Europe’s commercial real estate market continues to regain footing, and within it, retail property is showing measured but tangible progress. According to Altus Group’s Q4 2025 Pan-European Valuation Dataset, retail values increased by 0.2% in the final quarter of the year, bringing total annual growth to 1.6%. While this lags behind residential and industrial performance, it marks continued stabilization after a period in which 16.8% of asset values were written down during the broader market downturn.
The retail rebound is being driven less by yield compression and more by income fundamentals. Although central banks have gradually shifted toward lower interest rates, valuation yields edged outward across sectors in Q4, reflecting ongoing investor caution amid geopolitical and macroeconomic uncertainty. In retail, modest rental growth helped offset this pressure. Market contract rents improved by 0.6% to 0.8% over the year, signaling slow but steady strengthening in occupier demand.
Performance, however, varies by retail format. High street assets emerged as relative outperformers in 2025. Having corrected sharply during the downturn, they benefited from yields beginning to move back in, supporting above-average annual value growth of 2.5%, including a 0.7% uplift in Q4. Retail parks and supermarkets delivered more moderate gains of around 1.5% to 1.6%, while shopping centers remained at the lower end of the range.
Overall, retail real estate in Europe is transitioning from correction to cautious recovery. While capital growth remains moderate, improving income dynamics and selective investor confidence — particularly in prime high street locations — suggest that retail is steadily rebuilding its investment case within the broader CRE landscape.
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