EUROPEAN LUXURY RETAIL 2026

The European uxury retail market continues to evolve as it transitions from spending cycle toward a more moderated and structurally balanced phase. While consumer demand remains resilient among core luxury buyers, shifting spending patterns, constrained real estate supply and evolving store strategies are reshaping the relationship between luxury brands and physical retail space across Europe’s key luxury high streets.

Cushman & Wakefield’s analysis of 20 leading European luxury retail streets highlights a market defined not by contraction, but by recalibration. Despite slower sales growth across several luxury goods categories, retailer activity remains robust, reinforcing the strategic importance of physical stores and prime locations within luxury retail real estate.

Market Context: From Exceptional Growth to Measured Expansion

Following the exceptional consumer spending environment observed between 2021 and 2023, the luxury retail sector entered a more moderated phase in 2025. Core “true luxury” consumers have maintained spending levels, while aspirational shoppers have become increasingly selective in directing discretionary expenditure. Consumers are allocating a growing share of spending toward experiences rather than physical goods, while sensitivity toward perceived price increases has intensified, particularly among younger demographics.

This transition has created uneven performance across product categories. Clothing, footwear and accessories segments experienced softer sales performance over the past two years, while jewellery & watches and cosmetics & fragrances recorded continued albeit modest growth. The market environment therefore reflects normalization rather than decline, supported by structural demand drivers including tourism recovery, experiential retail and long term brand investment strategies.

Forecasts indicate European luxury retail sales will grow at an average rate of approximately 3% per annum between 2026 and 2030, signalling a return to sustainable prepandemic growth dynamics.

Store Openings Demonstrate Ongoing Retailer Confidence

Despite a slowdown in sales momentum, store opening activity increased across Europe’s prime luxury streets in 2025. A total of 96 new luxury stores opened, compared with 85 openings in 2024, although remaining below the exceptional 107 openings recorded in 2023.

More than half of these openings occurred in France, Italy and the United Kingdom, driven primarily by renewed activity in Paris and Milan. The resurgence of leasing activity in these markets underscores brands’ continued prioritization of established global luxury destinations.

Luxury conglomerates LVMH, Kering and Richemont remained key market drivers, accounting for nearly one third of all store openings. However, growth was increasingly diversified, with approximately 60 additional brands responsible for the remaining 70% of openings, demonstrating the depth of demand for luxury retail space.

Store strategies increasingly emphasize flagship formats and first-entry locations, reflecting brands’ ambition to strengthen visibility and reinforce brand identity through physical environments.

Physical Stores at the Core of Luxury Strategy

In a recalibrating market, physical retail has become more strategic rather than less relevant. Stores are evolving beyond transactional environments into immersive brand destinations designed to foster engagement, storytelling and long term customer relationships.

Luxury retailers are investing heavily in experiential formats, incorporating cafés, restaurants, lounges, galleries and VIP spaces to enhance instore engagement. Expansion strategies frequently involve combining adjacent units or vertically extending stores across multiple floors, increasing overall space requirements despite constrained availability.

Pop-up concepts and collaborations with local designers and artists are also gaining traction, enabling brands to test markets, deepen consumer engagement and launch limited collaborations.

These strategies reinforce the store as a critical channel for brand equity creation and experiential differentiation within an increasingly competitive luxury landscape.

Supply Constraints Define the Luxury Real Estate Market

The defining characteristic of Europe’s luxury retail real estate market remains limited supply.

Among the 20 luxury streets analysed:

- 8 streets recorded zero vacancy, up from six in 2024

- 14 streets reported vacancy below 5%

- No street has recorded vacancy above 10% since 2023

Vacancy increases observed on certain streets typically reflected only one to four additional vacant units rather than structural weakening in demand.

The persistent mismatch between strong retailer demand and constrained supply continues to intensify competition for prime pitches. As a result, nearby streets and secondary luxury locations are becoming increasingly attractive, offering proximity to core luxury clusters alongside lower occupancy costs and greater spatial flexibility.

Rental Growth Driven by Location Scarcity

Limited availability of prime retail space has sustained rental growth across European luxury high streets.

Key performance indicators include:

- Prime luxury rents increased by 3.5% year on year in 2025

- Nonluxury high streets recorded a comparable 3.3% increase, signalling broader retail recovery

- Prime rents on luxury streets are now 7% above 2018 levels, while nonluxury streets remain below pre-pandemic benchmarks

Half of Europe’s luxury streets either achieved or maintained record rental levels during 2025, including locations in Milan, Paris, London, Madrid, Lisbon and Geneva. Bond Street in London emerged as the world’s most expensive retail destination, surpassing Via Montenapoleone.

Looking ahead, rental levels are expected to experience continued upward pressure, with forecast average growth of 0.5%–4% per annum between 2026 and 2029.

The Increasing Importance of Location Strategy

Location remains the single most critical success factor for luxury retailers. Securing a store on the optimal stretch of a key luxury street shapes brand positioning, strengthens clustering effects and enhances customer perception.

As vacancy remains constrained, competition for core luxury locations is expected to intensify further. Redevelopment projects and new schemes across cities including London, Stockholm, Munich, Düsseldorf, Lisbon and Prague are gradually introducing additional supply aligned with luxury brand requirements.

However, availability remains structurally limited, reinforcing the strategic importance of long-term real estate planning and early site acquisition.

Outlook: A Structurally Strong but More Selective Market

The European luxury retail market is entering a phase characterized by:

- moderated but stable sales growth

- structurally constrained supply

- increasing experiential retail investment

- intensified competition for prime locations

International tourism recovery is expected to support future growth, with forecasts suggesting European tourist arrivals could exceed 2019 levels by 40% by 2030, led by high spending visitors from long haul markets.

In this environment, luxury retail success will depend less on rapid expansion and more on strategic presence. Brands are prioritizing fewer but larger, higher quality stores capable of delivering immersive brand experiences aligned with evolving consumer expectations.

Conclusion

European luxury retail real estate remains fundamentally supply constrained yet demand driven. Even amid slower sales growth, store openings, rental performance and continued investment demonstrate strong confidence in physical retail as a long term strategic asset.

As luxury retail continues to transform, one principle remains constant: being in the right location with the right store concept remains essential to success.

This report is prepared by Cushman & Wakefield. To access the original source, please visit "https://www.cushmanwakefield.com/en/insights/european-luxury-retail" 

Authors; 

Sally Bruer
Head of EMEA Logistics & Industrial and Retail Research

Robert Travers
International Partner, Head of EMEA Retail

Vincent Ascher
Deputy Head of Retail Leasing

 

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