and beauty sector with

dm-drogerie markt and Mueller. In the

value sector German footwear retailer

Deichmann continues to expand across

Croatia, as does Takko.

Franchisees represent many of the

international brands, such as Slovenian

Sportina Group, with 40 fashion brands

in Croatia, and Zagreb-based Magma,

which has around 20 brands. Many of

the franchisees have been noticeably

affected by the outcome of the crisis.

Several new brands are entering the

market, many of which will debut at

TriGranit’s Arena Centar in Zagreb when

it opens in November. These include

Hungarian fashion retailer Jeans Club

as well as US fashion retailer Gap,

which will open via its Greek franchise

partner Marinopoulos.

Marinopoulos has also signed an

agreement with Carrefour to expand

throughout the Balkans, including

Croatia. This new company will develop

hypermarkets and supermarket under

the Carrefour banner.

REtail paRkS


Although shopping centres still dominate,

the retail park sector offers cheaper rents

for retailers and free parking. Small retail

parks offer a good solution for towns of

20,000 to 30,000 people, which would

struggle to support larger shopping

centres, and proving popular with shoppers.

There also appears to be a pick-up in

activity in ‘big box’ retail, especially the

DIY sector. Some of the most active

retailers include OBI, Bricostore and

Bauhaus. In the furniture sector, Kika is

looking to further expand in Croatia while

Austrian furniture retailer XXXLutz has

acquired Slovenian furniture chain

Lesnina, which has a number of Croatian

stores. French sports retailer Decathlon,

which typically prefers to trade from

stand-alone ‘big box’ stores, is also

entering the market.

C&A is expanding through retail parks

while this year furniture retailer Jysk has

opened three stores in Zagreb alone,

with more throughout the country. Value

fashion chain New Look is considering

entering Croatia through a franchise

partner in 2011.

Conversely, the high street has

suffered somewhat this year and that has

created opportunities for overseas

retailers such as Zara, which finally

secured a high street store in Zagreb this

year. Hennes & Mauritz (H&M) will debut

on Flower Square and both these

retailers are planning to open their high

street stores during the first half of 2011.

This is likely to have a dramatic impact

on high street retailing in the capital and

rents should start picking up again next year.

Arn Willems A – arn@cbre.hr

ShopFront 2010/11 | CB Richard Ellis


The popularity

of the high

street has




Kazakhstan is a very large but sparsely populated country,

and its two major cities are a considerable distance apart.

The capital Astana and the affluent, more densely populated

Almaty are the dominant focus for the retail market in the country.

The quality of shopping centres tends to vary significantly,

with some small centres opening at low occupancy levels,

which will almost certainly see them go into terminal decline,

while others remain popular and full, even to the extent of

operating waiting lists. As a rule, shopping centres with a badly

managed tenant mix, low occupancy rates and poor location

face decreasing footfall and high tenant rotation.

The Mega Alma-Ata, Sputnik, A’port, Ramstore, Maxima and

Prime Plaza shopping centres are the most popular shopping

and entertainment locations in Almaty.

Today, Kazakhstan is definitely a tenant’s market and while

landlords previously refused to do any kind of deals to let their

retail space, this situation has now reversed and a wide range

of offers have become available, including lowering rents,

cancelling service charges and offering rent-free periods of

six to eight months or free fit-outs.

At the beginning of this year turnover-only rents were also

introduced for the first time in some shopping centres,

something that was previously unheard of in the local market.

Lease terms are relatively short at between one and three

years, but are likely to increase in the short-term.

REtailER aCtivity

Among the most notable events of 2010 was the opening of

stores under the Zara and other Inditex Group brands. The

franchise partner opened the first Zara store in the Mega

Alma-Ata Mall in Almaty earlier this year and has reported

soaring trade.

This year was noticeably more active than 2009. Since the

spring of 2010, the retail market has shown signs of recovery,

supported by the entry of new brands and the opening of new

stores. Developers have also started to plan the completion of

shopping centre projects which were frozen during the crisis

period, and in some instances even plan to construct and

launch new shopping centres.

German retail group METRO Cash & Carry opened its first

store in Astana earlier this year and in late September opened

another store in Almaty. It is aiming to add another two or three

stores in other cities before the end of the year and could grow

to approximately 10 stores in total. METRO Cash & Carry is the

only Western European chain operating in Kazakhstan but

Turkish retailer Ramstore has opened a number of Ramstore

Hyper stores.

Among local retailers, grocery chain Green, which was

established in 2008, has continued to expand strongly, with

a mix of formats and a quite high quality local offer.

The first few months of 2010 were quite slow, but since then

there has been an upturn in the fortunes of the retail market and

it would appear that 2011 will support further growth, with

higher footfall and higher spending. This is borne out by

government statistics which showed that retail sales increased

by 13% between January-September 2010.

Almaty and Astana remain the major retail cities in the

country, with shopping centres predominantly located on high

Since the spring of 2010, the retail market has shown

signs of recovery, supported by the entry of new brands

and the opening of new stores.

streets. At the same time, a number of operators have started

to consider other cities in Kazakhstan for potential expansion.


The popularity of the high street has remained robust, while

rental rates have slightly increased in comparison with 2009.

Vacancy rates on the high street and in prime shopping centres

have decreased and stores up to 150 sq m are in highest

demand, although there is an emerging trend for larger formats.

SHoppinG CEntRES

Three major shopping centres opened in Almaty in 2010: the

34,000 sq m gross lettable area (GLA) Prime Plaza Aksai, the

13,000 sq m GLA Globus and the 20,000 sq m GLA Mango.

The A’port Mall, the first phase of which opened in 2009, is

located on a very busy road on the city outskirts. We expect this

project will be very successful, especially after the completion

of the planned second phase.

In Astana just one major shopping centre opened this year.

Khan Shatyr has a GLA of approximately 123,000 sq m and is

the largest-scale landmark project in Kazakhstan. This scheme

is likely to change the perception of shopping centres in the

country. It has a significant entertainment component and has

been designed to attract international retailers.

The completion of a number of projects has been postponed

to 2011-2012. Many companies are currently seeking financing

arrangements and it appears that the availability of financing to

complete suspended projects will improve.

Given its status as an emerging retail market and the

domination of the two main urban centres (Astana and Almaty),

neither ‘big box’ retail nor retail parks have yet established

themselves on the Kazakhstan market.

Maksim Mankevich A – maksim.mankevich@cbre.kz

ShopFront 2010/11 | CB Richard Ellis



Czech Republic

After a dip in retail sales in the first quarter of this year, things

have begun to pick up again and consumer sentiment and

retail growth both seem broadly positive. But the outlook is

very uneven. New developments in good locations are making

some of the older schemes look tired, while international

interest in the Czech Republic remains strong, with the country

proving to have one of the more robust economies in Central

and Eastern Europe.

The development pipeline slowed once the economic

crisis hit in 2008 and 2009 and, although it is showing signs

of starting again, lending institutions are very sensitive and

very little new space will be delivered in 2010.

The capital city Prague is the strongest retail performer in

the Czech Republic and, with a significant tourist draw, it and

Brno are also the only two cities in the country with a sizable

high street offer.

However, in 2009 it has become a tenant’s market and there

have been rental reductions, rent-free periods and contributions

towards fit-outs offered in order to attract new retailers into

units. Typical leases within shopping centres run for five years.

