RETAIL REAL ESTATE REPORT GERMANY Hahn Group

Transcription

Hahn
Group
Creating Value with Retail Space
EDI T
8T H
ION
014
2
|
3
201
RETAIL REAL ESTATE REPORT GERMANY
IN COOPERATION WITH
RETAIL WAREHOUSE CENTER EK3 KAMP-LINTFORT
DEVELOPMENTS 2012/2013 AND FUTURE TRENDS:
GERMANY MAINTAINS ITS UNIQUE ECONOMIC POSITION IN THE EURO AREA
CONSUMER SPENDING REMAINS A KEY GROWTH DRIVER
RETAILERS GENERALLY OPTIMISTIC
ONLINE RETAIL CONTINUES DYNAMIC UPWARD TREND IN Non-food BUSINESS
FOOD RETAILING STORE FORMS AND RETAIL WAREHOUSE STORES REMAIN MOST
SOUGHT-AFTER FORMATS FOR STREET SIDE MERCHANTS
GERMAN AND INTERNATIONAL INVESTORS ON THE LOOKOUT FOR GERMAN RETAIL
PROPERTIES
B LOCATIONS AND MANAGEMENT-INTENSIVE PROPERTIES SHIFTING INTO
INVESTORS‘ FOCUS
MEDIUM-SIZED CITIES BECOME ATTRACTIVE INVESTMENT REGIONS
INVESTORS VIEW ONLINE RETAIL AS INFLUENCING FACTOR BUT NOT AS THREAT
INVESTORS EXPECT STABLE DEVELOPMENT OF RETURNS
4 | CONTENTS
CONTENTS
Editorial
1 General Economic Environment
1.1 Germany‘s solid economic development within crisis-ridden Europe
1.2 Consumer spending continues as key growth pillar
6
9
10
11
2
2.1
2.2
2.3
2.4
Development trends in German retail
Developments and trends in 2012 / 2013
Development of space declining for the first time-performance per unit of floor space still rising
Battle for market shares
Online retail on the fast track
15
16
18
19
20
Sideline discussion: Online vs. bricks-and-mortar? Complementary please!
22
3 Current trends in food retail
3.1 Development trends in food retail
3.2 Developments and trends at drug stores
25
26
31
4
4.1
4.2
4.3
4.4
Development trends in German non-food retail
General trends
Developments and trends in shoe retail
Trends in retail warehouses for electronics and home entertainment
Developments and trends in the DIY market segment
37
38
40
43
45
Sideline discussion: Focus on medium-sized cities - success from taking the center ground
49
CONTENTS | 5
5 The German retail investment market - 2012 to summer 2013
5.1 Commercial real estate market still surging ahead
5.2 Retail properties still in demand
5.3 Players in the German retail investment market
5.4 Stable peak returns in the retail segment
5.5 Outlook
53
54
55
62
65
66
69
Sideline discussion: the current environment for real estate financing
6 CBRE analysis of German retail property rents
6.1 Methodological approach
6.2 Analysis of shopping centers rents
6.3 Analysis of retail warehouse centers rents
73
74
75
81
7 Developments on the German retail rental market
7.1 Demand for retail space continues
7.2 The most expansive tenants at a glance
8 Results of the Hahn Group‘s summer 2013 expert survey 8.1 Retailers’ expansion plans and fundamental future outlooks
8.2 Retail property investors’ investment plans
89
90
94
99
100
106
114
Production credits
6 | EDITORIAL
EDITORIAL
With its steady upward development the German economy continues to hold a gratifying special
position in an otherwise crisis-ridden euro area. Strengthened by strong demand for its exports, a high
level of employment and stable consumer spending the outlook for the current year is also good and
above average.
Consequently, German retail properties are witnessing ongoing strong demand, both from domestic
as well as international investors. With returns moving either sideways or slightly down, the volume
of transactions on the investment market is limited less by the very robust demand but merely by the
availability of suitable investment properties.
A closer look reveals that developments throughout the retail landscape and on the real estate market
are by no means static but instead characterized by strong dynamic trends. The influencing factors of
technology and demography in particular are bringing significant changes with them. E-commerce is
gaining traction and brick-and-mortar operators are experimenting with many new formats and using
the opportunities of online retailing, as well as the opportunities afforded by an ageing society.
We will discuss this in chapters 3 and 4 of the report.
Such an environment undoubtedly holds ample opportunities for real estate investors, who, as our
sideline discussion on page 49 and chapter 5 shows, are also to be found outside the metropolitan
regions. Generally it is up to the investors to weigh which property type with what segment mix
represents a future-oriented asset and how it should be set-up to meet changing shopping
behavior. Chapter 8 outlines the criteria that are currently preeminent for the investment decisions
of real estate investors.
EDITORIAL | 7
The eight edition of the Hahn Retail Real Estate Report 2013 / 2014 has been prepared this year once
again in cooperation with our partners GfK GeoMarketing and CBRE GmbH. In chapters 1 through 4
the GfK examines the developments in German retail and describes trends in individual industries.
In Chapters 5 to 7, CBRE addresses the German investment market for retail properties, focusing once
more on an overview of rental activities. The findings from Hahn Group‘s summer 2013 expert survey
are detailed in chapter 8, offering you an up-to-date insight into the market perception of key actors
in the retail and real estate investment industry.
We hope you will find this report enjoyable reading.
Michael Hahn CEO HAHN-Immobilien-Beteiligungs AG
Thomas Kuhlmann
Member of the Board of Management
RETAIL WAREHOUSE CENTER ZÜLPICH
0.7
PERCENT
01
GENERAL ECONOMIC
ENVIRONMENT
GDP growth 2012
GERMANY’S ECONOMIC PERFORMANCE
REMAINS STABLE
0.8
PERCENT
Increase in private consumer
spending 2012
6.8
PERCENT
German unemployment rate
for 2012
ACCELERATED ECONOMIC GROWTH
EXPECTED FOR SECOND HALF OF 2013
WEAKENING CHINESE ECONOMY
DAMPENS DEMAND FOR EXPORTS
FROM GERMANY
CONSUMER SPENDING CONTINUES TO
BE KEY PILLAR FOR GERMAN ECONOMY
STRONGER GROWTH FORECAST FOR
2014
10 | GENERAL ECONOMIC ENVIRONMENT
1.1 GERMANY‘S SOLID ECONOMIC DEVELOPMENT WITHIN CRISIS-RIDDEN EUROPE
In 2012 the German economy once again proved its stability. While the economic and fiscal problems
of most countries in the euro area translated into a slightly negative development of the real gross
domestic product (GDP), the German economy grew by 0.7 percent. This meant that economic growth
for 2012 fell significantly short of the strong preceding years. The main factor here was a weaker
fourth quarter with declining exports.
