What is the difference between prime and secondary retail locations?

Justus Hayes - Research ·
Busy luxury flagship store corner bathed in warm afternoon sunlight contrasting with a quiet, shadowed secondary shopping street in the background.

Prime retail locations are properties situated in the highest-footfall, most commercially active parts of a city or town, where consumer demand is consistently strong, tenant competition is intense, and vacancy is rare. Secondary locations sit outside these core zones, where footfall is lower, tenant demand is thinner, and the gap between asking rent and achievable rent is wider. For investors in Dutch retail real estate, understanding this distinction is not academic — it directly determines yield, re-letting risk, and long-term asset value.

The Netherlands makes this distinction particularly sharp. The difference between an A1 location and a B-location on the same shopping street can translate into dramatically different rental income stability, vacancy exposure, and exit pricing. The sections below unpack the key questions that international investors ask when evaluating Dutch retail property.

What makes a retail location ‘prime’ in the first place?

A retail location is considered prime when it consistently attracts the highest footfall in its catchment area, commands the highest rents, and draws the strongest tenant demand from national and international retailers. In the Dutch retail market, prime status is typically assigned to A1 locations — the specific stretches of a shopping street where pedestrian flow peaks and dwell time is highest.

In practice, prime locations in the Netherlands are defined by a combination of measurable and structural factors. Footfall counts are the most direct indicator, but they need to be read alongside the tenant mix. A street populated by strong national and international retailers signals prime status far more reliably than footfall data alone. When retailers like Zara, Nike, or Rituals actively compete for units on a particular stretch, that competitive pressure is itself a marker of prime quality.

Physical accessibility matters too. Prime locations in Dutch cities tend to benefit from proximity to public transport nodes, covered pedestrian zones, or anchor destinations such as department stores and large-format food retailers. The absence of any of these factors does not automatically disqualify a location, but their presence reinforces prime status.

It is also worth noting that prime status is not static. A street that was prime in 2010 may have shifted as consumer movement patterns changed, new retail developments opened elsewhere, or anchor tenants relocated. Investors relying on historical classifications without current leasing intelligence risk misjudging where prime genuinely sits in 2026.

How do prime and secondary locations differ in yield and rent?

Prime retail locations in the Netherlands trade at lower yields and higher rents than secondary ones. In 2026, net initial yields on prime high street retail in Amsterdam’s top locations sit at the tighter end of the market, while secondary locations in smaller cities or weaker streets carry materially higher yields to compensate for greater vacancy and re-letting risk.

The rent differential reflects tenant willingness to pay. Retailers competing for limited prime space bid rents up. On secondary streets, landlords often accept lower rents, longer rent-free periods, or additional incentives to secure tenants. This gap has widened in recent years as retailers have become more selective about their physical footprint, concentrating investment in locations where conversion rates justify the cost.

For investors, the yield gap between prime and secondary Dutch retail property is not simply a return premium for taking more risk. It reflects structurally different re-letting dynamics. A prime unit that becomes vacant in a strong Dutch shopping street will typically attract multiple interested tenants within a manageable timeframe. A secondary unit in a structurally weakening location may sit empty for months or years, eroding income and asset value simultaneously.

Understanding Dutch rent review methodology is also essential here. The 303 rent review process, which governs market rent assessments in the Netherlands, uses comparable transactions to establish the achievable rent at review. In prime locations, comparable evidence is plentiful and rents are typically well-supported. In secondary locations, thin transaction evidence can make rent reviews unpredictable and outcomes harder to defend.

Why do some secondary locations outperform prime ones?

Some secondary retail locations outperform prime ones because they serve a distinct and stable consumer need that is less sensitive to footfall competition. Neighbourhood convenience retail, food-anchored centres, and dominant retail parks in mid-sized Dutch cities can generate stronger income stability than prime high street assets where rents are stretched relative to retailer profitability.

The key mechanism is catchment dependency. A well-located supermarket anchor in a residential district does not compete with the Kalverstraat in Amsterdam. It serves a different consumer mission entirely, and that mission is largely e-commerce-resistant. Consumers do not shift their weekly grocery shop online with the same ease as they shift discretionary fashion purchases. This makes food-anchored secondary retail a structurally different risk profile from secondary fashion retail.

Secondary locations can also outperform when prime rents become unsustainable for retailers. When prime rents rise faster than retailer sales densities allow, occupancy costs exceed what the business model can support. At that point, prime locations carry their own form of risk: over-rented leases that face downward pressure at review, or tenants who exit rather than renew. A secondary location with a rent set at a level retailers can genuinely sustain may produce more durable income over the hold period.

The distinction matters for portfolio construction. Investors who treat all secondary retail as inferior to prime are likely to overpay for prime assets and underprice genuinely strong secondary assets. Accurate assessment requires granular knowledge of the specific location, its catchment, and its tenant dynamics — not a blanket classification.

