Citycon shopping centers have outgrown the overall retail markets

Image and data sources: Citycon

The Nordic shopping centre owner Citycon is an interesting comparison as a kind of bellwether for the overall retail markets in its operating countries. Citycon shopping centres could be described as more or less upper-market retail locations.

When one compares Citycon shopping centre tenants’ sales growth to the overall retail market growth in Finland and Sweden, Citycon centres have significantly outperformed the market.

Only lately has the growth rate of the sales of the Citycon tenants declined. Now, they are more closely in line with the markets.

Finland & Norway biggest markets

As a company, Citycon is relatively evenly distributed between Finland & Estonia, and Norway is the two biggest rental income countries. Sweden & Denmark are significantly smaller.

Regarding retail categories producing the most rental income, the image is also relatively evenly distributed. Fashion is the most critical category. The picture becomes more interesting when comparing tenant distribution in the three main markets.

Grocery stores dominate the Finnish and Estonian shopping centres, whereas fashion is the biggest category in Norway. In Sweden, fashion, groceries and services (& offices) are all almost equally important.

In Finland, the share of income from groceries is almost 100 % higher than in Norway and nearly a third higher than in Sweden and Denmark. This highlights the Finnish curiosity about building giant hypermarkets (often two side by side) in shopping centres. Of the six biggest tenants for Citycon, five are grocers. The two biggest with the biggest share of rental income are the Finnish grocery giants S-Group and Kesko. Surprisingly, the Norwegian fashion group Varner Gruppen is the third most important tenant with 3,1% of rental income.

One could imagine that the giant hypermarkets would drive the rental levels down as they are usually unwilling to pay high rents. However, in Finland, the average rent for Citycon is significantly higher than in the other countries.

The 25,8 € per square meter per month is almost three euros more elevated than in Norway. This might result from the different kinds of shopping centre bases for Citycon in Finland compared to other markets.