As a consequence of M&A activity, investment turned a corner in 2025, posting volume growth for the first time since 2020, with a 16% year‑on‑year increase to €6.1 billion, according to MSCI data. The UK led with €1.8 billion, followed by Germany (€1.6 billion) and Sweden (€633 million), while grocery‑anchored and convenience assets accounted for 18% of retail investment across the 21 European markets we monitor, up from 15% in 2024, though still below the 25% share seen in 2020. Beneath the headline figure, single‑asset volumes fell 10%, offset by a 35% rise in portfolio volume, reflecting a re‑composition of the market toward fewer, larger, multi‑asset deals and increased M&A‑driven consolidation. Interestingly, there was a marked increase in North American capital seeking long‑income portfolio plays, with US and Canadian flows running 59% and 65% above their five‑year averages, respectively.

With individual investors reluctant to bring assets to market, liquidity has been driven by sale-and-leasebacks (S&LBs) and long income portfolios, with S&LBs accounting for 20.8% of grocery investment last year, the highest share in 13 years and more than double the ten-year average of 9.6%. Supermarket Income REIT and Blue Owl Capital were particularly active in this space, jointly acquiring 20 Carrefour stores for €123 million and participating in Asda’s €680 million S&LB programme to address elevated leverage. Strong investor interest for S&LBs reflects the sector’s long, index‑linked leases, which may include caps and collars depending on local market norms, offering dependable, income‑led returns in a market with few comparable alternatives; for retailers, bringing stock to market signals that capital needs and ongoing margin pressure are becoming harder to absorb.

Outside S&LBs, Slate Asset Management also stood out, completing four undisclosed portfolio acquisitions in Germany totalling €420 million.

Yields

Despite the rebound in investment activity across the sector, prime supermarket yields have remained surprisingly flat over the past year. In Q4 2025, the average prime supermarket yield across Europe stood at 5.8%, representing only 4 bps of year-on-year compression. Over the same period, prime shopping centre yields tightened by 3 bps from a notably higher base, while retail warehouse yields moved in more sharply by 9 bps.

Although investment volumes were elevated, deal flow remained relatively concentrated, limiting the depth of market evidence. In addition, the prominence of large portfolio transactions, in which pricing is blended across assets, may have reduced the visibility of sharper pricing movements at the prime end.

Looking ahead, as transaction activity broadens and liquidity conditions continue to normalise, we anticipate a more pronounced yield compression over the next 12 months. This is likely to be supported by renewed cross-border appetite, particularly from US investors bidding aggressively for income-led retail assets.

_{Read the articles within Spotlight: European Grocery Report – Q4 2025 below.}