At the start of 2013 the German economy showed signs of uncertainty and was, among other
things, hampered in the construction sector by a persistent winter. The second quarter saw business
performance rebounding again. Alongside stronger export demand from South-East Asia and the
USA, the main growth drivers were the construction industry and domestic economic demand.
The positive groundswell of the latest economic developments are also evident in the curve of the
Ifo business climate index. The positive outlook for exports have resulted in an expansion of
production plans, above all in the manufacturing sector.
IFO BUSINESS CLIMATE INDEX FOR GERMAN
TRADE AND INDUSTRY
Index figures, 2000 = 100, seasonally adjusted
in %
125
120
115
110
105
100
95
90
85
80
75
2000
2001
2002
2003
Source: ifo Institut für Wirtschaftsforschung
2004
2005
2006
2007
Ifo business climate
2008
2009
2010
Assessment of business situation
2011
2012
2013
Business expectations
GENERAL ECONOMIC ENVIRONMENT | 11
The slow-down in China‘s economic development, already on the horizon the year before, is likely to
impact the German export industry in the second half of 2013. Nonetheless, the outlook for the
further course of the year foresees an upward business performance as against the first half year.
All in all, expected real economic growth is estimated to come to around 0.6 percent in 2013.
Looking ahead to the upcoming year the general conditions appear to be even more favorable for the
German economy. The historically low interest rates are one key aspect, offering attractive credit
conditions and strengthening Germany as an investment location. Accordingly, the outlook for 2014
once again projects stronger GDP growth of close to two percent, underlining the stability of the
German economy within the euro zone.
ECONOMIC PERFORMANCE IN
GERMANY AND EUROPE
Change from previous year
2010
2011
2012
2013*
2014*
GDP (real) – Euro area
2.0 %
1.5 %
-0.6 %
-0.6 %
0.7 %
GDP (real) – Germany
4.2 %
3.0 %
0.7 %
0.6 %
1.9 %
CPI (Consumer Price Index) – Euro area
1.6 %
2.7 %
2.5 %
1.6 %
1.5 %
CPI (Consumer Price Index) – Germany
1.1 %
2.1 %
2.0 %
1.6 %
1.8 %
Private consumer spending (real) – Euro area
0.8 %
0.2 %
-1.3 %
-0.6 %
0.2 %
Private consumer spending (real) – Germany
0.6 %
1.7 %
0.8 %
0.8 %
1.1 %
Unemployment rate – Germany
7.7 %
7.1 %
6.8 %
6.9 %
7.0 %
* Projected
Source: ifo - Economic Projection 2013 / 2014, June 2013
12 | GENERAL ECONOMIC ENVIRONMENT
1.2 CONSUMER SPENDING CONTINUES AS KEY GROWTH PILLAR
Consumer spending by private households has become a key pillar of Germany‘s economic performance
since 2010. This positive trend was equally evident in 2012. While the financial crisis saw spending
by private households in the euro area as a whole drop by 1.3 percent, private consumption went up
0.8 percent in Germany.
Following a weaker fourth quarter 2012 the Germans‘ spending propensity was noticeably up again
at the start of the year. According to the ifo institute it is the ongoing positive developments on the
labor market, higher collective bargaining agreements and a lower rate of contribution to the public
pension scheme that aided consumer spending. Moreover, because of the historically low interest
rates, the falling savings rates also furthered this development.
GFK CONSUMER CLIMATE FOR
GERMANY
Index figures
9
8
7
6
5
4
3
2
1
Nov
2009
Jan
2010
Mar
2010
May
2010
Jul
2010
Sep
2010
Nov
2010
Source: GfK Consumer Climate Index – GfK Group
Jan
2011
Mar
2011
May
2011
Jul
2011
Sep
2011
Nov
2011
Jan
2012
Mar
2012
May
2012
Jul
2012
Sep
2012
Nov
2012
Jan
2013
Mar
2013
May
2013
GENERAL ECONOMIC ENVIRONMENT | 13
Expectations for the second half of 2013 are cautiously optimistic for German consumer spending.
Rising social security payments, higher pensions in Eastern Germany and the introduction of
child-care benefits („Betreuungsgeld“) are all set to strengthen consumer spending in the third
and fourth quarters. Shoring up this development is the projected increase in employment figures
of approximately 250,000 in 2013. The expectation is for private consumer spending to climb by
1.1 percent in 2014, thereby making it once again a growth pillar for the German economy.
Growing consumer spending is also reflected in the consumer climate index for Germany measured
each month by the GfK Group. After a slight drop toward the end of 2012, the mood among consumers
has been steadily upbeat since the start of 2013. Thus, the euro crisis in the neighboring European
states has not yet noticeably affected the domestic spending propensity. The prospect of an economic
recovery in the entire euro area in 2014 should give domestic consumer confidence an additional boost
and inject important growth impulses into the German economy.
BoDensee-center friedrichshafen
410
EUR BILLION
Retail revenue 2012
118
Square meters, million
Total sales floor space 2012
02
DEVELOPMENT TRENDS IN
GERMAN RETAIL
GERMAN RETAIL WITH SOLID REVENUE
PERFORMANCE IN 2012
FOOD RETAILING STORE FORMS
GENERATE STABLE MARKET SHARE
RETAIL WAREHOUSES LEAD STORE
FORMS
MAIL ORDER RETAIL WINS SIGNIFICANT
MARKET SHARES FROM DYNAMIC
GROWTH IN ONLINE RETAIL
27.6
EUR BILLION
Online retail revenue 2012
PRODUCTIVITY PER UNIT FLOOR SPACE
UP AGAIN IN 2012
16 | DEVELOPMENT TRENDS IN GERMAN RETAIL
2.1 DEVELOPMENTS AND TRENDS IN 2012 / 2013
Following successful revenue years in 2010 and 2011, German retail generated yet another solid
revenue performance in 2012.
For 2012 the German Federal Statistical Office reports nominal retail growth in the strict sense of
approximately 1.8 percent. The revenue increase was therefore slightly below that of the preceding
years, mainly due to weaker results generated in the second half of 2012. Taking into account general
price increases, retail revenue (in real terms) remained on the level of the year before.
According to figures from GfK the total retail revenue volume for 2012 came to around
EUR 410 billion.
Revenue performance during the first six months of 2013 was in line with the previous year‘s trend.
According to preliminary figures from the Federal Statistical Office, retail revenue gained 0.5 percent
in nominal terms from the same period last year, equivalent to an slight decrease of 1.0 percent after
adjustment for inflation.