International retailers are in a particularly strong position and

most are leveraging their advantage. They tend to push for

turnover rents, although these are unpopular with lending

institutions, a situation which is leaving many landlords and

developers in a difficult position.

Because of the crisis only a smaller number of significant

shopping centres are currently in development, although a

handful of local schemes are progressing. This year’s Van Graaf

department store in Prague, the 42,000 sq m Galerie Harfa

shopping centre, also in Prague, and the extension to Forum

Liberec have been the only major schemes to complete over

the past 12 months.

REtailER aCtivity

The biggest new arrival this year was Austrian furniture retailer

XXXLutz, while Peek & Cloppenburg affiliate Van Graaf opened

a 10,000 sq m department store on Wenceslas Square late

this year. Högl and Olilily have opened high street stores,

while IKEA is set to expand its offer in 2011 and fellow Swedish

retailer Lindex, plus Starbucks, KFC and Burger King all have

strong expansion plans. The arrival of Spanish fashion retailer

Desigual is anticipated.

Convenience store retailer Žabka has been rolling out

stores very aggressively this year, while Marks & Spencer

and Hennes & Mauritz (H&M) are also expanding in the

Czech Republic, with shopping centres the main vehicle

for growth. Some of the largest cities in the Czech Republic

are close to retail saturation and developers are looking

at the country’s smaller towns, with populations of around

50,000 people.

CB Richard Ellis | ShopFront 2010/11

In September 2010 the second, 22,000 sq m phase of Forum

Liberec opened. It is linked to phase one, which opened in

February 2009, and has expanded the overall gross lettable

area (GLA) to 46,000 sq m, adding a further 70 shops. A number

of international retailers are present in the scheme including

H&M with its first store in the region, anchor stores C&A,

Reserved, Datart, Humanic, KappAhl, Deichmann and Esprit,

plus fashion brands such as Gant, Promod, Etam, Pietro Filipi,

Calvin Klein and Guess and a new dm-drogerie markt.

Phase one of Forum Liberec included a 10,000 sq m MY

Liberec department store, run by Tesco and significantly its

first department store format globally, plus Motivi, New Yorker,

Orsay and Bijou Brigitte among a 60-store mix of international

and local retailers.

out-of-town anD REtail paRkS

Retail parks provide an effective model for accessing smaller

towns and a number of schemes, typically anchored by a

supermarket and with a few other ‘big box’ stores, are opening

around the country. In addition, planning laws tend to be quite

liberal, making development of a retail park a relatively easy

and safe investment option.

In the retail park sector Kik, Takko Fashion, Dracik and

Deichmann have been the most active. French sports retailer

Decathlon is also to open a ‘big box’ retail unit at Liberec and

its value proposition should work well with the Czech consumer.

Prague’s fashion outlet centre Fashion Arena, which includes

60 predominantly international brands, was extended by

7,200 sq m in October 2010.


High street rents have remained quite stable in 2010 but there

has been more activity recently than in the past two or three

years, when there was virtually no movement. Although key

money is still generally required, the amount requested

has decreased significantly, while off prime locations

are arguably still expensive by regional standards.

Tomas Beranek – tomas.beranek@cbre.com

Some of the largest cities in the Czech Republic are

close to retail saturation and developers are looking

at the country’s smaller towns, with populations

of around 50,000 people.

Some of the largest cities in the

Czech Republic are close to being

saturated with retail provision.




This year both retailers and consumers have acted quite

cautiously, as the impact of the economic downturn continues.

Unemployment remains high in Slovakia and shoppers are being

careful with their money, which is having a knock-on effect on

retail sales.

Retailers are also slowing their expansion plans, taking

longer to sign rental contracts and being tougher in their

negotiations, while they await the impact on retail sales of

an upcoming VAT rise from 19% to 20%, which comes into

effect in January 2011.

Despite market uncertainty, there has been more

development activity this year than last, when just two shopping

centres opened. In 2010 two shopping centres have opened, plus

several mixed-use developments which include retail and a ‘big

box’ scheme. Approximately 93,000 sq m of retail has opened

so far and another 80,000-90,000 sq m will be open by the end

of the year.

This activity is in part because a number of the schemes

were already under construction before the economic downturn.

It is likely that 2011 will see far less development than originally

planned, with only those projects already under construction due

to open next year.

SHoppinG CEntRES

The most important shopping centre opening in 2010 was

Eurovea in Bratislava, which at 60,000 sq m introduced a

number of new brands to Slovakia, while Aupark opened a

smaller, 8,200 sq m scheme in Piešt´any. Of the new mixed-use

schemes, the most notable are Galeria Cubicon and River Park

Centre in Bratislava. Both combine commercial, residential and

retail space.

Two more shopping centres are due to open in Slovakia’s

fourth largest city, Zilina. The 24,000 sq m Aupark Zilina and

the 28,500 sq m Mirage are both in the city centre and are of

quite a significant scale for a city the size of Zilina.

Competition to attract retailers will be very

difficult, with store chains very unlikely

to consider opening in both.

Bratislava’s three major centres are fully leased and in some

cases even have a waiting list. Leases in shopping centres tend

to run for ten years, while some of the major international

retailers have enough leverage to negotiate break clauses after

five years.

In the secondary and tertiary centres vacancy rates are high

and landlords have had to agree to some very competitive

rental negotiations at levels below previous expectations.

REtailER aCtivity

There are relatively few prime shopping centres in Slovakia

and in those that are open retailers have performed quite well.

However, the situation differs between local and international

retailers, with many local retailers, even in the prime centres,

having had a challenging year.

New market entries from abroad have slowed since the

downturn, although a number of foreign retailers have opened

stores this year. These include Burger King with its first

restaurant, Kotton, Debenhams, Sconto Furniture, Komfort,

Desigual and Motivi.

Slovakia does not have a strong domestic retail scene and

the local retailers tend to be small-scale food operators and

pharmacies. Some of the bigger chains, such as Panta Rhei,

Planeo Elektro, Dráčik, Super-ZOO, Amazon and Mega

Nábytok, have fared reasonably well this year, while

many of the smaller chains have had a

difficult 12 months.

HiGH StREEt anD REtail paRkS

Although shopping centre space tends to dominate the expansion

strategies for the larger retailers there has been more activity

on the high street, with international retailers looking at high

street space for the first time. This is partly because there is

little new shopping centre space to occupy and also because

landlords have been combining smaller units on the high street

to create the larger, circa 1,500 sq m spaces preferred.

This is a slow process but Hennes & Mauritz (H&M) and

New Yorker are both looking to establish flagship stores on

the high street for the first time, while Italian fashion chain

Terranova has upsized to a larger site at Poštová Street in

Bratislava. This strategy will in particular boost the profile

of Obchodná Street in Bratislava, historically a secondary

location compared with the concentrated café and restaurant

scene along Michalská Street.

Outside the main cities, retail parks are popular in Slovakia and

tend to be built to serve smaller towns, typically anchored by a

food store. Increasingly discounters are looking at these locations

because they are cheaper and offer good visibility and footfall.

German footwear retailer Deichmann, KiK Textil, dm-drogerie markt

and Takko have all been expanding strongly in this sector,

as has fashion retailer New Yorker.

