While consumer sentiment in Europe remains negative, it is slowly improving. Whereas the Consumer Confidence Index stood at -13.5 in the middle of last year, it reached -11.7 in February. With gradual growth of real household incomes (expected to rise by +1.1% in 2026), the outlook for consumption is also improving. Average real spending by European households is expected to increase by 1.6%, which will further boost market growth. Central and Eastern Europe will see the most significant growth.

Spending is growing fastest in discretionary categories

According to Oxford Economics forecasts, the Czech Republic, Hungary and Poland are among the three countries with the highest real growth in retail consumption this year: each with an estimated 3%. This is significantly higher than the average expected for Germany, France or Italy, where forecasts range between 1 and 1.5 percent. In Western Europe, only Spain shows comparable growth, with an estimated 2.8 percent.

This growth is driven primarily by rising real wages and the gradual release of previously pent-up demand. Spending is growing fastest in so-called discretionary categories, which have been under pressure in recent years. These include, in particular, restaurants and dining (+1.7%), household goods (+1.9%), and clothing and footwear (+1.6%).

Improving consumer demand is also gradually translating into retail tenants’ performance and, consequently, into the commercial real estate market. More stable sales by retailers have bolstered investor confidence and are creating conditions for a revival of investment activity.

“In commercial real estate, Prague behaves as a conservative but reliable market. Rents in Prague’s shopping centers remained unchanged in the second half of last year, similar to Berlin, for example. Other major cities saw more significant movement — rates in Lisbon rose by eight percent, Bucharest by seven and Barcelona by five. Prague is therefore not growing dramatically, but there are no surprises in terms of declines either. The city offers investors predictability above all,” explains Blanka Sovová, Director of the Retail Real Estate Department at Colliers.

Consolidation of retail networks

Despite the gradual recovery and growth in consumption, retail brands remain cautious and are adapting their strategies — success is no longer measured by the number of stores, but by their quality and location. Across Europe, retail networks are being optimized, leading to the strengthening of flagship stores and a withdrawal from weaker locations.

For example, H&M in Eastern Europe reports a year-on-year decline in sales of 1–2 percent and is actively downsizing its network. Inditex, which owns Zara, grew by 3 percent year-on-year, but is nonetheless reducing its number of stores in favor of larger, better-located units. This trend confirms the growing importance of premium high street locations and dominant shopping centers, which are once again attracting increased investor interest.

The luxury segment is also facing a difficult situation. Hermès was one of the few global brands to increase global sales in 2025, by 5.5 percent — and by as much as 10 percent in the EMEA region. Other major players, however, are not faring as well. LVMH reported an overall decline in sales of one percent, with the key fashion and leather goods segment down by five percent. Kering, the owner of Gucci, recorded a 10 percent drop and is openly discussing further store closures.

Investors are returning, the market seeks balance

The total volume of transactions in European retail reached €35 billion in 2025. This corresponds to 16 percent of all real estate investments in the EMEA region and represents a slight decline from 18 percent in 2023. Two-thirds of this volume was accounted for by shopping centers, with the largest transactions taking place in the United Kingdom, Italy and Germany.

“Prague and the Czech Republic are emerging as a stable, predictable market that offers an attractive risk-return ratio at this stage of the cycle. With prices continuing to stabilize and growing certainty regarding future developments, we expect a further gradual return of capital to retail real estate, particularly in prime locations,” summarizes Blanka Sovová.

More at: Colliers | EMEA Retail Snapshot | March 2026