Spain continues to establish itself as one of Europe’s most dynamic retail markets
Retail leasing activity across Europe remained stable during the first half of 2026, while retailers’ expansion strategies continued to evolve. The focus is no longer on opening more stores, but on opening better stores, prioritising locations that enhance customer experience, strengthen brand visibility and deliver long-term commercial performance.
This shift is reflected in an increasing polarisation of demand between compact formats and large flagship stores. During the first half of 2026, transactions involving units below 600 sq m grew by 12%, while transactions and floorspace leased in units above 2,000 sq m increased by 38%. By contrast, units of between 1,000 and 2,000 sq m recorded a 5% decline.
Spain stands out within this European context. The market continues to benefit from record levels of international tourism, with arrivals 14% above 2019 levels, boosting consumer spending and reinforcing the appeal of cities such as Madrid and Barcelona for both domestic and international retail expansion.
Location matters more than ever
The limited availability of prime retail space is making retailers increasingly selective. Brands are showing a growing willingness to wait for the best locations rather than compromise on secondary space, further reinforcing rental pressure across the leading retail destinations.
This combination of strong demand and limited availability of high-quality space continues to drive prime rents, which are rising across all three main retail formats: High Street leads the way (+2.5%), followed by Retail Parks (+1.9%) and Shopping Centres (+1.2%). Spain is also among the markets where shopping centres are recording positive rental growth.
The rise of flagship stores and luxury growth
Another key trend identified by Retail Radar is the growth of large-format stores. Although the number of luxury transactions fell by 28% compared with H1 2025, the total floorspace leased by these brands more than doubled, highlighting a clear commitment to larger, experience-led and higher-impact retail spaces. Spain features among the markets with notable luxury operator activity.
This focus on larger, higher-impact retail spaces sits alongside the rise of compact formats: while openings of smaller units are increasing, demand for large-format spaces that create distinctive brand destinations is also growing. Madrid and Barcelona continue to position themselves as key markets to capture this trend.
Physical retail remains a priority for brands
Fashion continues to lead demand for retail space across Europe, while food & beverage and leisure operators are playing an increasingly important role. F&B operators now account for 17% of leased floorspace and have doubled their take-up compared with the previous year, reinforcing the transformation of retail destinations into more experience-driven environments.
Retailers continue to invest in stores that enhance the customer experience and strengthen brand positioning. For owners, this represents a significant opportunity. Growing competition for the best locations and the limited availability of high-quality space continue to support rental growth and strengthen the position of the best-located assets.
Our European Retail Radar report analyses the key trends reshaping the European retail market and how Spain continues to strengthen its position as a leading destination for brand expansion, investment and sector growth.