In addition, the 13,500 sq m retail warehousing scheme

Stop.Shop in Liptovský Mikuláš is doing well, with Deichmann,

Takko, New Yorker and Kik all signing up, attracted by its location

within the city and suitable unit sizes.

Martin Biro – martin.biro@cbre.com

Despite market uncertainty, there has been more

development activity this year than last, when just

two shopping centres opened

ShopFront 2010/11 | CB Richard Ellis




CB Richard Ellis | ShopFront 2010/11

Sweden has emerged from the global recession in good shape.

Public finances are strong; unemployment, though still higher

than ideal, is falling and consumer spending is growing from

what was already a good level.

This wasn’t enough to enable the country’s incumbent

centre-right coalition government to gain an outright majority in

September’s parliamentary elections. Despite winning the

largest number of seats they did not gain a majority under the

country’s proportional representation system; however they

have formed a minority government with which to continue their

tax cutting and business-friendly agenda.

Retail rents have broadly climbed back to pre-recession

levels, as landlords dispense with discounts or stepped rents

that had begun to creep in during the economic slowdown.

Retailers have also abandoned their attempts to renegotiate

existing leases in their favour, a trend that was a notable feature

of 2009.

For 2011 and beyond we see much the same positive

pattern – Sweden is nothing if not a stable and mature market and

there are likely to be few surprises in store – positive or negative.

REtailER aCtivity

One of the biggest drivers of recent activity in the retail sector

has been the privatisation and liberalisation of Sweden’s

state-owned pharmacy monopoly. There are now a number of

groups competing fiercely to gain critical mass in this sector,

including the former state-run company Apoteket plus

international groups Alliance Boots from the UK and DocMorris

One of the biggest drivers of recent activity in the retail

sector has been the privatisation and liberalisation of

Sweden’s state-owned pharmacy monopoly

from Germany. Vacant units of a size appropriate to a pharmacy

rarely stay vacant very long, and are often the subject of

competing bids.

The most interesting domestic retailing group today is

Clas Ohlson, which started out as a pure mail order business

but now has stores in Sweden, Norway, Finland and the UK,

with big expansion plans for the latter country.

Domestic players looking to expand within Sweden include

the hard discounter Outlet Company, which has traditionally

based itself in retail parks but now has a successful city centre

concept that it is keen to roll out. In addition, Dixons Retail’s

Swedish subsidiary Elkjøp has been performing well of late and

is looking at acquiring larger store sizes to counter the arrival of

Germany’s Media Markt.

CB Richard Ellis also expects significant changes in the

sports retailing environment, with a move towards ‘big box’,

hard discount style outlets led by the top domestic player

Stadium plus Norway’s XXL. Meanwhile, France’s Decathlon

is trying hard to uncover the right locations for a market entry

that would provide further impetus to this segment.

In the fashion segment, Desigual opened its first Swedish

store in April this year. The Spanish company, which operates

through a Swedish franchisee, plans a further three stores

before the end of the year.

Finally Specsavers, whose market entry was highlighted in

ShopFront last year, has gone from strength to strength,

managing its growth through a mixture of opening new outlets

and acquiring established opticians. The company has been

a real success story in the past couple of years.


The Swedish high street environment is a very stable one but

the retailer activity noted above has sparked a definite pick-up

in interest for good locations. The supermarkets are also eyeing

up the high street for smaller, ‘local’ outlets, while electronics

retailers are looking to stage a return having previously

abandoned the high street in favour of shopping centres or

out-of-town parks.

In many cases, though, a lack of suitably-sized units –

Swedish high street premises are typically little more than 15m

deep – is proving a constraint. If developers could reconfigure

some of the existing space the centre of Stockholm could take

on quite a different feel.

SHoppinG CEntRES

During the era of cheap money it’s fair to say that a number of

shopping centre and retail park schemes were built that would

probably not have gone ahead in today’s climate. Some are

struggling and have too many vacant units, a situation that is

deterring other retailers from coming on board.

It may take a further two to three years for the market to

catch up with some of the more speculative schemes, but it’s

also true to say that the well-established malls in primary

locations are performing adequately.

In terms of a pipeline, the most significant new scheme to

get the investment go-ahead is the €350m Emporia in Malmö,

set to open in late 2012. However, Unibail-Rodamco’s Mall of

Scandinavia project in Stockholm is getting under way while

awaiting a final investment decision.

out-of-town/REtail paRkS

The heyday of retail park development in Sweden was between

1999 and 2007. Since then there’s been little further activity,

and this is unlikely to change until evolutions in retailing

create the need for different types of selling space to those

currently available.

As with the shopping centre segment, good retail parks have

flourished while others that were less well thought out or not

optimally located are struggling.

Rents for the prime retail parks in the greater Stockholm area

currently stand at 1,800 kronor per sq m per year, while outside

of Stockholm the best parks can obtain rents between 1,000-

1,200 kronor per sq m per year. Lesser parks away from

Stockholm are seeing rents in the region of 800-1,000 kronor

per sq m per year.

Anders Lillsunde – anders.lillsunde@cbre.com

ShopFront 2010/11 | CB Richard Ellis



The retail market in Bulgaria continued to struggle during the

third quarter of 2010, as both developers and retailers remained

uncertain of when to expect a recovery. A challenging

macroeconomic environment has adversely impacted

Bulgaria’s retailers, to the extent that sales turnover is reportedly

down between 10% and 40% year-on-year. That said, overall

retail sales for Q3 reported by the National Statistics Institute

(NSI) actually increased slightly on those for Q2.

The market has also been hit by an excess of supply as a

large number of new shopping centre schemes opened this

year, almost tripling the available retail space in Sofia and

doubling it across the whole country.

This has shifted the leasing environment even more in the

tenants’ favour. Retailers are able to take quite aggressive

negotiating stances, demanding rent reductions, rent-free

periods and landlord contributions towards store fit-outs,

amongst other incentives.

We expect these market characteristics to persist in 2011,

with conditions favouring tenants at least until the newly-opened

shopping centres become more established and the remaining

vacancies are filled.

REtailER aCtivity

Bulgaria has a relatively small and inactive group of domestic

retailers, so what movement there has been emanates from the

international brands that are either established in the country or

looking to make an entry.

In the hypermarket segment Carrefour opened its first

Bulgarian store in Bourgas in March 2009 and has been quick

CB Richard Ellis | ShopFront 2010/11

to build on that. Subsequent stores have begun trading in Sofia,

Plovdiv and Varna, while a fifth store is set to open in the

northern Bulgarian town of Rousse by the end of the year.

Carrefour sees good potential in Bulgaria and the company is

certain to be a major influence in the market in the coming years.

With food having been one of the strongest sectors in 2010,

other supermarket chains are also on the lookout for space,

including Kaufland, Billa, Lidl, Plus and Penny Market.

In fashion, the tendency has been towards consolidation into

better space rather than rapid expansion. We have seen activity

among the brands of the Inditex Group in particular Zara,

Pull & Bear, Bershka and Massimo Dutti – while Germany’s

New Yorker and Peek & Cloppenburg have both opened

stores in Sofia. Humanic made its entry to the country by

opening two stores in Sofia. Meanwhile Deichmann, already

present in the market with its stores in Plovdiv and Burgas,

also secured several locations in Sofia.

