There are more signs of recovery and cautious optimism in retail markets around the world as the pandemic is left behind. Footfall and retailer sales have continued to increase in many dominant retail places, with consumer spending proving more resilient than anticipated. The rise in tourism has also provided a positive boost to sentiment and is currently a notable driver for retailers looking to secure space near tourist sites.
This article is part of JLL’s Global Real Estate Perspective
Retailer demand for quality space in prime high street locations, tourist corridors and dominant shopping centers has strengthened in retail markets around Europe and Asia, albeit with a degree of variation. Net absorption also remains positive in the U.S., although activity in malls has softened in recent months. Some retailers are shifting their focus to neighborhood centers and locations with a larger proportion of necessity goods as consumers become more cautious on discretionary purchases, while a range of retailers have announced major store expansion plans.
Future trends: More retailers pursuing international expansion
Short-term: Global retail sales are likely to come under pressure during the second half of 2023 as economic growth slows. But resilient labor markets, rising earnings and the continued resumption of tourism are supporting retailer sentiment with store counts set to increase over the year. Limited new development in mature markets over recent years and positive demand should support occupancy and rental rates in quality, relevant retail space.
Long-term: More retailers have recently announced cross-border expansion plans, and this trend is likely to continue in the coming years. Cost-of-living pressures are most evident in less affluent catchment areas in many markets, with the recovery in real disposable incomes expected to take longer than in the world’s largest cities. International cross-border expansion into affluent retail places regionally and globally is an attractive route for many retailers to enter new markets and achieve profitable income growth, while balancing operational risks across different economies and geographies.
Global Real Estate Perspective August 2023
This page is part of JLL’s quarterly Global Real Estate Perspective. Follow one of the links below to find out more about global real estate market trends and outlook by sector.