Despite the credit crunch, there are still significant opportunities for retailers and developers in the European out-of-town (OOT) arena, with the Mediterranean countries showing strong potential for further rapid development. However – going forward – these opportunities will become harder to find. In the South the prime OOT locations get snapped up, while in northern Europe retailers and developers will increasingly need to focus on redeveloping older sites and make existing space work harder.

For many years OOT development appeared a relatively easy route to riches for both retailers and developers, however over the last five years profitability at many OOT retailers has been adversely impacted by the boom in OOT superstores especially in the DIY and furniture sectors. As the operating costs of these stores have risen in tandem with slowing top line sales, going forward profitability growth will be a lot harder to come by. The research also shows that the European out-of-town market is still characterised by huge differences, despite convergence being a major theme across business activities in the EU.

For Italy and Spain a new report predicts buoyant sales and space growth in OOT retailing, as the relatively new concept is introduced by international investors and retailers eager to gain a share of these markets. The fastest growing country will be Italy (46.0% space growth over the 2007-12 period), as the potential to develop the sector is greatest. Spain will come in second place over the period (25.0%), as the currently buoyant growth levels slow somewhat, especially against the backdrop of concerns about the robustness of the Spanish property market.

Looking north, according to Verdict Research OOT sales in France, Germany, the Netherlands and the UK will grow more slowly over the next five years. In the more mature markets growth in the OOT sector will be stifled by the absence of available, high quality space that could be developed. This problem is especially acute for the UK, the Netherlands, France and to a degree Germany. Moreover in these markets a new focus on the high street and especially inner city shopping centre development will provide fierce competition against OOT development.