We’ve seen the vacancy rate in Luxembourg rise steadily for years, from 6% in 2015 to 10.1% at the beginning of 2022. Eighteen months after this peak, the national vacancy rate is back down to 8.7%. The vacancy rate is on a downward trend despite the aftershock of Covid 19 and rising inflation, just like in Belgium and the Netherlands. The main cause behind the vacancy decline is that the number of retail properties is decreasing due to change of function.
Locatus has kept a countrywide database of all retail premises in the Grand Duchy of Luxembourg since 2015. Locatus fieldworkers visit all retail, hospitality, and service properties every year to assess the retail situation in Luxembourg.
Luxembourg has a total of almost 9,000 retail properties with a combined retail area of over 1.5 million m². Luxembourg thus has 2.3 m² of retail per inhabitant. That is slightly less than in the Netherlands (2.4 m²) and Belgium (2.5 m²).
Out of nearly 9,000 retail properties, 780 are vacant, which represents 8.7%. In retail surface, the vacancy rate is 6.7%.
At 6%, the vacancy rate was low in 2015. As of 2015, the vacancy rate started to rise significantly, finally reaching 10.1% in early 2022. From then on, the vacancy rate started falling again down to 8.7% currently, at the beginning of June 2023.
Fewer retail properties
The decline in vacancy rates – as in the Netherlands – is mainly caused by retail properties being given a different function. Often retail properties are converted to residential or office use. That’s why we see a drop, not only in the vacancy rate, but also the number of retail premises in Luxembourg. This is a trend we see repeatedly throughout the Benelux.
Central shopping areas and shopping malls
Besides Luxembourg City, Esch-sur-Alzette also has a large city centre. All other residencies in Luxembourg are small towns, of which only the tourist towns have a significant shopping offer.
In addition to the city centres offer, Luxembourg has a number of large shopping malls including Cloche d’Or in Luxembourg City, City Concorde in Bertrange and Massen in Wemperhardt. Ultimately, in these categories combined, there are only 15 centres in Luxembourg with more than 50 shops.
Of these 15 largest centres, five have a high vacancy rate of more than 10%. The centre of Echternach is the only one to have a vacancy rate above 15%.
Differences between municipalities
If we look at vacancy rates at municipal level – among municipalities with more than 5,000 inhabitants – we do not see any major outliers. Schifflange, a town in the south, has the highest vacancy rate at 12.5%, followed by the touristic city Diekirch at 12.3%. In contrast, there’s no vacancy in the municipality of Kehlen (west of Luxembourg City).
The influence of shopping tourism on vacancy rate
An important element in Luxembourg’s retail sector is tourists shopping across the border. Due to low excise duties on liquor, fuel, and cigarettes, among other things, many Germans, Belgians, and French cross the border to make purchases in Luxembourg. Conversely, Luxembourg has a relatively high consumer price index, so Luxembourgers themselves cross the borders to shop for other products.
The evolution of prices and the rules concerning excise duty and VAT influence this reciprocal shopping tourism. If, due to inflation or VAT increases, prices rise more in one country than in the neighbouring country, this affects shopping tourism and consequently retail in the border region.
There does seem to be a pattern here when looking at vacancy rates by canton. Relatively speaking, the places along the German border have the highest vacancy rates and the border region with Belgium the lowest. We can thus reasonably assume that Luxembourg has become less interesting for German shopping tourists in recent years and more interesting for Belgian ones.