PERFORMANCE OF THE RETAIL REVENUE SHARE OF
CONSUMER SPENDING
in %
in EUR bn
1,800
45
1,600
40
1,400
35
1,200
30
1,000
25
800
20
600
15
400
10
200
5
0
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
* Projected
Source: GfK GeoMarketing GmbH, based on Federal Statistical Office, Wiesbaden, and Eurostat.
2008
2009
2010
2011
2012
2013*
2014*
Consumer spending
Retail revenue
Retail share of consumer spending
DEVELOPMENT TRENDS IN GERMAN RETAIL | 17
After the share of retail spending in consumer spending had increased slightly for the first time in
2011, the steadily declining trend, evident over the previous years, continued again in 2012. The retail
share amounted to around 26.9 percent for last year. Consequently, retail only managed to benefit
slightly from higher consumer spending, while other usages, such as living, energy, services, gained
further in importance.
A look at the revenue performance of individual merchandise groups in the current year 2013 reveals
a heterogeneous development. Registering a nominal revenue gain of 2.4 percent (-0.1 percent after
adjustment for inflation), food retail stands out from the total market‘s revenue performance during
the first half of the year. Not least because of the persistent long winter weather, the retail segments
in textiles, apparel, shoes and leather goods grew only marginally in nominal terms (+0.2 percent) and
after adjustment for inflation incurred revenue losses of 1.2 percent in real terms. The revenue
performance of furniture, household appliances and building materials also declined. A nominal
revenue drop of 3.3 percent compares to an only slightly smaller decrease of 3.1 percent after
adjustment for inflation. This is down to declining price trends in this segment. Mail order revenue
again recorded above average gains, generating a nominal increase in revenue of 8.2 percent (in real
terms +7.5 percent). While conventional mail-order sales were clearly falling, as in the years before,
this development was more than compensated for by the performance of the online trade.
The projection for the full year 2013 are for a slightly lower nominal growth year-on-year
with retail revenue gains down by 0.5 percent. These assessments were confirmed by the
decision-makers of large-store retailers that were surveyed for this report.
2.2 DEVELOPMENT OF SPACE DECLINING FOR THE FIRST TIME –
PERFORMANCE PER UNIT OF FLOOR SPACE STILL RISING
For the first time since the turn of the millennium Germany‘s retail sales floor space declined last year.
While the preceding years had seen appreciable growth from new openings and extensions of retail
warehouse and shopping centers, increasing market consolidation trends and above all the insolvency
of Schlecker had a dampening effect on sales area developments in 2012. As a result the total sales
floor space decreased 0.2 million m² last year, to about 118 million m², equivalent to about 1.45 m²
per capita.
Due to this slight decrease in sales floor space, with simultaneous revenue growth, German retail
managed to increase its average productivity per unit of floor space once again significantly (revenue
per m² sales area). At around EUR 3,470 per m² the figure is closing in again on the pre-crisis level
(approx. EUR 3,500 per m²). The average productivity per unit of floor space in German shopping
centers was marginally down. Though at EUR 4,100 per m² retailers are generating a significantly
higher performance per unit of floor space, the figure is nonetheless around EUR 100 per m² less than
the year before.
On the one hand, the current year has seen the realization of a number of large-scale projects, such
as the Skyline Plaza in Frankfurt and the IKEA Scandinavian Center in Lübeck. A number of Schlecker
branches that were closed the year before should also be rented out again. On the other hand, the
insolvency of Praktiker AG would suggest that a number of DIY areas will be taken off the market in
the course of this year. All in all, the assumption is for sales areas to increase slightly in Germany
despite the given trend towards market consolidation. Given the concurrent slight revenue growth this
should generally result in stable productivity per unit of floor space.
The survey of decision-makers in large-store retail also reveals a generally positive trend in terms of
demand for store space, although it is more restrained / in comparison with previous year findings.
In terms of average store size, around half of the respondents expect that sought-after floor spaces
will remain more or less constant.
2.3 BATTLE FOR MARKET SHARES
The structural shifts of market shares between the different store types and sales channels in German retail
is more and more determined by the increasing importance of mail order. This in turn is essentially a result of
the dynamic growth of E-commerce.
Given the sustained growth of the e-commerce segment, the GfK reckons that mail order will increase its
market share in German retailing by another 0.7 percentage points in 2013 to 9.5 percent.
E-commerce‘s strong growth contrasts with slackening dynamics in the shifts between brick-and-mortar
store types. Even store types with positive revenue developments, such as supermarkets and discounters,
could not extend their market shares in 2012 in view of the strong growth in mail order retailing. Alongside
the department stores and conventional specialty retailers, whose market shares have been falling for years,
the non-food retailer chains, retail warehouses and hypermarkets/superstores are all likely to lose market
shares this year.
The news regarding the current sales crisis of Karstadt seem to suggest that department stores are also set
to lose further market shares in future. Though in the first quarter 2013 Galeria Kaufhof registered a revenue
gain on a like-for-like basis, the closure of branches in 2012 had led to an overall drop in revenue volume.
SHIFTS IN MARKET SHARE IN GERMAN RETAIL
BY TYPE OF STORE
in %*
100
90
80
70
60
50
40
30
20
10
0
2007
11,3
11.6
11.4
11.2
10.8
10.8
10.7
7,2
7.2
7.3
7.3
7.4
7.4
7.4
7.4
11,8
3,1
12.8
2.9
12.8
2.7
12.7
2.6
12.8
2.6
12.8
2.4
12.8
2.3
12.8
2.2
22,8
23.1
23.4
23.6
23.8
23.6
23.5
23.5
23,2
21.6
21.2
21.0
20.5
20.2
19.9
19.7
13,8
13.9
14.0
14.2
14.3
14.1
13.9
13.9
6,7
6.8
7.1
7.3
7.9
8.8
9.5
2008
* Rounding differences possible
** Projected, Source: GfK GeoMarketing,
based on Federal Statistical Office
2009
2010
2011
2012
Hypermarkets, superstores
Supermarkets
Retail warehouses
Conventional specialty retailers
2013 **
Food discounters
Non-food retail chains
10.6
9.9
2014 **
Department stores
Mail order
In addition, it was announced in mid-June that three Kaufhof stores, in Düsseldorf, Augsburg and Heilbronn,
are earmarked for closure.
Despite marginally lower market shares, at around 23.5 percent retail warehouses account for the biggest
market share for the last five years among the different store types of German retail. Up until 2010 they
had been continuously expanding their share. As of 2012 this development flattened out, which in this
segment is also certainly due to the increasing significance of E-commerce. All the same, the long-term
assumption is that retail warehouses will be able to defend their leading role among the retail store types,
in the future as well.
