We hear a lot about rental prices rising on the world’s top luxury shopping streets but less about the prices on more mass-market-oriented shopping thoroughfares. Now however, international real estate advisor Savills has researched Europe’s prime high streets, including mass-market streets, and found healthy rental growth.

In fact, looking at those well-located, high-traffic retail areas that serve a broad consumer base, it said the sector “has gained momentum, with Q3 year-on-year rental growth averaging 9.9%, nearly seven times the 1.5% recorded a year earlier”. It was also ahead of the 5.9% seen for luxury-focused streets.

The average rent value across all high streets as of Q3 was around €3,600 per sq m annually, although the range actually went from €1,275 up to €15,100 across 27 key premier high streets that contained a mix of luxe and mass-market.

The acceleration in rental growth has closed the ‘rental recovery gap’ post-pandemic with prime rents on key mass-market streets now, on average, only 1.8% below Q3 2019 levels. But while current rental growth for the mass-market is beating luxury, there’s no denying that luxury has been strong overall since the end of the Covid era with luxury rents having fully rebounded, standing 5.2% above 2019 levels.

Savills said the rental recovery for the mass-market has been driven primarily by a contraction in vacancy rates, “fuelled by strengthening occupier demand”. Over the past 12 months, mass-market streets saw a 156 basis point (bps) reduction in vacancy, compared to a 144bps decline for luxury streets. Average vacancy for prime mass-market streets is now 3.6%, aligning with 2019 levels.

While luxury streets were initially quicker to recover post-pandemic, their vacancy rates remain, on average, slightly elevated compared to pre-2019 levels, with the research highlighting that this is largely attributed to the more selective approach luxury brands are taking in regards to quality of space.

Looking at both luxury and mass-market streets, it said several high streets “stand out for outperforming the broader trend”. In Spain, Madrid’s luxury Ortega y Gasset and mass-market Preciados recorded sharp vacancy reductions, 450bps and 730bps, respectively, below 2019 levels. London’s Bond and Oxford Streets have also achieved vacancy levels below pre-2019 benchmarks.

By contrast, mass-market streets in Germany have lagged behind the rest of Europe when it comes to vacancy recovery. Vacancy across its prime streets has been relatively stable since 2021, but it’s still averaging an undesirable 8.3%, and while vacancy contracted 40bps in 2024 to 8.2%, it remains almost double that seen across Europe as a whole(4.5%). But there may be light at the end of the tunnel. Savills said economic challenges persist in the country, but rent adjustments by some landlords are driving increased deal activity and “positioning the market as a hotspot for activity in 2025”.

The resurgence in occupational demand is also mirrored in the uptick in European retail investment, which saw transaction volumes across the sector increase by 6% year-on-year to reach €19 billion for the first nine months of 2024. Savills believes Q4 retail investment volumes will reach around €8.5 billion, bringing 2024 year total numbers to just over €27.5 billion, a 15% increase on 2023 volumes.

Marie Hickey, director in Commercial Research at Savills, said: “Looking ahead to next year, macro-economic conditions will continue to shape the occupier landscape. Mounting uncertainty may temper occupier confidence, but we believe this will have little read through to prime streets.  Southern Europe will continue to be a lead performer, as will mass market streets in the core markets of London and Paris, with Germany set to emerge as a new hotspot.”