Dynamics of the European commercial real estate market with an empirical focus on the retail Italian sector

Abstract

This paper examines the dynamics of the European commercial real estate market (CRE), with a particular focus on retail Italy market, analysing investment trends, sectoral performance and macroeconomic influences from 2020 to 2024. The study explores how macroeconomic shocks, evolving consumer behaviours and changing investor strategies have shaped capital allocation across different retail asset classes, including high-street retail, shopping centres, retail parks, and supermarkets. The research finds that retail real estate investment in Europe experienced significant volatility, with a sharp contraction in 2023 due to rising interest rates and inflationary pressures, followed by a recovery in 2024, particularly in resilient asset classes such as grocery-anchored retail and luxury high-street locations. Italy, despite facing macroeconomic constraints, demonstrated a substantial resurgence in retail investment, with supermarkets and urban high-street retail outperforming traditional shopping centres. This study contributes to scientific socio-economic knowledge by quantifying investment fluctuations across different asset classes and identifying key structural transformations in retail real estate. It establishes a direct link between commercial real estate investment, consumer behaviour shifts and macroeconomic policy adjustments, offering insights into the future trajectory of retail property markets. The findings support the hypothesis that grocery-anchored retail and prime urban assets provide long-term stability, while secondary retail formats require adaptation to remain viable.