2.4 ONLINE RETAIL ON THE FAST TRACK
As expected, online retail wrote another chapter in its success story last year and the upcoming chapter
also seems to promising. Thus, the growth dynamics of E-commerce improved once more in 2012
compared to the preceding years.
According to data published by Germany’s BVH mail-order retail association, online retail revenue climbed
another 27 percent to around EUR 27.6 billion. Internet retail now represents about 70 percent of all
EVOLUTION OF REVENUE IN GERMAN LONG-DISTANCE RETAIL IN 2012
in EUR bn
50
43.5
45
39.3
40
34.0
35
30
27.6
25
20
33.5
30.3
29.1
15.5
15
21.7
18.3
13.6
12.3
12.0
11.7
10
10.0
5
0
2009
2010
Source: Bundesverband des deutschen Versandhandels
(bvh - German E-Commerce and Distance Selling Trade Association).
2011
2012
Total long-distance retail
Projected 2013
E-commerce
Conventional mail order
long-distance retail. Despite shrinking results in the classic channels, the bottom line is that distance
retailers are recording increasing shares in Germany‘s total retail market thanks to the strong gains in
E-commerce.
For the current year the ‚bvh‘ industrial association again expects revenue gains of over 20 percent in
E-commerce. Conventional mail-order, on the other hand, is expected to lose further ground, with more
than three quarters of total mail order sales for 2013 being attributable to E-commerce.
The growth of E-commerce not only adversely affects conventional mail-order but is also putting more
and more pressure on street side retail. Many retailers that started out as bricks-and-mortar stores are
increasingly countering this trend with multi-channel and/or cross-channel concepts. Among the latest
cross-channel providers is the fashion chain P&C from Düsseldorf, who joined the ranks in spring 2013.
Many years of development preceded the launch with the domain ‚Fashion ID‘. One major German apparel
chain younger customers are still missing in the Internet is New Yorker, which has so far shunned the
implementation of its own online shop.
At around 40 percent the lion‘s share of online revenue is generated by the so-called Internet pure players,
including providers such as Amazon and Zalando. This group of mail order companies managed to expand
its market position still further in 2012, generating a revenue growth of around 42 percent. They are
followed in second place by multi-channel mail-order retailers (catalog + Internet), with a market share
of almost 31 percent. Despite revenue gains of around 21 percent, this group registered falling market
shares. Online mail order houses with bricks-and-mortar origins, on the other hand, extended their market
share and generated significant revenue gains of approximately 35 percent. The smallest revenue gain was
recorded by power sellers on eBay, who consequently lost market shares to other mail order retailers and
dropped just short of 10 percent.
About a fifth of online revenue, equaling approximately EUR 6 billion, was generated with apparel in
2012, followed by home entertainment and other electronic articles, at EUR 3.5 billion, and computers/
periphery at around EUR 2.3 billion (13 percent and eight percent market shares respectively).
The merchandise group telecommunication, cell phones and accessories almost doubled its revenue
year-on-year (+94 percent). Other groups of merchandise that increased revenues were drugstores /
cosmetics / perfume (+67 percent), household goods (+61 percent) as well as furniture / decorative
articles (+58 percent) although their market shares are generally rather minor.
Though expected by many, the increase in growth in food E-commerce did not materialize. In comparison
with total E-commerce this segment recorded disproportionately low growth rates of around 15 percent
to EUR 460 million, equaling a market share of merely 0.3 percent of the entire food retail sector.
22 | SIDELINE DISCUSSION: ONLINE VS. BRICKS-AND-MORTAR? COMPLEMENTARY PLEASE!
SIDELINE DISCUSSION: ONLINE VS. BRICKS-AND-MORTAR?
COMPLEMENTARY PLEASE!
Not only is E-commerce conspicuous for its strong growth rates, it generally increases the pressure for
retailing to adjust. At present retailers and investors are agreed that online will not replace brick-andmortar retail. However, in ever more retail segments the street side business is turning from a point-of-sale
toward a touchpoint. What once was a simple shopping trip with little interaction is now turning into a
contextual process with a great degree of information exchange between retailer and consumer.
The fact is that E-commerce will continue to grow. Consumers are forcing retailers to address new channels
and at least review the functions of brick-and-mortar branch networks. One key aspect needs highlighting
in this context: generally customers do not consciously distinguish between street side and online. Most
often their considerations are very practical when selecting the manner of shopping. Consequently the
cross-channel sales strategy must offer the customer not only different sales channels but also the option
to switch easily between the different channels in the course of purchasing. The customer expects
a uniform and coherent brand image across the different sales channels. The ability to choose between
offline and online must be self-evident. Hence, no customer should be put into the awkward position of
having to decide in general for or against street side retail. Instead, it is up to retail to provide him with the
right offer at the right time to suit his situation. Where expansion plans duly take this into account, the
brick-and-mortar retail types successful today will generally retain their proven function for convenient
shopping even in the new overall environment.
The German consumer is deemed more the conservative type. In the past this often led to German retail
being „overtly conservative“. Time and again a breeze of fresh air blew in from abroad, into what has been
termed an extremely tricky German retail market. Often the Internet readies the market for the sweep. It is
often the concepts that start below the radar and cause a stir via YouTube or Facebook campaigns before
stretching out their feelers into Germany with online shops at a suitable time. This is followed up finally
with brick-and-mortar stores, for example the openings of Forever 21 in Vienna and Berlin, which had been
extensively promoted in advance on the Internet.
Equally, niche concepts that initially are only available online are increasingly important today when setting
up brick-and-mortar branch networks. Thus, having barely left the online start-up phase ‚mymuesli.com‘ is
already sounding out top locations within Germany‘s inner cities.
The sudden success of brands without any established physical presence shows retailers the potential that
is to be found in the clever intertwining of Internet and street side store. It can also introduce new ideas
into brick-and-mortar retail.
SIDELINE DISCUSSION: ONLINE VS. BRICKS-AND-MORTAR? COMPLEMENTARY PLEASE! | 23
However, the equation that an online shop equals new applications is too simplistic. A cross-channel
strategy should integrate additional functions that serve brand building as much as service and the
ordering of the merchandise. In addition, it is becoming more and more important to link the physical visit
to a store with online applications and other technological innovations.
Already today it is evident that external pressure weakens the weaker concepts still further and strengthens
the strong ones. Highly successful pure online stores, such as Amazon, are juxtaposed by equally successful
pure offline stores such as Primark. The future of Zalando is as questionable as that of Karstadt. Online
supplements offline, just as offline does online. When switching into the other dimension both spheres
must weigh up the opportunities and risks.
