Europe’s leading retail destinations are approaching 2026 from a position of measured strength. After several years shaped by inflation, cost pressures and shifting consumer behavior, prime retail markets across the continent have demonstrated a notable ability to adapt and stabilize. Insights from JLL’s European Retail Market Outlook 2026 and the European Retail City Profiles underline that demand for high-quality physical retail space remains robust, supported by improving consumer confidence, rising disposable incomes and the continued strategic importance of stores within omnichannel retail models.
Rather than signaling a return to aggressive expansion, the current phase is defined by selectivity. Retailers are focusing their efforts on fewer, better-performing locations, prioritizing prime streets and dominant centers capable of delivering sustained footfall, strong sales densities and long-term brand visibility. This disciplined approach is reinforcing the strength of Europe’s core retail destinations while underpinning a gradual recovery in rents.
Physical retail regains strategic relevance
A central theme emerging from JLL’s research is the renewed strategic role of physical retail. Stores are increasingly viewed as multifunctional assets that support customer engagement, fulfilment and returns, rather than simply points of sale. In operational terms, physical locations continue to demonstrate advantages over digital channels, particularly in profitability linked to fulfilment and returns, reinforcing their role within integrated retail strategies.
This renewed confidence is reflected in the stability of global retailers’ store networks. Leading luxury, premium and mainstream brands have maintained a remarkably consistent presence across Europe’s largest cities, with only marginal adjustments despite a challenging trading environment. This stability underscores the long-term confidence retailers place in Europe’s prime locations as anchors for brand positioning and revenue generation.
At the same time, retailers remain open to targeted expansion. New market entries and first physical store launches accounted for more than a quarter of notable openings during the first three quarters of 2025. This highlights ongoing interest in geographic diversification, particularly in cities offering strong fundamentals but less intense competition for space than the most supply-constrained capitals.
Leasing activity stabilizes at sustainable levels
After an exceptionally strong year in 2024, leasing activity across Europe moderated in 2025 but remained healthy. Across 16 major cities, just over 200 notable store openings were recorded in the first three quarters of the year. The slowdown primarily reflects the limited availability of prime space rather than weakening occupier demand.
As availability tightens in Europe’s largest retail capitals, leasing momentum has broadened geographically. Cities such as Düsseldorf, Dublin, Antwerp and Porto are increasingly attracting attention from international brands seeking access to affluent consumers, strong tourism flows and high-quality retail environments. These markets are benefiting from their ability to combine regional scale with growing international visibility.
Retailers’ preference for larger units further illustrates how leasing strategies are evolving. While large-format stores represent a minority of total transactions, they account for a significant share of total space leased. This reflects retailers’ focus on experiential concepts, flagship formats and enhanced omnichannel capabilities, particularly in locations with strong tourist footfall.
London’s West End remains Europe’s most active retail market, reinforcing its status as one of the world’s most resilient retail destinations. Activity in cities such as Düsseldorf also highlights the growing role of affluent regional hubs within European expansion strategies.
Prime rents regain upward momentum
The resilience of retailer demand is increasingly reflected in rental performance. Prime retail rents across Europe have moved firmly into recovery, exceeding pandemic-era lows and edging closer to pre-COVID levels. By the third quarter of 2025, prime high street rents recorded average annual growth of just over 3 per cent, while prime shopping center rents increased at a slightly faster pace.
This recovery is uneven across markets, shaped by local supply constraints, consumer spending patterns and exposure to international tourism. Nonetheless, the overall direction is clear. Limited availability of high-quality space, combined with sustained demand from retailers, is placing upward pressure on rents in Europe’s most established retail destinations.
For landlords, this environment supports rental resilience and long-term income growth. For retailers, rising occupancy costs are sharpening the focus on operational efficiency and location quality, reinforcing the trend towards consolidation around fewer, stronger stores.
City fundamentals underpin resilience
Europe’s retail strength is rooted in the diversity and depth of its cities. From global fashion capitals to fast-growing regional hubs, the continent offers a wide range of retail environments shaped by local demographics, purchasing power and tourism dynamics.
Cities such as Antwerp and Brussels continue to benefit from affluent consumer bases and strong cross-border appeal, while Southern European markets including Barcelona, Madrid, Lisbon and Porto are buoyed by tourism recovery and strengthening domestic consumption. In Germany, Berlin, Munich, Hamburg, Düsseldorf and Frankfurt collectively form a powerful network of retail centers, each with distinct strengths but consistently strong fundamentals.
Dublin has emerged as one of Europe’s most attractive expansion markets, supported by high household incomes, a strong economy and growing international tourism. At the top end of the hierarchy, London and Paris continue to set global benchmarks for scale, international appeal and rental levels, while Milan retains its role as Italy’s primary entry point for international brands.
Further east, Warsaw stands out as Central and Eastern Europe’s leading retail market, supported by strong economic growth, rising wages and a young population driving retail sales growth well above national averages.
Investment outlook aligns with leasing strength
The strength of Europe’s leasing markets is mirrored in the retail investment landscape. Investor sentiment remains positive, supported by strong occupational demand and improving rental fundamentals. JLL expects gradual growth in retail investment volumes through 2026, underpinned by active lending markets and increasing supply.
Capital continues to favor prime assets, particularly dominant shopping centers and retail parks with resilient income profiles. While prime yields are expected to remain broadly stable in the near term, modest compression is anticipated as competition for high-quality assets intensifies.
A confident but selective path forward
Looking ahead, Europe’s prime retail markets appear well positioned for 2026. Economic growth is expected to remain mixed but non-recessionary, with stable labor markets and improving consumer confidence supporting retail spending. Physical retail sales are forecast to continue growing, particularly in prime locations where sales densities are increasing.
While affordability pressures may prompt some retailers to reassess portfolios, the broader outlook remains positive. For occupiers with strong propositions and for investors focused on quality, Europe’s leading retail destinations continue to offer compelling opportunities for sustainable growth and long-term value creation.
