Europe's premier retail leasing markets are positioned for continued strength in 2026, with prime destinations maintaining robust appeal for retailers seeking expansion and market entry opportunities across major European cities, according to new research from JLL's European Retail City Profiles, 2025 edition.

The sustained demand reflects retailers' strategic focus on enhancing physical footprints, capitalising on expected growth in physical retail spending, and strengthening omnichannel experiences following recent market challenges.

"Retailers positioned in prime locations with compelling propositions can achieve exceptional returns across Europe's leading cities," said Mark Smith, Lead for EMEA Cross Border & UK Retail Occupiers at JLL. "These prime destinations benefit from high-density retail spending, substantial footfall, significant tourism expenditure, and unparalleled brand exposure opportunities. Moreover, physical stores demonstrate on average 10% greater profitability in fulfilling sales and processing returns compared to their digital counterparts.”

Global top-tier retailers maintained remarkable stability. An analysis of 36 luxury, premium and mainstream retailers with the largest global reach in prime locations showed that they operate 1,370 standalone stores across Europe's top seven cities in 2025, representing just a 0.7% decline from 1,379 stores in 2024.This minimal adjustment occurred despite challenging conditions including high inflation and consumer spending pressures.

The first three quarters of 2025 recorded 219 notable store openings across 16 analysed cities, an 11% year-on-year decline following exceptionally strong 2024 performance. Within Europe's seven largest cities, 158 notable openings occurred in key high street and shopping centre locations. This assessment excludes store openings in new developments. New market entries and first physical store launches accounted for 26% of all notable store openings, demonstrating retailers continued focus on untapped markets for profitable growth and diversification of revenue sources.

Prime rents are experiencing upward momentum, with European high street locations posting 3.1% year-on-year average growth and shopping centres achieving 3.7% growth, on average, in Q3 2025. Both segments have climbed 11% above pandemic lows, signalling recovery toward pre-COVID performance levels. The recovery is multi-speed across the individual markets.

The rental recovery and sustained retailer demand present compelling opportunities for retail real estate investors.

Sandra Ludwig, Head of Retail Capital Markets EMEA said, “The combination of tightening supply in prime locations and improving rental growth fundamentals creates a favourable environment for capital appreciation. Rising occupancy costs may accelerate market consolidation, potentially benefiting landlords with superior assets in prime destinations.

“Investors should note the flight-to-quality trend, as retailers increasingly concentrate on premium locations with proven footfall and spending patterns. This selectivity supports rental resilience and reduces vacancy risk for well-positioned assets. The scarcity of high-quality retail space in Europe's top cities is expected to provide pricing power for prime landlords throughout 2026.”

Retail units exceeding 1,000 square meters represented 17% of notable store openings but accounted for 50% of total space occupied during the first three quarters of 2025. This trend reflects retailers' emphasis on enhanced customer experience and omnichannel distribution capabilities. London's West End recorded the highest number of new notable store openings, followed by Düsseldorf's city centre. Uniqlo and Kiko Milano emerged as the most active retailers opening new stores across premier European destinations.

JLL forecasts Europe's top retail leasing markets will remain healthy in 2026, though new store openings and lease agreements are expected to gradually normalize as high-quality retail space becomes increasingly scarce. Rising rents may create affordability challenges for some retailers, potentially triggering strategic portfolio reviews and creating opportunities for better-positioned operators.