Multi- and cross-channel concepts will undoubtedly gain in importance, although this may not make sense
for every product and brand. Yet, where online applications foster and promote the sale of brick-andmortar products, or vice versa, it holds true that „1+1=3“. Customers consider it a benefit in their purchasing decision when they are free to decide on the manner of contact and purchase. In many sectors retail
companies will therefore have to implement cross-channel strategies, which leave it up to the customer
to choose the most convenient and advantageous way of shopping. Retailers implementing this stringently
will be able to more than compensate for generally falling revenue from their brick-and-mortar business.
In short: E-commerce will establish itself as an additional and obvious sales channel in Germany and will
eventually reach its natural saturation level.
Retail properties will therefore retain their significance as important elements in a multi-channel strategy,
because contact with the brand and products is most sustainable if it is not just virtual. Accordingly, the
street store must be able to meet specific customer requirements, in different locations and with different
set-ups, depending on customer demand. Whether as brand store, flagship store, retail warehouse, or
pick-up station: each one of these branch types has its specific success criteria and requirements in terms
of location, sales area, accessibility or economic feasibility.
Multi-channels and cross channels will drive forward professionalism on the operators‘ side and raise the
demands to be met by the conceptualization and positioning of a retail property.
Retail Park Hückelhoven
160
EUR BILLION
Food retail revenue 2012
3.1
03
CURRENT TRENDS IN
FOOD RETAIL
EDEKA, REWE AND THE SCHWARZ
GROUP CONTINUE AS TOP THREE
AMONG GERMAN FOOD RETAILERS
WITH AROUND 11,800 SITES IN 2012
EDEKA HAD HIGHEST NUMBER OF
FOOD STORES IN GERMANY
PERCENT
Revenue gain 2012 in food retail
7,000
EUR PER M2
Highest average productivity
per unit of floor space in
drugstore segment 2012 (dm)
REWE LAUNCHES NEW CONCEPT WITH
OPENING OF „MADE BY REWE“ BISTRO
METRO SUBSIDIARY REAL,- COUNTS
ON STRATEGIC REORIENTATION
AND MODERNIZATION OF EXISTING
BRANCHES
DM AND ROSSMANN TOGETHER
GENERATE THREE QUARTER OF
GERMAN DRUGSTORE REVENUE
26 | CURRENT TRENDS IN FOOD RETAIL
3.1 DEVELOPMENT TRENDS IN FOOD RETAILING
For 2012 the German Federal Statistical Office reports nominal revenue growth for food retail of around
3.1 percent year-on-year, whereby the inflation-adjusted increase is substantially lower at 0.4 percent.
According to figures from GfK the segment generated around EUR 160 billion in revenue in 2012.
Given the ongoing good consumer climate, general revenue performance for the current year is expected to
be clearly positive.
The ranking between Germany‘s top three food retailers with strongest revenue has remained
unchanged. With its 11,8000 sites the Edeka association remains undisputed market leader, not only in
relation to retail as such, but also in food retail. Edeka raise its net revenue in food retail 4.5 percent in
2012 to EUR 41.6 billion. Noteworthy revenue drivers were Netto Marken-Discount as well as the
independent retailers in the Edeka association, whose revenue growth of 6.5 percent was above average
in 2012. At the same time the total number of sites decreased by around 1.7 percent, due to the closure
of smaller formats as well as large-area Marktkauf hypermarkets. Nonetheless, the total sales floor space
increased slightly in the wake of extension to existing stores and the ongoing expansive new development
of E-centers and Netto Marken-Discounters. The Edeka association sold its equity investment in Netto
Supermarkt GmbH & Co., Stavenhagen, during the course of the year 2012. Conceptually, Edeka puts great
emphasis on appealing shop fittings and high-quality store design to foster the customers‘ shopping
experience.
Second-biggest food retailer is the Schwarz Group with its Lidl discounter format and its Kaufland large
stores. Following a satisfactory fiscal year 2012 the Group registered total revenue of EUR 26.5 billion.
Both sales channels increased revenue, with Lidl 1.3 percent up and Kaufland generating 3.1 percent more
revenue. In line with general market developments Lidl decelerated its expansive drive and now operates
around 3,300 stores with Kaufland having almost 640 stores nationwide. For the further expansion of
Kaufland the Neckarsulm-based company is increasingly looking for centrally located and/or inner-city
sites, as has been successfully demonstrated with the opening in Essen-Borbeck in December 2012.
CURRENT TRENDS IN FOOD RETAIL | 27
REVENUE PERFORMANCE OF FOOD RETAILERS
IN 2012
2011 net revenue 2012 net revenue
in EUR bn
in EUR bn
Change
in revenue
Company
Sales line
Aldi
Aldi Nord
10.0
10.1
0.9 %
Aldi Süd
12.0
12.7
5.8 %
Total
39.8
41.6
4.5 %
Independent retailers
20.0
21.3
6.4 %
Company-run retailers
8.4
8.3
-0.5 %
Netto Marken-Discount
10.7
11.3
5.2 %
Bakery products
0.7
0.7
0.0 %
Metro*
real,-
8.1
8.1
0.1 %
Rewe Group*
Total
21.8
22.7
4.0 %
Full-line
15.2
15.9
5.0 %
4.9
5.5
12.0 %
13.2
13.9
5.9 %
6.7
6.8
1.7 %
Total
26.0
26.5
1.9%
Edeka*
- of which merchants
- of which: supermarkets
Penny
Schwarz Group
Lidl
14.3
14.5
1.3 %
Kaufland, including
Handelshof
11.7
12.0
3.1 %
Globus*
Globus hypermarket
3.0
3.2
5.1 %
Norma
Norma
2.3
2.5
5.7 %
Tengelmann
Kaiser´s / Tengelmann
2.0
2.0
0.7 %
Source: GfK GeoMarketing based on TradeDimensions and *annual reports / corporate press releases
Rounding differences possible
In the food segment the Rewe Group comes third and generated net revenue of EUR 22.7 billion in fiscal
year 2012. With a gain of almost four percent year-on-year the retail Group almost managed to generate
the sales growth of the segment leader Edeka. The independent merchants, who are mainly to be found
in the supermarket and superstore segment, are making a substantial contribution toward this positive
showing, also at Rewe. The development at the discounter Penny is down to a conceptual realignment:
a new store layout and optimized assortments, including new in-house brands, have already translated
into marginally higher revenue whilst the number of sites is simultaneously declining.
