In 2010, a real estate research thesis dared an unusual step: it attempted to forecast retail rents in the prime locations of eight European metropolises not by gut feeling but with an econometric model – five years ahead, until 2015. The basis was economic fundamentals alone. Sixteen years later, the approach can be soberly re-checked. This is more than an academic exercise: anyone deciding today on acquisitions, rental assumptions or exit scenarios in the high street works with the same questions.
Key points at a glance
In 2010, prime rents in eight European prime locations were forecast until 2015 from economic data alone – drivers: retail-sector value added and employment.
Within its forecast window, the model was largely correct; the crisis resilience of prime locations has held over more than a decade.
A pure macro model could not capture the structural break through e-commerce (from around 2018) and the pandemic – German prime rents then gave way.
London and Paris confirmed the thesis most clearly: New Bond Street is in 2025 the most expensive shopping location in the world.
Two economic indicators were meant to explain prime rents
The model (Konstantin Hähndel, “Retail Rents in the Prime Locations of European Metropolises”, VDG Weimar 2010, developed in cooperation with Deka Immobilien) rested on two statistically significant variables: value added of the retail and distribution sector, and employment in this sector. Through regression of historical time series combined with an economic forecast, the author derived prime rents until 2015 – for Berlin, Munich, Hamburg, London, Paris, Lyon, Madrid and Barcelona.
The starting values were deliberately set as a basket average of several top locations, not as a single-street record. For Berlin, the level was around EUR 2,580/sqm/year; for London around EUR 4,100/sqm/year (average of the “ORB” streets Oxford, Regent, Bond Street). Hamburg was to climb to up to EUR 2,850/sqm/year by 2015, Paris to an average of up to EUR 8,000/sqm/year. Important for comparison: modern benchmarks measure single prime streets, the model calculated in a basket. What is informative is the direction, not the exact figure.
Germany: direction was right – until e-commerce broke the curve
For the German locations, the model forecast a slight decline followed by renewed growth until 2015. Within its actual forecast window, it was largely correct: prime rents of German top locations rose into the mid-2010s.
Thereafter, the curve turned – for a reason no 2010 time series contained. From around 2018, growing online commerce pressed on floor demand, the pandemic accelerated the decline. By 2024, prime rents in many places lay below their earlier peaks: Stuttgart around 22 per cent below peak, while Munich held on top with just under EUR 300/sqm/month (Source: REFIRE / DZ HYP, Real Estate Market Germany 2025). Cushman & Wakefield reports Munich’s Kaufinger-/Neuhauser Straße at EUR 3,840/sqm/year for 2024 (Source: C&W, Main Streets Across the World 2024). The model captured the economic cycle cleanly – it could not see the structural break through e-commerce.
London and Paris: the “prime remains prime” thesis delivered
The central assumption of the study confirmed most clearly: the prime segment is remarkably crisis-resistant. For London the model expected, after a short correction, renewed and stronger growth than in the German markets. The correction turned out weaker than assumed – the growth thesis hit the bullseye: New Bond Street is in 2025 the world’s most expensive shopping location for the first time, at USD 2,231/sq ft/year and 22 per cent up within a year (Source: C&W, Main Streets Across the World 2025).
Paris too confirmed the direction. Avenue des Champs-Élysées continues to rank among Europe’s most expensive locations; rents move in 2024, depending on section, between around EUR 10,000 and 25,000/sqm/year (Source: market surveys 2024/25). Decisive is the relative pattern: that London and Paris would outpace German locations in price was correctly anticipated by the model.
Spain: caution was justified – recovery came nevertheless
Madrid and Barcelona were expressly treated as an exception: the regression fit less well here and the author warned of structural risks in the Spanish economy. In the short term he was right. Spain slid deeper into crisis – 2009 GDP dropped 3.7 per cent, in 2012 unemployment stood above 27 per cent (Source: PMC, “From Boom to Bust 2008–2013”).
But recovery turned out stronger than the dark scenario suggested. In 2024/25, Portal de l’Àngel in Barcelona at around EUR 265/sqm/month and Preciados in Madrid at around EUR 263/sqm/month lead the Spanish high streets – at near-full occupancy and rents above pre-crisis levels (Source: idealista 2025). The prime segment proved more substance than fundamentals alone would suggest.
What the model could not see: structural breaks and their consequences
From today’s perspective, the question is worth asking which factors beyond fundamentals overtook the forecast. Three structural breaks marked the decade: the rise of e-commerce with an online share of non-food turnover of under 10 per cent in 2010 rising to around 30 per cent in 2024 (Source: HDE, GfK); the Corona pandemic with lockdowns, temporary frequency slumps and an accelerating insolvency wave in bricks-and-mortar retail; and the geopolitical re-mapping since 2022 with the interest-rate turn, energy price shock and a shift in consumer behaviour.