In the DIY segment, the Austrian retailer bauMax now has

four stores in Bulgaria, part of an expansion campaign that has

spread the brand to much of Central and South Eastern Europe.


High street development remains constrained by a lack of

suitably sized spaces, with most units ranging from 50 sq m to

250 sq m instead of the 1,000 sq m and upwards preferred by

modern retailers. Rents across the board have fallen this year,

with prime locations declining by around 20% and secondary

and tertiary locations outside the top cities falling by as much

as 50% year-on-year.

There has also been a distinct lack of public or private

initiatives to improve the high street realm, causing consumers

to favour the shopping centres for their leisure/discretionary


SHoppinG CEntRES

Of the new shopping centres that have opened this year

(see table), two of the most high profile have been the Serdika

Centre and The Mall, both in Sofia.

The €210m Serdika Centre, which opened in March, has

210 units containing a mixture of domestic and international

brands. It houses the first Bulgarian stores for both Zara

and Peek & Cloppenburg.

The Mall, anchored by the first Carrefour hypermarket in

Sofia, opened in April. At 66,000 sq m and spread over six

storeys it has taken the title of Bulgaria’s largest shopping


The future pipeline looks less healthy, with around

15 schemes currently on hold in the hope that the leasing

environment might improve, while a number of others remain at

the planning stage with little likelihood of them ever reaching fruition.

out-of-town/REtail paRkS

This sector continues to be relatively inactive, suffering from

lack of demand and high land prices. Even in the better

performing parks, tenants have been able to secure significant

rent reductions, sometimes by as much as 30% or more.

Typical rents now stand at around €96-108 per sq m per year.

Mimi Belcheva A – mbelcheva@mbl.bg

City NAmE oPEN dEvELoPER sizE iN sq m

Sofia Sofia Outlet Center Q1 Arnok Immobilien 15,000

Gabrovo Mall Gabrovo Q1 Balkan Properties



Sofia Serdika Center Q2 ECE 52,000

Sofia The Mall Q2 Carrefour/Assos


Plovdiv Galleria Plovdiv Q2 ECDC and Sienit

Hording AD

Varna Grand Mall Q2 Orchid


Plovdiv Markovo Tepe





Q4 Melina 22,000

Varna Varna Towers Q4 Varna

Towers OOD

and Densy M



Galleria Stara

Zagora (GTC)


Q4 GTC 26,800

Rousse Mall Rousse Q4 Aviv and

Cinema City


source: MBL – Part of the CB Richard Ellis Afilliate Network.

Carrefour sees good potential in Bulgaria and the

company is certain to be a major influence in the

market in the coming years.

ShopFront 2010/11 | CB Richard Ellis


The Brazilian retail market

is hot news right now, with

developers expecting to

build over 2.2 million sq m

of new shopping centre

and ‘big box’ retail space

by the end of 2013

CB Richard Ellis | ShopFront 2010/11

The Brazilian retail market is hot news

right now, with developers expecting to

build over 2.2 million sq m of new

shopping centre and ‘big box’ retail

space by the end of 2013 amid strong

demand from both domestic and

international retailers.

The Brazilian economy has achieved

sustained growth of 8.9% in the first

half of 2010, according to Government

statistics agency IBGE, without inflation

rising out of control. The upcoming

World Cup and Olympics are providing

a further general economic boost to

the country. Retail sales figures support

the view that Brazil’s retail sector is

booming, with figures from IBGE

showing retail sales growth of over

11% approaching year-end 2010.

SHoppinG CEntRES

A total of 1.8 million sq m of shopping

centre development is currently under

construction in Brazil, with more than

1 million sq m of this to be located

within the states of São Paulo and

Rio de Janeiro. Some of the biggest

projects scheduled to open in

2011 include Shopping da Ilha

(41,000 sq m Gross Lettable Area

– GLA), Park Shopping São Caetano

(39,000 sq m GLA), Uberlandia

Shopping (38,000 sq m GLA),

Porto Madeira Shopping

(35,000 sq m GLA), Blumenau Norte

Shopping (34,000 sq m GLA), and

JK Iguatemi (33,000 sq m GLA).

The last of these is a high-end

shopping centre under construction

in a prestigious region of São Paulo.

Prime shopping centres are

performing very strongly, with low

vacancy rates and rising rental levels.

However, the volume of upcoming new

stock is likely to create high levels of

competition to attract retailers.


The most affluent Brazilian consumers

prefer to buy within shopping centres,

predominantly for personal security

and comfort reasons. Consequently

there is little contemporary prime retail

in city centres, although both São Paulo

and Rio de Janeiro have upmarket retail

streets – Oscar Freire/Haddock Lobo

Streets and Garcia D’Ávila Street

respectively. These streets host global

luxury brands, such as Louis Vuitton,

Mont Blanc, Ermenegildo Zegna and

Cartier. However, the primary purpose

of these stores is to showcase brands

as consumers are security-conscious

and are wary of purchasing high value

items in a street environment.

REtailER aCtivity

Among international retailers, Zara

has continued its expansion in Brazil,

while Hennes & Mauritz (H&M) is still

analysing the market. Sephora is

evaluating opportunities, Louis Vuitton

is looking for more locations, L´Occitane

plans to open approximately 95 new

stores and concessions by 2013 and

Lacoste intends to double its Brazilian

portfolio by 2012. The Brazilian

high-end retailer Le Lis Blanc is also

growing rapidly and has announced

plans for 68 new stores by 2014.

Domestic general merchandiser

Leader Magazine aims to open 20

new stores in the next three years and

electrical and home appliances retailer

Lojas Americanas will add 400 stores.

Brazilian fashion retailer Hering

intends to open 129 new stores in the

next years, Zoomp plans to grow from

550 shops to 850 stores and Renner

recently opened its 18th store in

São Paulo. Restaurant chain Porcão

has announced plans to double its

restaurant portfolio by 2013, while

restaurant group Viena has raised

€72m to finance growth.

There have been a number of retail

mergers between Brazil’s biggest

retailers, with grocery retailer Grupo

Pão de Açúcar announcing its takeover

of furniture and home appliances

retailer Casas Bahia and consumer

electrical retailers Insinuante and

Ricardo Eletro agreeing to merge

this year.

In the drugstores sector, Drogaria

São Paulo has purchased rival Brazilian

Drogão and is focusing its efforts on

increasing its presence inside shopping

centres. Meanwhile, drugstore chain

Pague Menos plans 50 new stores

next year.


Carrefour, Walmart and Grupo Pão

de Açúcar have had another good year

and have increased their out-of-town

developments, which often include

mixed use space. Leroy Merlin plan

to double its store portfolio in Brazil.

Marcos Cesar – mcesar@cbre.com

ShopFront 2010/11 | CB Richard Ellis



While the Norwegian market has certainly slowed down a little

this year compared with 2007 and 2008, there has been a

general return to stability and retail sales although flat are not

declining. Although leases are taking longer to agree and

retailers are looking for competitive rental terms, the market

is broadly settled.

SHoppinG CEntRES

Like the rest of Europe there has been a shift towards prime

retail property and sales data suggests that large shopping

centres have seen higher retail sales growth than the high street

or secondary centres. These latter two categories have been

struggling and – aside from a few prime locations – this has

been another difficult year.

