Retail chains dominate Dutch high streets, but rents stagnate

New international entrants are helping to bolster demand for space in Dutch cities, and up to 90% of all stores in high streets across the country belong to retail groups, broker Savills has said in its latest retail report on the Netherlands.

While overall purchasing power has been affected by rising consumer prices, several international retail chains - such as Starbucks, Triumph, Desigual and Apple - are setting up shop in the Netherlands. The new arrivals, coupled with expansion by existing large retail formats, including H&M, C&A, Esprit, Score and Bestseller, have led to a rise in flagship stores. Of the current 27.2 million m² in sales area, on average 7.5% is vacant against 7% last year. This rate varies between 6% for large retail schemes and 9% for city centre units, mainly on B locations.

High street prime rental levels remain at an average EUR 1,000 m2/year for medium-sized cities and up to EUR 2,500 m2/year in Amsterdam, which is a 3-4% annual rise over the past few years. However, due to the economic climate these levels have remained stagnant since the beginning of 2008.

Jan Peter Hebly, managing director of Savills Retail in the Netherlands, said: 'Overall activity on both the investment and leasing markets has weakened considerably. There is considerable pressure on rents and yields in non-prime locations but high-street rents remain stable, due to strong national and international demand. We expect prime retail to keep outperforming the property market.'

On the investment front, Savills does not expect to see an increase in activity before the end of 2010. High street yields have moved out 150 bps to 6.5%, while in the shopping centre sector the increase was 130 bps to 6.8%. In addition, prime rental warehouse yields have moved up to 7.5%, an increase of 125 bps.