What are the signs a retail location is structurally weakening?

A retail location is structurally weakening when vacancy rates rise persistently, anchor tenants exit without replacement, footfall declines year on year, and incoming tenants are of lower covenant quality than outgoing ones. In the Dutch retail market, these signals often appear in sequence rather than simultaneously, making early identification critical for investors.

Rising vacancy is the most visible indicator, but it is a lagging signal. By the time vacancy is obvious, rents have usually already softened and the re-letting pipeline has thinned. Earlier warning signs include the type of tenants filling vacant units. When prime fashion or lifestyle brands are replaced by discount retailers, pop-up operators, or service providers with lower footfall draw, the location’s retail hierarchy is shifting downward.

Anchor tenant behaviour is particularly telling. In Dutch shopping centres and high streets, the departure of a major anchor — whether a department store, a large-format sports retailer, or a supermarket — removes the footfall engine that supports surrounding units. Smaller tenants often follow, and the remaining rental income becomes harder to sustain at current levels.

Structural weakening also manifests in lease terms. When landlords begin offering longer rent-free periods, stepped rents, or turnover-linked lease structures to attract tenants, these concessions signal that headline rents no longer reflect what the market will actually bear. For investors relying on passing rent as a proxy for market rent, this gap between headline and effective rent is a material valuation risk.

Dutch vacancy rates vary significantly by city and street, and national averages obscure local dynamics. A location that appears sound based on city-level data may be weakening at the street level. This is where granular retail market research — at the unit and street level rather than the postcode level — provides the intelligence that investment decisions actually require.

How does location classification affect re-letting risk?

Location classification directly determines re-letting risk because it reflects the depth of tenant demand for a specific unit. Prime locations attract multiple competing tenants when a unit becomes vacant, compressing void periods and supporting rents. Secondary and tertiary locations face thinner demand, longer void periods, and greater pressure to offer incentives that reduce effective income below the headline rent.

In the Dutch retail market, the A1, A2, and B-location classification system is widely used by valuers, investors, and leasing agents to communicate this demand hierarchy. An A1 unit on a dominant Dutch shopping street has a fundamentally different re-letting profile from a B-location unit two streets away. The physical distance may be small; the investment risk difference is not.

Re-letting risk also interacts with lease expiry profiles. A prime unit with a short unexpired lease term is a manageable risk because demand at re-letting is reasonably predictable. The same short lease on a secondary unit introduces meaningful uncertainty: will the next tenant accept a similar rent, require significant incentives, or not materialise at all within an acceptable timeframe?

For international investors acquiring Dutch retail assets, retail investment advisory that integrates leasing market intelligence is essential at the due diligence stage. Understanding not just the current passing rent but the realistic re-letting rent, the likely void period, and the tenant demand profile for a specific unit requires active leasing market knowledge that generalist advisors rarely hold.

Which retail formats perform best outside prime locations?

Outside prime locations, the retail formats that perform most consistently are food-anchored neighbourhood centres, standalone supermarkets, and large-format retail parks serving bulky goods categories such as furniture, DIY, and electronics. These formats are driven by consumer necessity and destination shopping rather than footfall, which makes their performance less dependent on location hierarchy.

Supermarket-anchored assets have demonstrated particular resilience in the Dutch market. The Netherlands has a concentrated supermarket sector with strong operators whose covenant quality is well-established. A supermarket on a long lease in a residential catchment area generates predictable income that is structurally less exposed to e-commerce displacement than discretionary retail. For investors seeking stable rental income outside prime high streets, this format warrants serious consideration.

PDV and GDV retail concentrations — the Dutch equivalent of retail parks focused on large-format, destination-driven retail — also perform well outside traditional prime locations. These assets serve consumer needs that require physical presence: testing a mattress, selecting kitchen units, or purchasing garden furniture. The consumer journey to these locations is intentional rather than incidental, which supports occupancy even when the surrounding retail environment is weaker.

Food and beverage concepts have also shown strength in locations that would traditionally be classified as secondary. A well-positioned restaurant or cafe cluster can generate its own footfall rather than relying on surrounding retail to deliver it. In Dutch mid-sized cities, this dynamic has supported income on streets that pure fashion retail has partially vacated.

Assessing which format fits which location requires both investment analysis and operational retail knowledge. KroesePaternotte operates across leasing, valuations, and investment advisory simultaneously, which means the market intelligence informing an acquisition recommendation reflects live transaction data rather than desk research. That combination of perspectives — what tenants are actually signing, at what rents, and in which locations — is the foundation of sound retail property investment in the Netherlands.

For investors building or refining a Dutch retail portfolio, the prime versus secondary distinction is a starting point, not a conclusion. The real work is understanding the specific dynamics of each asset, each street, and each catchment. Active leasing market knowledge is what converts that understanding into defensible investment decisions.

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