These three breaks did not act symmetrically. In absolute prime locations with limited supply, international brands and luxury players absorbed the demand gaps; in B locations and mid-sized inner cities they led to a lasting reorganisation with pronounced vacancy and structural repositioning of entire street stretches. For econometric models, this presents a methodological challenge: a pure fundamentals model reproduces cycles, not structural jumps. Anyone evaluating forecasts today should know this methodological limit – and combine fundamentals with qualitative trend assessments of sector and consumer behaviour.
What matters for forecasts from 2026 onwards
For the coming years, five themes emerge that every high-street forecast must take seriously. First: the further course of the e-commerce share. After a pandemic peak, online growth has slowed – the question is whether the share settles around 30 per cent or continues to rise. Second: the role of international retailers and luxury brands who carry demand at absolute prime addresses. Third: interest-rate developments and their effect on purchase price factors and refinancing structures. Fourth: urban upgrading of public spaces, mixed-use concepts and BID initiatives that strengthen dwell quality in inner cities. And fifth: the change in consumer behaviour, particularly among younger target groups who prioritise experience and curation over pure merchandise.
Anyone integrating these five themes into a modern forecast model comes closer to sustainable statements than a regression relying on value added and employment alone. The core thesis of the 2010 work – that prime locations are structurally crisis-resistant – continues to hold. Its precision, however, depends on how well one grasps the structural change beyond classic economic figures.
Methodological consequences: how modern forecast models should look
For practice, this means: a robust forecast model for high-street rents should combine three layers. First layer: macroeconomic fundamentals (value added, employment, GDP growth, purchasing-power development) as the base level of cyclical development. Second layer: structural variables such as e-commerce share, demographic shifts and consumer behaviour – ideally in the form of dynamic indicators that can capture change. Third layer: qualitative factors such as location prestige, international brand presence, urban upgrading and BID activity – often only partially quantifiable but decisive for actual forecast quality.
For valuation practice in retail real estate advisory, this means: multiple scenarios instead of a point forecast, sensitivity analyses on structural variables and a deliberate separation between prime addresses (where fundamentals act strongly) and B locations (where structural shifts dominate). Anyone today needing a reliable rent forecast for acquisition or repositioning works with this layered methodology – and accepts that classic regressions deliver only part of the picture.
What this means for investors in 2026
The retrospective delivers three robust lessons. First: economic fundamentals explain the floor and relative ranking of locations well – the crisis resilience of real prime locations is not a marketing promise but documented over more than a decade. Second: macro time series cannot see structural breaks. E-commerce and pandemic shaped the second half of the 2010s – neither was in any 2010 model. Third: flight to the best locations has intensified.
From an investor and owner perspective, this means: fundamentals belong in underwriting, but they are not enough. Anyone calculating rent assumptions and exit scenarios must lay structural change beside them – and cleanly separate real prime location from the “good” location that only carries as long as demand does not tip.
Frequently asked questions
Which factors determine retail rents in prime locations?
Beyond supply and demand, above all the economic base of the location. The 2010 econometric study identified two statistically significant drivers: value added and employment in the retail and distribution sector. Structural factors such as online commerce add as an independent force.
Are high-street rents crisis-resistant?
Largely yes. Prime rents of real prime locations passed largely unimpressed through the 2008/09 financial crisis; in 2025 London’s New Bond Street reached an all-time high at USD 2,231/sq ft/year (+22 per cent year-on-year, Source: C&W). Secondary locations, by contrast, are much more vulnerable.
Why did German prime rents fall after 2015?
From around 2018, growing online commerce pressed on floor demand, the pandemic accelerated the decline. By 2024, rents in many places lay below peak (e.g. Stuttgart −22 per cent), while Munich held stable at around EUR 300/sqm/month (Source: REFIRE / DZ HYP).
Which European shopping street is the most expensive in 2025?
New Bond Street in London – it is in 2025 the world’s most expensive shopping location for the first time (USD 2,231/sq ft/year, Source: C&W, Main Streets Across the World 2025).
Which five themes matter for high-street forecasts from 2026?
The further course of the e-commerce share, the role of international luxury brands at prime addresses, interest-rate development and its effect on purchase price factors, urban upgrading through mixed-use and BID initiatives, and the change in consumer behaviour of younger target groups towards experience and curation retail.
About the author: This article comes from Unique Retail, specialising in retail real estate and retail strategy in Germany. Philipp Junikiewicz and the Unique Retail team advise owners, investors and tenants on the assessment of retail space, location strategy and transaction advisory in the context of changing inner-city landscapes.
