Scandinavia & Switzerland: Retail not off the hook yet

Q2 data was a mixed bag as all markets recorded shifts in yields while only a handful of markets saw moves in rents. That said, Scandinavian investment activity took a significant hit in Q2, and despite the pick-up in June and July, transactions look set to remain far below their historical levels. And the fact that prime retail rents held steady in Scandinavia and Switzerland in Q2 is far from promising. (See Chart 1.) Indeed, prime retail rents in Scandinavia had already declined prior to the lockdown and we still expect rents to nudge down by the end of this year on the back of a weak recovery in economic activity. Moreover, the prevalence of e-commerce in the region will be an additional headwind to retail rents.