In addition, in the course of the current year 2013 the Rewe Group will transfer its 55 toom hypermarkets
into the superstore business of the respective Rewe region. The comprehensive relaunch of this sales
channel is already in the implementation phase. At the end of 2013 the first two pilot markets in
Egelsbach and Darmstadt are set to open their doors with a new large-area fresh and non-food concept.
The assumption is that in future the markets will be registered under the REWE umbrella brand, although
it is presently not known whether the stores will carry the addition „XL“ or „Center“.
The recently completed majority investment in WASGAU, a supermarket operator with regional focus on
the South-West of Germany (Rhineland-Palatine and Saarland), saw the Group expand its market position
in the food segment further.
In addition, the Rewe Group is entering conceptually uncharted territory: in close proximity to its recently
opened store at Cologne‘s Waidmarket the company is about to launch its new bistro concept entitled:
„Made by Rewe“. According to unofficial sources, the catering concept was developed together with the
Vapiano founder Korzilius. Covering an area of around 200 m² it is to be integrated into the area in front
of the supermarket‘s cash desks, converting into a wine bar in the evening.
Moreover, Rewe Group attests the satisfactory revenue performance of the convenience format Rewe to
go, which so far is operative at four sites, all of which are located in the state of North Rhine-Westphalia.
Their expansion into further high-frequency locations within German inner-cities is to be expected. Their
Dutch counterpart „Albert Heijn to go“, by the Ahold Group, also plans to open further convenience stores
in Germany. So far the Dutch were represented with stores in Düsseldorf, Essen and Aachen, offering
a portfolio of products ranging from meals and snacks for in-between or to take away.
Further down the revenue rankings for 2012 are Aldi Süd with EUR 12.7 billion, Aldi Nord at
EUR 10.1 billion and the Metro Group (real,-: EUR 8.1 billion) as well as Kaiser‘s / Tengelmann with
EUR 2.0 billion net revenue.
SITE DEVELOPMENT AND PRODUCTIVITY CHANGES PER UNIT OF FLOOR SPACE FOOD
RETAILERS IN 2012
Company
Aldi
Edeka
Sales channel
(selection)
Type of
store
Locations in 2012
No.
Change
Average
sales floor
space in m2
Sales floor
productivity
2012 (gross)
EUR per m2 Change
Aldi Nord
DC
2,477
-1.6 %
820
5,510
1.1 %
Aldi Süd
DC
1,807
0.6 %
800
9,640
4.5 %
11,763
-1.7 %
900
4,000
3.1 %
Total food retail
division
Low Price (LP)
DC
681
-1.0 %
640
3,080
2.1 %
Netto
DC
4,093
0.5 %
750
4,020
1.2 %
E-Center
SS
358
2.9 %
3.230
4,080
3.9 %
Marktkauf
HM
152
-5.6 %
5.510
4,070
4.0 %
Metro
real,-
HM
313
-1.3 %
7.020
4,310
2.7 %
Rewe Group
Total food retail
division
6,627
-2.3 %
1.050
3,910
3.0 %
Penny
DC
2,305
-4.6 %
700
4,590
1.0 %
Rewe
SM / SS
3,127
1.0 %
1.400
3,710
4.2 %
Toom
HM
55
-3.5 %
5.870
3,800
4.1 %
Lidl
DC
3,299
0.6 %
820
5,920
0.0 %
Kaufland
SS / HM
627
1.6 %
4.340
4,860
1.9 %
Norma
DC
1,279
0.4 %
690
3,080
3.9 %
Globus
Globus
HM
44
4.8 %
11.650
6,140
4.9 %
Tengelmann
Kaiser´s /
Tengelmann
SM / SS
516
-1.7 %
850
4,940
1.0 %
Schwarz Group
Norma
DC
Discounter
SM
Supermarket
Source: GfK GeoMarketing based on
SS
Superstore
TradeDimensions (as per December 31, 2012)
HM
Hypermarket
Looking at the location development in the discounter segment, it is noteworthy that the total number
of locations has declined year-on-year. This is primarily due to the consolidation of the sales network
at Penny and Aldi Nord. But also the other operators are generally more restrained in their operations
as their expansion did not compensate closures.
Last year, Aldi Nord started to apply conceptual changes to the store layout and design of its branch
network. Thus, stores now come with larger window fronts, wider alleys and brighter tiles. In addition,
the stores now integrate fully automated bakery stations and the portfolio now also includes selected
products from Ferrero, such as Nutella.
Productivity per unit of floor space serves as an indicator of the strength of the individual sales
channels, as it maps revenue generated per m² of sales area. In 2012 almost all food retail providers
surveyed here managed to increase their performance per unit of floor space. However, the price rises
in food retail played a key role here, as they did in the total market‘s development (awkward in the development of the entire market). As had been expected, Aldi Süd came first by a long margin
with an average performance per unit of floor space of around EUR 9,640 per m² in 2012. With its
hypermarkets, Globus also clocked up a remarkable performance per unit of floor space of approx.
EUR 6,140 per m², followed closely by Lidl (around EUR 5,900 per m²) and Aldi Nord (around
EUR 5,500 per m²).
The weakest performance per unit of floor space among the German food retailers analyzed was
measured for Norma and Niedrig-Preis, both at around EUR 3,080 per m², whereby Norma was able to
grow 3.9 percent against the previous year.
Despite its very stable market shares, for years special attention has been on the development of the
hypermarket segment (> 5,000 m² sales area) as flagship stores among the store types in Germany
retail After many years of concentration, the debate has been dominated by issues such as downsizing
and clearing out the non-food ranges. Some operators are still looking to find the right strategy for
large-area stores. Thus, the integration process of the Marktkauf hypermarkets into Edeka‘s regional
companies has been going on for almost six years now. The Rewe Group‘s toom hypermarkets has still
to face this step.
The Globus Group from St. Wendel continues to be successful with its ‚Mega-sized areas‘ averaging
11,650 m² (sales floor space). Concentrated above all in the Rhine-Main area, the company has
consolidated its network by taking over previous real,- locations.
Metro‘s subsidiary real,- is pressing ahead with the modernization of its stores. In June 2013 it
announced that it would invest EUR 500 million over the next three years in new cash desks, RVMs
(reverse vending machines), parking spaces and shop trolleys. So far real,- has integrated so-called
concept modules into the stores as part of its strategic reorientation, including for example the
in-house bakeries, which offer over 90 varieties of freshly-baked goods.
In 2012 the hypermarkets of the largest operators generated gross revenue of around EUR 23 billion.
At almost EUR 8.5 billion the lion‘s share of this revenue is taken by the real,- hypermarkets of the
Metro Group, followed by Kaufland with around EUR 5 billion and Globus at around EUR 3.2 billion.
