Emerging Europe: Further pain in store for retail

While virus restrictions have weighed on retail markets across Europe, the hit has been particularly severe in CEE. Indeed, core-CEE prime retail rents fell by an eye-watering 20% last year, the sharpest drop since our series began in 2007. In contrast, office and industrial rents got off more lightly, with annual rental growth easing to -1% and -0.3% respectively. But with virus restrictions still in place, economic activity will be soft in the near term. And the slow vaccination rollout means that there is a risk that the recovery is delayed. In turn, rental values will remain under pressure over the coming quarters, particularly in the retail and office sectors.