There is a general shift towards value and discount retail and

where hard discounters are impacting on sales for the traditio

CB Richard Ellis | ShopFront 2010/11

In secondary centres retailers have been much more

aggressive and have sought more investment from landlords

in their shop fit-outs and the mall environments to help

attract footfall.

Norway already has 4.1 million sq m of retail space for a

population of circa five million and most of the development

work around the country this year has focused on extensions,

therefore little new retail space is due to complete until 2012.

REtailER aCtivity

A number of retailers have entered or expanded in the

market this year, including Swedish fashion retailer MQ,

Hennes & Mauritz (H&M) which has opened Monki and

Weekday stores in Norway, and Varner Group, which has had

a very buoyant year with its eight fashion brands. Varner will

act as franchisee for the first Topshop store, which will open

either late this year or early in 2011. Sports goods retailer XXL,

Dixons-owned Elkjøp, Gina Tricot, Mango and Bauhaus have

also been expanding and performing strongly in the

Norwegian market.

There is a general shift towards value and discount retail

and this is especially prevalent in fashion and grocery, where

hard discounters are impacting on sales for the traditional

supermarket groups.

HiGH StREEtS anD REtail paRkS

Other than Oslo and one or two other major high streets,

Norwegian retail tends to be concentrated on shopping centres.

This has been another challenging year for the high street,

especially as many of the smaller shopping centres have been

developed in urban locations to act as city centre destinations.

Retail parks have been a major growth story over the past

five years, although unlike many European countries they have

not yet enticed fashion retailers other than some sports goods

retailers such as Gresvig and XXL.

In June this year a private investment group opened

Norwegian Outlet, Norway’s first factory outlet centre in Vestby,

to the south east of Oslo.

Niels-Andreas Lundheim A

– nal@ncmd.no

this is especially prevalent in fashion and grocery,

nal supermarket groups

Shopfront 201011 | CB Richard Ellis



One of the big surprises in the Japanese retail market this year

is the rebound of the high street, in prime locations at least.

The exit of upmarket brands including Valentino, D&G and

Versace had left prestigious destinations such as Tokyo’s Ginza

Namiki Street riddled with vacancies. But that problem became

an opportunity for other brands such as The Hour Glass, Brioni

and Theory to ‘trade up’ from secondary locations into streets

that had previously been closed to them.

Mass market fashion retailers also have made an impact

on Ginza. Once known as a luxury shopping destination,

Ginza is now adapting to the growing demand for apparel,

as evident in recent openings of Hennes & Mauritz (H&M),

Forever 21, Abercrombie & Fitch, and UNIQLO.

While this has strengthened the prime high street and given

landlords the ability to take aggressive bargaining stances,

there has been a significant weakening in secondary and

tertiary locations. Landlords of these properties must be much

more accommodating, with retailers able to secure significant

rental discounts. The same tough conditions prevail in regional

Japanese cities, such as Nagoya, which have seen steeper

declines in consumer spending than Tokyo.

Elsewhere, changing market conditions are driving new

strategies within the retail sector. Japan’s historically dominant

department stores, for example, have reacted to a longstanding

decline in turnover by broadening their focus towards younger,

fashion-led consumers, having traditionally catered for an

ageing, wealthy customer base. With department store sales

in 2010 down 9.6% year-on-year it could be argued that such

a move is long overdue.

REtailER aCtivity

As already mentioned, the fast fashion segment is trading up to

prime space in the high street, with H&M and Forever 21 also

expanding into suburban shopping malls. The UK’s Topshop

has also touched down in Japan, opening its first store in 2008

and recently announcing plans for a 1,000 sq m flagship in

Tokyo’s Shinjuku shopping district.

However, perhaps the most exciting retailer in Japan today

is UNIQLO. This brand’s success is based on the flexibility of

its approach to the market; opening in high streets, shopping

malls and even railway station concessions in order to get its

merchandise in front of as many consumers as possible. As

ShopFront went to press, the company had just opened its fifth

‘global flagship’ store (and first in Japan) in Shinsaibashi, Osaka.

But fashion is not the only ‘hot’ sector in Japan: the country’s

number one electricals and white goods retailer, Yamada Denki,

is planning to open 50 new small-format stores each year from

2011, focusing on secondary and tertiary locations. Additionally,

the low priced furniture segment has been a notable success,

with international player IKEA competing head-on with local

rival Nitori.

CB Richard Ellis | ShopFront 2010/11

SHoppinG CEntRES

No fewer than 29 shopping centres opened in Japan between

January and September 2010, of which the top 10 by size are

listed below right.

This surge of development looks likely to slow in the coming

years, with the most high profile opening in 2011 set to be a

31,600 sq m scheme in Tokyo’s Futako-Tamagawa neighbourhood.

In the past two to three years outlet malls have become an

extremely popular part of the overall shopping centre mix.

Leading developer Mitsui Fudosan is now focusing on that

market, with two big schemes in the pipeline. Meanwhile

Mitsubishi Estate has announced plans for a 20,000 sq m

Premium Outlets mall near Narita airport, to be developed by

Chelsea Japan, its joint venture with the US-based Simon

Property Group.

Mitsubishi Estate has openly stated that its airport mall,

scheduled to open in 2013, will be targeted at Chinese tourists

visiting Japan, emphasising the growing importance of this

wealthy consumer group to certain sectors of Japanese retail.

Visa requirements have been relaxed, meaning Chinese can

now travel to Japan independent from organised groups.

According to the Japan National Tourism Organization more

than a million made the trip last year, spending heavily on luxury

items in particular, and both developers and retailers are stepping

up their attempts to woo them. China’s corporate sector has

also made inroads into Japan, with dominant stakes being

taken in two high profile domestic retailers, Laox and Renown.

out-of-town/REtail paRkS

After enjoying several years of relative freedom, retail park

developers are once again being constrained by a tighter

planning environment, designed to protect traditional inner-city

shopping neighbourhoods. Though not applied retrospectively,

meaning existing schemes were able to be finished, the effect

on the pipeline can be seen in statistics from Japan Council of

Shopping Centers that show 111 out-of-town schemes opened

in 2000 (the first year of planning relaxation) compared with just

25 in 2009.

intERnEt SHoppinG

As might be expected with such a technologically-savvy

population, the Japanese are very keen on internet shopping,

often visiting a ‘real’ store to inspect their desired item before actually

buying it online to take advantage of web-exclusive discounts.

Perhaps the most exciting developments in this field

surround Rakuten, an online ‘mega mall’ that houses 35,000

virtual stores. The company announced sales up 17.4% and

profits up 20.6% in the first half of 2010, and it has also

launched an overseas investment spree, acquiring buy.com

of the US and PriceMinister of France.

Stewart Tudor – stewart.tudor@cbre.co.jp

No fewer than 29 shopping centres opened in Japan

between January and September 2010.