As far as performance per unit of floor space is concerned, the ranking remained unchanged with
Globus hypermarkets as undisputed leaders at EUR 6,140 per m². Kaufland and real,- generate average
area performances of around EUR 4,720 per m² and EUR 4,290 per m² respectively, while at the other
end toom comes in at approx. EUR 3,800 per m² and Famila as well as Edeka Group‘s hypermarkets
each at around EUR 3,740 per m².
DEVELOPMENT OF PRODUCTIVITY PER UNIT OF FLOOR SPACE FOR HYPERMARKETS
(> 5,000 m² SALES AREA) IN 2012
in EUR / m2 (gross)
7,000
6,140
6,000
5,000
4,720
4,290
3,800
3,700
4,000
3,740
3,350
3,000
2,000
1,000
0
Change from
year before in %
Þ
1.9 %
Þ
2.9 %
Source: GfK GeoMarketing GmbH based on TradeDimensions
à
-2.1 %
Þ
4.8 %
Þ
4.1 %
Þ
0.5 %
Kaufland
Marktkauf / E-Center / E-neukauf
Real
Globus
à
-2.9 %
Toom
Famila
Other hypermarkets
The strategies for developing the online business pursued so far by the food retailers have differed.
This June Kaufland announced that it was working on launching a comprehensive online store.
For the delivery options the customers can choose between delivery at home and click&collect at
the store of their choice. Metro AG is currently reworking its online shops for the real,- hypermarkets,
with a likely relaunch scheduled for November 2013. Rewe is also gradually extended its online offers
and is offering Click&Collect in 12 stores in ten German cities. In addition, Rewe delivery service is
available in the cities of Hamburg, Berlin, Düsseldorf, Cologne, Homberg / Ohm (Hesse), Frankfurt
(incl. Taunus region) and Munich. The service is offered in cooperation with DHL Partner Shops, with
deliveries in two time windows after work (6-8 pm or 8-10 pm), or on the same day, depending on the
products on offer.
The delivery service offered by Kaiser‘s Tengelmann online platform bringmeister.de is currently only
available regionally in Berlin, Munich and Düsseldorf. Edeka, on the other hand, delivers the produce
selected from the Internet nationwide, but does not offer fresh produce in its portal. Shop Mytime.de,
operated by the Dutch retailer Bünting, also delivers nationwide across Germany and provides a wide
range of goods. Next to a surcharge for freshness on orders for refrigerated or frozen articles, it also
charges an additional EUR 10 for late deliveries between 5 and 10 pm. The online activities of the food
discounters have been limited so far. Though Lidl, Norma and Netto Stavenhagen are already offering
non-food articles, the other actors are still holding back.
Among the biggest online pure players are the providers of Lebensmittel.de and saymo.de. Though
both companies deliver their merchandise nationwide, Lebensmittel.de can guarantee delivery on the
following day only for customers in Berlin. saymo.de delivers within two to five working days. Fresh
produce and frozen goods are still missing from the range of the online portal.
So far neither the online shops of the pure players nor the online portals of the stationary retailers
have been entirely convincing. Depending on the platform, the problems currently still encountered
concern the selection of delivery dates, comparatively long delivery times, regionally limited
delivery radius, high shipping costs or an incomplete range of products. So far this has kept the
brakes on consumers‘ willingness to spend online. Compared with other European countries the biggest
obstacles for successful food E-commerce for the retailers are the comparatively low margins and the
German customers‘ lack of willingness to pay for the delivery services accordingly. Although trade in
these goods has not yet reached the same significance in Germany as it already has in the UK or
Switzerland, it nonetheless offers solid opportunities for niche providers and food retailers in
conurbations.
The operators of „Emmas Enkel“ for example have seen a successful start to their regional shopping
concept. „Emmas Enkel“ combines the traditional shopping trip to the counter with the Internet age‘s
innovations: orders can be placed via tablet PC in the store or via smartphone or PC on the move or
from home. In October 2011 „Emmas Enkel“ opened up a small store in downtown Düsseldorf, with a
second location meanwhile opened in Essen.
Germany‘s first digital shopping wall is currently being tested in cooperation between „Emmas Enkel“
and Vodafone on the Düsseldorf campus of the mobile telco company. Employees shop from the
shopping wall using an app and pay directly with their smartphone. The virtual shelf offers retail new
sales opportunities at highly frequented sites such as train stations or pedestrian zones, among other
locations. Customized offers can be made to specific target groups at these sites, with the shopping
wall managed via remote mobile telecommunication.
3.2 CHANGES AND TRENDS AT DRUG STORE RETAIL WAREHOUSES
Following the bankruptcy and subsequent break-up of the Schlecker Group, the drugstore sector had
to restructure itself in 2012. While the preceding years had seen revenue gains by the competitors at
the expense of Schlecker, the focus is now on apportioning the remaining market shares. One-time
effects were observed due to the closing Schlecker stores being sold off. Initially this dampened competitors‘ revenue. Clear winners of the battle for market shares are primarily the drugstore chains dm,
Rossmann and Müller.
The industry followed developments at the Austrian TAP dayli Vertriebs GmbH at first with excitement
but thereafter increasingly with bewilderment. Dayli‘s plan was to take over Schlecker Österreich
(Austria) first and then start their convenience concept in Germany as well, taking over up to 600
Schlecker locations. After the company had to postpone the startup in Germany a number of times and
has meanwhile filed for insolvency in Austria with the closure of 350 stores, the whole issue of dayli
entering the German market seems to be off the cards.
A potential relaunch could be in the offing for ‚ihr Platz‘, after the rights to the business name went
to the Rewe Group in the wake of Schlecker‘s bankruptcy. According to the latest press releases, the
current network of 68 branches is set to expand to 100 sites by 2014.
Ultimately it was dm that benefited most from the Schlecker bankruptcy. The new market leader
increases its gross revenue 18.4 percent last year to around EUR 5.2 billion. Second-placed
Rossmann also clocked up a double-digit growth of 13 percent in 2012, recording total gross
revenue of EUR 4.3 billion. Both drugstore companies are continuing on their expansion course.
Rossmann grew 10.3 percent last year, among other things, by taking over 90 Ihr Platz stores, to bring
its total tally to around 1,772 stores, which is the highest number in Germany. The branch network
of dm also grew from the takeover of Schlecker stores and the invigorated expansion in the North of
Germany, up 8.9 percent to 1,387 stores now.
During fall 2012, Rossmann-Express was launched as a new stationary concept for the Germany
market, offering a convenience-oriented range for travelers in the former Ihr Platz stores in train
stations.
