JLL Italian Retail Snapshot q4 2022
JLL Italian Retail Snapshot q4 2022
JLL Italian Retail Snapshot q4 2022
Retail snapshot
Q4 2022 – Market Overview
Milan, Italy
4. Looking ahead 11
2 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
1. Our Key Takeaways
1
The Italian economy shows some resilience
The Italian economy held up surprisingly well in 2022, ranking
above other key eurozone countries (France and Germany).
GDP growth posted a +0.5% in Q3 2022, mainly driven by domestic
demand. Net exports on the other hand were a negative driver.
Carry-over annual GDP growth now stands at +3.9%.
2
Retail warehousing remains appealing to investors
From the capital markets perspective, the retail sector is still in
recovering mode since the covid-19 pandemic lows. Investment
activity may be a bit softer in the first half of 2023, with Investors
looking for assets with strong fundamentals and good defensive
qualities.
3
Retail leasing market shows some degree of resilience
Retail rents are expected to remain stable in most European
countries in 2023, albeit pockets of solid growth may appear,
depending on the affordability of rents. Solid growth is expected to
return in 2024.
3 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
2. The Italian Economy
The Italian economy held up surprisingly well in 2022 despite high global uncertainty
and rising energy prices: carry-over annual GDP growth now stands at +3.9%.
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3
Consumption Investments Govt
Net Exports Inventories GDP at market prices
4 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
Industrial production data in November highlights another negative expansion of -0.3%
MoM (-3.7% on a calendar adjusted YoY basis) – the third consecutive contraction – albeit
at a slower rate – since last summer.
The change of the average industrial production over the last three months versus the
previous three months remains in negative territory around -1.0 %.
8.00%
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22
IP MoM % IP YoY %
Annualized headline inflation (HICP) reached 11.6% in December (down from 11.8% in
November). Looking ahead, headline inflation may start to decline following the recent
reduction in gas prices since the summer peak, however the pass-through to the core
inflation component should take longer to materialize.
Source: JLL elaborations on ISTAT data. Source: Oxford Economics as of 19th Jan 2023.
Data: annual percentage changes unless specified.
5 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
3. Retail Capital Markets
The European retail market enters the current slowdown from a position of strength.
Although retail investment volumes for 2022 grew by 15% year on year to €37.2 billion
(+15%YoY), the slowdown observed during the third quarter accelerated in the
final quarter of 2022 as various transactions have been halted.
The Italian retail sector is still recovering from the post-pandemic lows. In 2022 investment
flows amounted to €0.8 billion (-44% YoY). Of these, around 24% were in-town
transactions while the remaining 76% were out-of-town.
2,500 2,112
2,000 1,680
1,000 759
500
0
2018 2019 2020 2021 2022
In-town transactions reached €160mln spanned across four deals, two in Milan while the
other two in Rome and Bologna. Out-of-town transactions reached almost €0.6bn
spanned across 14 deals; In terms of deal size, more than 60% of transactions had a
ticket lower than €25mln. The average deal size decreased too.
<25 >100 Between 25 and 50 Between 50 and 100 avg. deal size
6 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
Since the start of the year, around 75% of the retail investment volumes into the sector
were from foreign investors (of which 32% are newcomers) whereas the remaining 25%
were coming from domestic capitals.
100%
80%
60%
40%
20%
0%
2018 2019 2020 2021 2022
Domestic International
Note: we exclude transactions with unknown origin of capital
Prime net yields moved out across all retail submarkets starting from Q4 2022.
10.00 10.00
9.00 9.00
8.00 8.00
7.00 7.00
6.00 6.00
5.00 5.00
4.00 4.00
3.00 3.00
2008 Q4 2010 Q4 2012 Q4 2014 Q4 2016 Q4 2018 Q4 2020 Q4 2022 Q4
High Street MI High Street RM Shopping Centre Prime
Retail Warehouse Parks Shopping Centre Secondary
7 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
High street
Investment volume: €160 m
N° of deals: 4
2 deals in Milan
1 deal in Rome & Bologna
Out of town
Investment volume: €0.6 bn
N° of deals: 15
7 single asset deals
7 deals ≥ €25 m
3 shopping centre deals
23%
In town
out-of-town
77%
8 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
Prime Rents - High Street
5,000 €/sqm/pa
4,500
PRIME RENT
4,000 High Street
3,500
3,000
4,000
€/sqm/year
2,500
2014 Q4 2016 Q4 2018 Q4 2020 Q4 2022 Q4
760
860
720 €/sqm/year
2014 Q4 2016 Q4 2018 Q4 2020 Q4 2022 Q4
225
€/sqm€pa
220
215
210 PRIME RENT
205 Retail Park
200
195
190
185
180
210
€/sqm/year
175
2014 Q4 2016 Q4 2018 Q4 2020 Q4 2022 Q4
9 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
Big picture – EMEA leasing trends
Leasing activity across Europe slowed Prime rents mainstream retail locations
during Q4 2022, although various retailers
Paris - Avenue des…
continue to look for high-quality space in
Zurich - Bahnhofstrasse
key retail areas and good quality locations.
London - Oxford Street
Geneva - Rue du Rhone
Prime rents remained stable in most Munich - Kaufingerstraße
European countries, but notable growth in Milan - Corso Vittorio…
rents have been observed in Italy. Berlin - Tauentzienstraße
Rome - Via del Corso
0 10,000 20,000
0% 0%
6,000
Prime rent (€/sqm/pa)
2,000
1,000
10 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
4. Looking ahead
Inflation may reach its peak soon Global geopolitical uncertainty may
while economic growth should continue to temper the outlook in H1
soften
• On the macroeconomic front, there are • All real estate asset classes have
some early signs that inflation may reach suffered somewhat in the last
its peak soon. More recently, energy quarter of 2022 and retail is no
prices have fallen, although the exception.
passthrough to core inflation should take • Global geopolitical uncertainty
longer. As inflation starts to fall, the may continue to weigh-in on the
pressure to hike interest rates should outlook, especially in the first half of
diminish too. 2023.
• On the capital markets front, the retail • Pressure on yields may persist as
sector is still recovering from the post financing costs continue to be a
pandemic lows. Rising interest rates and drag on investment decisions.
tighter monetary policy may continue to
temper the investment outlook in 2023, • Rents may still grow in 2023
but pockets of liquidity are likely to although the weaker economic
remain. Investors will be focusing on
outlook may cast some cloud.
assets with strong fundamentals and
good defensive qualities.
• On the leasing front, rents are expected
to remain stable in 2023, albeit some
pockets of growth may appear,
especially on prime assets and locations.
11 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
Our Three Scenarios for the Italian Retail Market in 2023
12 | Retail snapshot – Q4 2022 © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.
Contacts
Milano Roma
Via Agnello, 8 - 20121 Via Bissolati, 20 - 00187
Phone: +39 02 85 86 86 1 Phone: +39 06 42 00 67 1
Fax: +39 02 85 86 86 20 Fax: +39 06 42 00 67 20
Francesca Fantuzzi
Head of Research Italy
francesca.fantuzzi@jll.com
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