(sq m)

1 09/03/2010 Aeon Mall Aratamabashi Nagoya-shi, Aichi Aeon Mall Approx. 24,000

2 16/03/2010 Aeon Choshi SC Choshi-shi Chiba Aeon Retail 39,276

3 19/03/2010 Peonywalk Higashi


4 25/03/2010 Aeon Mall Yamato


5 01/04/2010 Totsuka Nishiguchi Kyodo

Building Totsukana)

6 22/04/2010 Mitsui Outlet Park Sapporo

Kita Hiroshima

Higashi Matsuyama-shi, Saitama Uny 48,633

Yamato Koriyama-shi, Nara Aeon Mall Approx. 49,000

Totsuka-ku, Yokohama-shi Yokohama City

Tokyu Fudosan

Tokyu Community

Kita Hiroshima-shi,



Mitsui Fudosan Approx. 23,000

7 04/06/2010 Ario Kitasuna Kita Suna, Koto-ku, Tokyo Ito Yokado Approx. 33,300

8 04/06/2010 Aeon Mall Kyoto Minami-ku, Kyoto Shimizu Kensetsu Approx. 45,200

9 08/07/2010 Mitsui Outlet Park

Shiga Ryuo

Gamo-gun, Shiga Mitsui Fudosan Approx. 27,000

10 17/09/2010 Ario Hashimoto Sagamihara-shi, Kanagawa Ito Yokado Approx. 47,600

source: Japan Council of Shopping Centers.

ShopFront 2010/11 | CB Richard Ellis




Although organised retail remains in its infancy in Vietnam,

annual GDP growth of circa 6-8% in the past few years and

an economy untouched by the financial crisis mean that the

country continues to attract interest from international retailers.

Consumers are also very in tune with the major western

brands and there remain strong opportunities for growth,

although shopping centres are still a relatively new concept

in Vietnam. Most Vietnamese still shop daily at the traditional

markets or at independent stores, which account for about

85% of food sales.

The market shows every sign of sustained growth in 2011,

with a number of shopping centre projects under development

which will begin to provide more suitable modern retail space in

the next three to five years, concentrated on Hanoi and Ho Chi

Minh City, where retail space is likely to double within five years.

Suitable store sites in downtown areas are difficult to find

and the market does not fully understand the idea of

affordability, so rental levels vary dramatically and do not

correlate with normal market dynamics.

Last year we saw the emergence of out-of-town retail, which

does provide far more cost effective rental space for retailers,

although the schemes are variable and there tend to be

vacancies at the less well developed sites.

REtailER aCtivity

Typically, out-of-town developments are anchored by a hypermarket.

Casino through its local fascia Big C and METRO Cash & Carry

are both active in the market, as are Korean retailer Lotte and

Giant (owned by Dairy Farm).

CB Richard Ellis | ShopFront 2010/11

Hypermarkets tend to be viewed as expensive but their

pricing is coming more in line with the traditional markets.

However, because most Vietnamese travel by motorbike the

size of shopping basket tends to be relatively small and this

is also a barrier to the market for bulky good suppliers.

In non-food retailing, Malaysian department store group

Parkson is present in Vietnam, while Saigon Co.opMart has

expanded from Ho Chi Min City to open its first store in Hanoi.

A number of acquisitions and joint ventures have recently

concluded, including Spar’s joint venture with Phu Thai Group,

to initially open a number of 1,000 – 3,000 (sq m) convenience

stores and in 2012 a further number of 10,000 (sq m) hypermarkets.

Foreign ownership rules are complicated, currently limiting

overseas retailers to one store. However, there are government

moves to review this. Consequently, local distributors have

a stronghold and distribution of international brands is

concentrated in the hands of a small number of companies.

SHoppinG CEntRES

In the north of the country the 200,000 sq m gross lettable area

(GLA) Ciputra Mall is under construction by the eponymous

Indonesian company Ciputra Group, while The Crescent, a

70,000 sq m shopping centre, is being developed outside

Ho Chi Minh City by Phu My Hung.

Richard Leech – richard.leech@cbre.com.hk

Consumers are also very in tune with the

major western brands and there remain

strong opportunities for growth

ShopFront 2010/11 | CB Richard Ellis




The first half of 2010 saw Canada stage a very strong recovery

from recession, posting record economic growth levels and

recouping all the jobs that were lost during the downturn. Retail

sales also rebounded – up 6.3% year on year by the end of July,

according to Statistics Canada.

Since that point the economic outlook has once again

become more uncertain and a cooling housing market

prompted retail sales to decline in three of the four months

from June to September 2010.

One unexpected result of the challenging market conditions

is that tenants are asking for extra security in the form of longer

lease terms – with a 15 year initial term replacing the more

traditional 10 years in a number of transactions. This is partly

to lock in favourable terms, since rents have declined across

the board, but also to amortise their fit-out costs over a longer

period. Meanwhile, landlords seeking extra security of their

own are requiring tenants to shoulder a greater burden of

fit-out costs when taking new space.

REtailER aCtivity

The most active Canadian retailing groups today are

Home Outfitters (part of Hudson’s Bay Company), Winners

(the T.J. Maxx Canadian brand), Future Shop (Best Buy sister

brand), Joe Fresh and Shoppers Drug Mart. The country’s

various supermarket chains are also expanding wherever they

can, while the food & beverage sector is looking to take

advantage of the ‘buyer’s market’ that exists in some urban

environments to acquire space at attractive rents.

International retailers have been quick to acknowledge the

healthy levels of Canadian consumer spending throughout the

recession and a number of brands have made market entries

so far this year.

Naturally, many have made the short trip over the border

from the United States, including Victoria’s Secret (lingerie),

Stuart Weitzman (footwear), True Religion (fashion), Panera,

Chipotle and Buffalo Wild Wings (food & beverage),

Crate & Barrel and CB2 (furniture and home accessories)

and Hot Topic (teen retail). Currently scouting for Canadian

locations are Marshalls and DSW (Designer Shoe Warehouse).

The UK’s Topshop has also entered the market, opening

a concession within the Jonathan+Olivia fashion store in

Toronto’s prime retail destination, Ossington Avenue. The

ambitious Hennes & Mauritz (H&M), meanwhile, has expanded

its Canadian presence by moving into Toronto’s only major

downtown enclosed shopping mall, the Eaton Centre, where

it has a three-storey unit that includes high street frontage.

However, the retailer we think could have the biggest impact

in the coming years is the US discount chain Target, which has

indicated its desire to enter the Canadian market and is now

actively reviewing options. Target has already proved a worthy

competitor to Walmart in the US and any presence in Canada is

sure to provoke consumer interest as well as spicing up the real

estate market as it looks for suitable trading space.

CB Richard Ellis | ShopFront 2010/11


The high street environment is still integral to the retail offering

in Toronto, Montreal and Vancouver, all of which have affluent

urban populations. The ultra-dense high rise apartment blocks

in these city centres focus pedestrian traffic into a walkable area,

as well as providing ground floor retail space of their own. All this

helps to keep the prime high street rental market healthy: rents in

Toronto can be as high as CA$325 per sq ft per year and rarely

fall below CA$100 per sq ft per year for mass market retail.

On top of these rents, retailers must pay additional taxes and

operating costs of between CA$20 and CA$35 per sq ft per year.

High street frontage is a prerequisite for new entries to the

market, particularly at the luxury end of the spectrum. The only

present drawback to the environment is certain areas being

designated as historically significant, which has implications

for storefront designs and increases costs for tenants and

landlords alike.

SHoppinG CEntRES

After decades of being ‘under-retailed’ Canada saw a major

development surge that culminated in a record 9.8 million sq ft

of new shopping centre or retail park space being delivered

in 2009.

