Economic Context
Portugal's economy continued its positive trajectory in the first quarter of 2026, demonstrating sustained momentum. The Gross Domestic Product (GDP) grew by 2.3%, a figure that notably outperforms the Euro Area average. Inflationary pressures have eased, with the rate moderating to 2.3% in 2025. Projections indicate that inflation will stabilise below the 2.0% mark in the coming years, although a temporary increase to 2.6% is anticipated for 2026. The labour market has shown resilience, with the unemployment rate expected to fall to 5.7%. However, the pace of job creation is projected to slow, with an anticipated growth of 1.3%.
Demand Overview
The retail landscape is experiencing a significant surge in activity, reflecting strong market confidence. The first quarter of 2026 witnessed 68 new shop openings, marking a notable 13% increase from the same period in the previous year. This expansionary drive from retailers signals a bullish outlook on the market's potential.
Excluding the high street retail format, shopping centers captured the largest share of new retail units, accounting for 58% of total openings, followed by stand-alone units with a 28% share.
Looking forward, the development pipeline is robust. Nearly 210,000 sq.m of new retail space are slated for completion over the next three years. A significant portion of this pipeline is dedicated to retail parks, indicating a strategic shift in development priorities towards more spacious and accessible shopping destinations.
Rent Trends
In Q1 2026, prime rental rates have maintained a steady course across all retail formats, providing a stable foundation for both landlords and tenants. Lisbon prime rents for high street in Chiado are holding firm at €140/sq.m/month. Similarly, prime shopping centres continue to command high rental values, whilst retail parks present more budget-friendly alternatives.
However, this period of stability is likely a precursor to change. The combination of strong, sustained demand from retailers and a positive overall market sentiment is creating upward pressure on rents. It is widely expected that landlords will begin to adjust rental rates upwards in the near term to capitalise on the favourable market conditions.
Total and Under Construction Pipeline
The future of retail development in Portugal is overwhelmingly geared towards retail parks. An ambitious 209,300 sq.m of new retail space is planned over the next three years, and a staggering 96% of this new supply will be delivered as retail parks. This highlights a clear and decisive trend in the market.
With 64% of this extensive pipeline already under construction, the market is poised for a significant influx of this particular retail format. The recent successful completion of the Batalha Retail Park is a prime example of this trend, serving as a blueprint for the large-scale, easily accessible retail destinations that will define the next phase of Portugal's retail evolution.
