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Stefan Wundrak

Retail spending and supply

Stefan Wundrak analyses the results of the retail warehouse crane survey in the context of the different markets within Europe.

Usually the supply of retail space is shown on a per capita basis. This can be misleading as retail spend per capita can vary widely, even between countries with similar per capita GDP levels.
The chart below shows a five year aggregate retail spending forecast per sqm of new retail warehouse space in the pipeline (incl. all projects still at an early stage of planning). It puts expected completions in context of the expected additional spending to match. The UK, the Czech Republic, Poland and Germany look quite strong on that measure, with a modest pipeline compared to retail sales growth. Spain, France, Sweden, Italy, Portugal and the Netherlands suggest a less favourable supply/demand picture going forward. This analysis disregards current levels of stock, for which there is no consistent set of data across Europe.
The patchy stock evidence suggests that the UK and Germany are very mature retail warehouse markets with relatively high levels of existing stock. Looking forward the UK comes in first place in terms of future demand/supply balance due to high spending growth forecasts rather than low construction levels. If spending growth does not materialise as expected, the market will look less favourable. Germany mainly benefits from low new supply, as retail sales growth forecasts are very modest.
The Czech Republic and Poland offer a convincing case of an immature market as high spending growth is matched by low stock and moderate expected completions. Both countries have relatively high levels of shopping centre space, which dents the overall attractiveness of the market. In Central Europe the fast advancing motorisation rate (cars per capita) will additionally benefit retail warehouses going forward.
Sweden already has a very high distribution of stock and the low ranking in this chart is due to a very full pipeline which will continue to add to high stock levels. On the spending side Sweden (2.5% pa over the next five years) remains the top performer in Western Europe ahead of the UK and even the Czech Republic.
The most curious case is the group of weaker economies Spain, Italy, Portugal, France and the Netherlands. Across this group sanguine developers appear out of sync with slow expected retail sales. However, Spain, Italy and Portugal have quite low levels of retail warehouse stock as in the past developers have focused on shopping centres. Despite being a mature retail market France has always been tight on stock and an accelerating pipeline will do less harm than in over-shopped locations (like some British, Dutch or Swedish regions). Also a long pipeline does not necessarily mean that all the projects will become reality; indeed with severe restrictions on financing in Spain, Italy and the Netherlands many ideas will never see the light of day.


Stefan Wundrak

Stefan Wundrak

Head of European Research

Stefan's biography