After a brief lull the economic recovery in the first half of 2010

encouraged many projects back into the development pipeline,

of which the following are some notable examples opposite:

According to various market commentators, Canadian malls

averaged sales equating to CA$574 per sq ft per annum in July

2010, a year-on-year rise of 5.4%. Footfall has remained steady

in the better malls, but lesser quality schemes have been

negatively affected by the uncertain economic picture.

Rents in the best malls are in the CA$100 per sq ft per year

range for medium sized (3,000 sq ft) units and up to CA$200

per sq ft for smaller spaces. Additional charges in the form of

taxes and operating costs can be as much as CA$90 per sq ft

per year in urban areas.

out-of-town/REtail paRkS

Out-of-town retailing in Canada takes place in power centres

(retail parks), usually featuring DIY retailers, outlet formats and

discount chains all in big box units.

With the drift back to downtown living among affluent baby

boomers and young professionals the power centre format

could come under pressure in future, but for now a healthy

development pipeline remains, led by the 467,400 sq ft

SmartCentres scheme, set to open in the Québécois city of

Lachenaie by the end of this year.

Power centre rents are presently in the range of CA$20-35

per sq ft per year, with additional operating costs of CA$15-22

per sq ft per year.

Stuart Smith – stuart.smith@cbre.com

International retailers have been

quick to acknowledge the healthy

levels of Canadian consumer

spending throughout the recession.



Shepard Regional

Shopping Center

Phase III




City Centre


Shopping Centre



City dEvELoPmENt

tyPE (NEw/



Calgary phase Shepard


Calgary new Ivanhoe


Brampton new Morguard


owNER sq




200 2010

Mid Year

300 2010

Mid Year

323.4 2010

Mid Year

Burlington expansion Ivanhoe Cambridge 150 2010

Mid Year

Surrey new Larco


Chinook Centre Calgary expansion Cadillac


Currents of


(both sections

being developed


Currents of


(see above)

Edmonton new Cameron


Edmonton new Cameron

Development Corp.

450 2010

Mid Year

180 2010

Year End

228 2010

Year End

600 2011

Year End

source: CB Richard Ellis National Research Group; McGraw Hill/CBRE-EA Pipeline; Canadian Directory of Shopping Centres.

ShopFront 2010/11 | CB Richard Ellis




After surviving the global recession with

little ill-effect, there were fears in Australia

that economic factors would eventually

catch up with the market in 2010,

instead retail sales have progressed

steadily and market fundamentals have

remained positive.

But there are challenges for 2011.

Interest rates are expected to rise sharply

and with them home loan repayments

which, given the high levels of home

ownership in Australia, will place

pressure on household budgets. Indeed,

May’s 25 base point increase in interest

rates had an immediate negative effect

on retail sales.

In addition, rising utility prices and

wage inflation, thanks to Australia once

again approaching full employment, are

putting pressure on retail occupancy costs.

In an attempt to mitigate potential

problems that might arise for the

economy, the Australian government

backed a AUS$12bn stimulus package

that should have a positive effect on the

retail sector. That said, although retail

sales have climbed by 8.9% between

June 2007 and June 2010, the last two

quarters have seen limited growth.

Australia has also been experiencing

record levels of population growth

through migration, yet by comparison

there has been a limited supply of new

retail space to serve the rising population.

SHoppinG CEntRES

The Australian retail market is dominated

by shopping centres and for the major

ones, which are experiencing very low

vacancy rates, the landlords hold the

balance of power.

Rents in primary centres have

increased well ahead of inflation, while

in secondary and tertiary centres growth

has been more closely aligned with the

inflation rate. Indeed, secondary and

tertiary locations have seen rising

vacancy rates as franchise groups and

smaller retailers have pulled back

expansion plans due to the high cost

of business finance.

That said, leases in Australia are

typically legislated to be a minimum

of five years with fixed annual increases,

which has limited retailers’ bargaining power.

Despite the strength of retail sales,

the majority of centres not under

CB Richard Ellis | ShopFront 2010/11

construction in 2008 were stopped,

which has created a lag in the shopping

centre development pipeline. The first

phase of Westfield Sydney opened in

autumn 2010 (phase two opens 2011),

Charlestown Square & Top Ryde in New

South Wales will be complete this year

and the out-of-town bulky goods centre

HomeHQ at Artarmon, north of Sydney

opened in March.

Finance for significant schemes

remains an issue and the market needs

compression in capital rates (the ratio

between the net operating income

produced by an asset and its capital

cost) to make financing of projects

feasible; conditions which could be as

far as two years away.


anD REtail paRkS

There has been a move towards

enclosed centres that cater for a wider

mix of retailers, which has been enabled

by a change to planning laws allowing

more lifestyle retailers and smaller units

to open in such schemes.

For example, in 2011 the 72,000 sq m

‘big box’ retail site Springvale, Melbourne

will open, anchored by a Harvey Norman

furniture and electrical store and Swedish

furniture giant IKEA. This will be the

largest centre of its type in Australia.


In contrast to the shopping centre

market, the two top high streets in the

country – Oxford Street in Sydney and

Chapel Street in Melbourne – have

experienced a rise in vacancies, up to

about 6%. As a consequence rents have

reduced by about 7% on both streets.

This change is attributed to the multi

ownership of properties and a pull back

in the expansion plans for boutique

fashion retailers, which typically

dominate these precincts.

REtailER aCtivity

The stand-out retail area in the past year

has been the luxury market, which has

done exceptionally well. Jimmy Choo

(Sydney and Melbourne), Hermes

(Brisbane), TAG Heur (Melbourne and

Sydney), Prada, Tiffany & Co and

Miu Miu (all Melbourne) opened in 2010,

with Burberry and Louis Vuitton both

fitting out flagship stores in the Sydney

Central Business District.

International retailers have increasingly

been attracted to the Australian market.

Gap is to open at Chadstone shopping

centre (Melbourne), with a second store

at Westfield Sydney. Zara will open two

new stores next year and Esprit is to

open its first Australian flagship store.

Furthermore, a number of retailers are

using the change in market conditions to

secure prime tenancies and to launch

new concepts. These have included

Luxottica’s new OPSM Eye Hub, the

takeover of Babies Galore by Mothercare,

Cotton On with Rubi Shoes & Typo and

The Just Group with Portmans.

In the grocery sector Coles and

Woolworths continue to dominate the

market, although discounter Aldi is

making strong gains with its smaller,

limited assortment store format.

Woolworths is launching a joint venture

with Lowes from Canada next year,

which will rival local market leader

Bunnings Warehouse.

Discount warehouse club Costco’s

market entry has been a huge success

and it will open its second location in

Sydney in 2011, with plans to accelerate

its roll out strategy.

However, in general value retail has not

been a strong sector in Australia.

Mid-to-lower-tier fashion and lifestyle

stores have failed to make major inroads

because there has been no real shift towards

value retailing by shoppers in Australia.

The demand for retail space has also

been fuelled by private equity-backed

groups which are looking to increase store

numbers as a prelude to listing on the

Australian Stock Exchange. This approach

has been adopted by local brands such

as Kathmandu, Myer Department Stores,

Witchery and the Retail Food Group.

One new rival to Australian retail sales

is online purchasing from US transactional

websites. An increasing number of

consumers are taking advantage of the

strength of the Australian dollar to buy

online and have goods shipped from the

US and UK. It is a small but growing trend

and, when combined with a record levels

of outbound tourism, one that could

impact retailers here.

