New report: Increasing appetite in European grocery real estate
The European grocery real estate market has remained resilient in the face of economic uncertainty. Grocery stores have attracted 37% of the total retail consumption in the EU (27 countries) in 2020. Not surprisingly the sector’s resilience during the pandemic has increased investor appetite. This has led net initial yields for quality grocery stock in Europe’s key retail markets to see continous compression.
According to The European Grocery Real Estate Market, a new report by JLL and Union Investment, the market is set to continue to flourish through 2021.
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The main trends
Although there is still uncertainty around the long-term implications of the pandemic, the report seeks to identify longer term trends that will affect the grocery real estate market. - Scroll through the charts below to find out more -
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Growth of online food sales is expected to slow
Low profit margins will not sustain widespread online sales and retailers continue to invest in their physical stores.
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Growing urban populations are set to create opportunities for well-connected grocery stores.
Despite the pandemic, employment opportunities and social considerations will continue to drive migration to cities, with urban populations across Europe expected to rise 3.4% by 2035 (3.7% including UK).
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Grocery anchored real estate has shown itself to be one of the most resilient assets in the current environment
The comparative recent performance of food retailers compared to, for example, fashion and the strength of grocer covenants has reinforced the attractiveness of the grocery anchored real estate sector through the pandemic.
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Rising investor interest in supermarkets and grocery-anchored real estate
The sector is able to offer both core long term income for more risk adverse investors as well as more value add product where shorter leases and older assets are put to the market.
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Sustainability, affordability and quality are key drivers
Changing shopping preferences will be key drivers for floor productivity for the various grocery store formats. Adaptability will be key for the grocery sector to quickly pivot in response to these changing preferences.
Your contacts
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Neil Lipscomb
Director Retail Investment,
International Capital Markets, EMEA
Tjard Martinus
Head of Retail Research, EMEA
Henrike Waldburg
Union Investment Real Estate GmbH
Head of Investment Management Retail