Josh Loudoun – josh.loudoun@cbre.com.au

After surviving the global

recession with little

ill-effect, there were

fears in Australia that

economic factors would

eventually catch up with

the market in 2010.

ShopFront 2010/11 | CB Richard Ellis




The Industrial and Logistics sector

is increasingly influenced by retailer

demand as requirements for space

continue to escalate. In any given year,

approximately 30-40% of demand for

new logistics space is driven by

international retailers.

This is very noticeable in Central

and Eastern Europe, where eastward

led growth from retailers entering markets

such as Poland and the Czech Republic

have created a corresponding demand

for logistics space. Despite an economic

slowdown in the CEE markets, which led

to lower levels of development and

take-up, it would be reasonable to

anticipate a pick-up in demand over

the next six months.

Supply-CHain SHiftS

The retail supply chain system is

constantly reinventing itself to save

costs and space and supply routes from

logistics centres are evolving. Once

primarily to supply a store network,

supply routes now increasingly fulfil

online sales transactions as well.

Distribution systems are increasingly

combined in one location, rather than

just separated. The needs of the network

and what might be considered prime

may also change with this supply chain


nEw DEvElopmEnt

New development and expansion have

become very specifically retail-driven,

and speculative development across

Europe has all but stopped since early

2008 when the economic crisis began

to take hold. Bit by bit those logistics

properties that had been built before

the downturn have been letting; not

surprisingly primary space has let first,

but even secondary logistics space has

been moving gradually for the right price.

There is little evidence to suggest that

speculative development has restarted

and it is unlikely that we will see this

CB Richard Ellis | ShopFront 2010/11

market return until the second half of

2011 at the earliest. As a result, it is likely

that some upward rental movement may

begin as available supply is squeezed.

Instead there has been an increase in

the number of buildings constructed to

suit, with rents at historic lows. In such

scenarios, the developer is probably

looking for a 10 year lease commitment,

as the market diverges into a two-tier

scenario. By contrast, standard leases for

existing sites have dropped to between

two to three years reflecting a continuance

of leases becoming shorter and shorter.

The UK, which used to operate on

longer leases, has fallen in line with

European norms. In mainland Europe

retailers have more choice as logistics

centres in strategic locations can serve

several different markets. At the moment

price dictates, but longer term strategies

are likely to return to the market.

uk-lED RECovERy

The UK logistics market began to show

signs of recovery last year. Capitalisation

has become easier and yields have

hardened since the market trough.

In the UK, companies such as

Marks & Spencer and Tesco are

becoming more active. The retailers are

usually looking for logistics sites

designed specifically for their

requirements and to meet their changing

needs, as they expand different formats

such as out-of-town locations and town

centre convenience stores. As retailers

constantly reinvent themselves, their

logistics strategies will inevitably change

too to support new infrastructure demands.

Although continental Europe has

lagged behind the UK recovery, the

upturn in the retail markets in the CEE,

notably Poland and the Czech Republic,

should encourage more activity in this

region of Europe. We would expect a

number of retailers to be reviewing their

distribution strategies in light of the

consumer upturn.

After a static period we would also

hope to see the German market show

some signs of growth next year. Most

European markets are showing pretty

steady performance, especially in

France, Eastern Europe and Scandinavia.

Some of the other European markets

are a little quieter and are recovering

more slowly.

Heading into 2011, occupancy

demand on good prime locations and

on good terms will undoubtedly become

difficult to achieve for retailers – ultimately

this will boost secondary locations and

complex vacant sites.

Guy Frampton – guy.frampton@cbre.com

There is little evidence to suggest that

speculative development has restarted and it is









see this








the second


half of 2011

has restarted

at the earliest

and it is unlikely that we

will see this market return until the second half of 2011

at the earliest.

ShopFront 2010/11 | CB Richard Ellis



CB Richard Ellis | Shopfront 201011


Research &


CB Richard Ellis Global Research &

Consulting includes just under 450

research professionals worldwide who

gather, compile and analyse

transactional and operational real estate

information. Global Research &

Consulting is divided into three regions

and the Europe, Middle East and Africa

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to our global commitment to Research &

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business, our team is continually

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one dedicated full time research analyst

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Outside the UK, the individual

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coordinated by Neville Moss, Michael

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• Understanding Retail Destinations

Our latest report, How Active are

Retailers in EMEA? , sets out to examine

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of leading retailers across the region.

Based on detailed discussions with

retailers over the summer of 2010, the

report reveals that retailers are more

optimistic about the future. However they

are taking a different approach to

expanding their networks, sticking to

what they know and trying to minimise risk.

Neville Moss

e: neville.moss@cbre.com

Head of Retail Research

EMEA Research & Consulting

Natasha Patel

e: natasha.patel@cbre.com


EMEA Research & Consulting


aCRoSS 50 CountRiES









ShopFront 2010/11 | CB Richard Ellis




the Business

of Retail

At CB Richard Ellis we are judged, and

judge ourselves, on what we deliver for

our clients. The business of retail rewards

those with ambition and foresight as well

as an ability to get the job done; our

clients are focused on success and

so are we.

Gaining a thorough understanding of

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are able to fully appreciate how each

relies on the other as well as the

foundations upon which successful

relationships are based.

nEw yoRk, lonDon, paRiS,

tokyo anD BEyonD

We are active in every global retailing

centre across the world – no other

consultancy offers such unrivalled depth

throughout Asia, Australasia and The

Americas, as well as the markets of

Europe, Middle East and Africa (EMEA)

that are the focus of this publication.

And when we say ‘local’ we mean

local. We appreciate that retailers and

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cross-border perspective. Which is

why we continue to invest in a network

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Our 450-strong team of retail

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owners. This team is also augmented by

a specialist cross-border team who work

CB Richard Ellis | ShopFront 2010/11

alongside our local consultants to

provide consistent advice to retailers

and developers seeking to expand

beyond their home markets.

on tREnD

In the fast-paced retail market, spotting

potential trends and being one step

ahead of the competition is essential.

That is why we invest heavily in our

award-winning research group, who offer

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knowledge resource to our clients and

the wider marketplace. CBRE research

publications such as ‘How Global is the

Business of Retail?’ and ‘How Active Are

Retailers in EMEA?’ are extensively

monitored by the industry and the media alike.

moRE tHan JuSt

a pREtty faCE

At CBRE we know that the perfect shop

in the perfect location acts as a retailer’s

window to the world. But we also know

that there is much more to the business

of retail, from efficient logistics to

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That is why our advice does not stop

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To find out more about CBRE Retail

and what we can do for you, visit:


iCSC – SERvinG tHE GloBal

REal EStatE inDuStRy

CB Richard Ellis continuously strive to

improve the levels of knowledge and

transparency within the global business

of retail. That’s why we are the European

sponsor of the International Council of

Shopping Centers (ICSC), the global

trade association for the shopping centre


ICSC provides educational

programmes and publications covering

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a-Z of SERviCES

Across EMEA, CBRE offer specialist retail

advice in the following areas:

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Capital maRkEtS



inDuStRial anD loGiStiCS

lEaSE ConSultanCy



pRopERty manaGEmEnt

RatinG anD taxation



tEnant REpRESEntation


ShopFront 2010/11 | CB Richard Ellis


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