Müller as the third in the segment stands out from its competitors through its significantly deeper
and wider product portfolio. On sales areas of up to 4,500 m2 arranged in the format of a department
store, Müller increased its revenue 6.4 percent in 2012 to around EUR 2.6 billion. Moreover, the
Ulm-based company is increasingly venturing outside its core regions of Bavaria, Baden-Württemberg
and Hesse in the pursuit of a nationwide expansion strategy.
LOCATION PERFORMANCE OF DRUG STORE RETAIL WAREHOUSES
IN 2012
No. of locations
2,000
1,772
1,800
1,600
1,387
1,400
1,200
1,000
800
600
481
400
159
200
0
Change from
year before in %
Þ
8.9 %
Þ
10.3 %
Þ
1.3 %
Þ
3.2 %
dm
Rossmann
Müller
Budnikowsky
2012 was also positive for Budnikowsky. The provider with activities in the greater Hamburg area
increased its revenue by 2.8 percent. Noteworthy is its reconceptualization of smaller sites as well
as a stronger focus on discount offers by introducing its private „Budni“ label.
As regards the individual drugstore chain‘s average productivity per unit of floor space, dm clearly
stands out, at EUR 7,000 per m² outperforming its rivals to take first place. Special mention must
be made of its enormous year-on-year increase of 8.2 percent. Müller likewise managed to increase
its area performance against 2011 to presently EUR 4,410 per m² (+4.8 percent). The revenue of
Rossmann (EUR 5,010 per m², -1.0 percent) and Budnikowsky (EUR 5.280 per m², -0.8 percent), on
the other hand, could not keep pace with the sales area growth, resulting in slightly lower
productivity per unit of floor space.
DEVELOPMENT OF PRODUCTIVITY PER UNIT OF FLOOR SPACE FOR DRUG STORE RETAIL
WAREHOUSES IN 2012
in EUR / m2 (gross)
8,000
7,000
7,000
6,000
5,280
5,010
5,000
4,410
4,000
3,000
2,000
1,000
0
Change from year
before in %
Þ
8.2 %
à
-1.0 %
Þ
4.8 %
à
-0.8 %
dm
Rossmann
Müller
Budnikowsky
OBI, BODENSEE-CENTER FRIeDRIcHSHAFEN
1.4
PERCENT
Growth of non-food
retail revenue 2012
11.5
EUR BillioN
Shoe retail revenue 2012
04
DEVELOPMENT TRENDS
IN GERMAN
NON-FOOD RETAIL
NON-FOOD RETAIL CLOSES 2012 WITH
DAMPENED REVENUE PERFORMANCE
GERMANY STILL IN FOCUS OF
INTERNATIONAL FASHION CHAINS
HIGH GROWTH RATES PARTICULARLY
EVIDENT IN RETAIL WITH
TELECOMMUNICATION DEVICES
GROWTH IN SPORTS RETAIL AND PET
PRODUCTS ABOVE AVERAGE
2,090
EuR pER m²
Highest average productivity
per unit of floor space in
DIY market segment 2012 (Hornbach)
INSOLVENCIES OF PRAKTIKER AG AND
MAX BAHR STIR UP DIY MARKET
SEGMENT
38 | DEVELOPMENT TRENDS IN GERMAN NON-FOOD RETAIL
4.1 GENERAL TRENDS
Compared with the previous years the German non-food retail recorded a more restrained revenue
performance in 2012. Though revenue volume was nominally up by 1.4 percent, this represents
stagnation after adjustment for inflation. The same trend continued throughout the first six months
of the current year, during which non-food retail revenue climbed nominally by merely 0.2 percent,
which is half a percent down after adjustment for inflation.
A closer look at the individual non-food product ranges reveals a situation which in some cases is very
heterogeneous.
Apparel retail for example only managed a weak nominal plus of 0.4 percent. Brick-and-mortar apparel
chains in particular will have felt the pressure from the strong revenue gains in e-commerce.
The apparel discounter NKD is presently in the headlines, as it is looking for a new owner following
an ambitious expansion drive. But the fashion heavyweight H&M also raised eyebrows, especially at
the start of the year, with news that revenue was down. Continuing their location expansion has
meanwhile become a key cornerstone for H&M‘s revenue performance, which nonetheless stabilized
again toward the middle of the year.
Germany continues to be a sought-after region for international chains. Primark, TK Maxx and Co.
have established themselves in the meantime as well known players on the German market, keeping
their expansion drive going. Among the most spectacular openings of recent weeks are those of
Abercrombie & Fitch in Hamburg and Munich, those of „&Other Stories“ (H&M) in Berlin as well as the
openings of Pull & Bear (Inditex Group) and Forever 21 in the direct vicinity.
Small niche providers, like the Austrian streetwear label Blue Tomato, also pushing forcefully into the
German market. Their first stores opened in November 2012, and meanwhile Blue Tomato is also to be
found in Hamburg‘s Alstertal shopping center. The Düsseldorf-based casual wear provider Adenauer &
Co is pressing ahead with its nationwide store expansion, as is the Italian linen and hosiery specialist
Calzedonia.
Slowly but steadily the British fashion chain Topshop is foraging into Germany. After launching an
online store for the German market, its womenswear label Topshop and the menswear label Topman
will be represented with shops to the size of 150 m² in Berlin‘s KaDeWe, in Hamburg‘s Alsterhaus, with
Oberpollinger in Munich and Karstadt in Düsseldorf as of September 2013. The Japanese fashion chain
Uniqlo, on the other hand recently admitted that it was putting its plans for an entry to the German
market on ice for the time being.
DEVELOPMENT TRENDS IN GERMAN NON-FOOD RETAIL | 39
Compared with the total market‘s development, sports retailers generated an above average nominal
revenue increase of 3.1 percent (+1.9 percent in real terms) in 2012. The battle for market shares in
this segment is heating up, given the saturation trends evident in the outdoor market as well as the
ongoing expansion on the producers‘ and the retailers‘ sides. Nonetheless, providers such as
Decathlon or SportScheck are sticking to their ambitious expansion course. For the fall of 2013
SportScheck, for example, announced the opening of the biggest inner-city sports department store
on around 10,000 m² sales area. The company is simultaneously pursuing its smaller „Sport Scheck
kompakt“ format with around 1,200 m² sales floor space. With the latter it also wants to increase its
presence next to the metropolitan regions.
A remarkable development is under way in the so-called consumer electronics segment, which includes
IT and telecommunications as well as home entertainment. Though higher sales volumes resulted in a
significant rise/increase in real terms, the sharp fall in prices in this segment triggered a small nominal
loss in the retailers‘ books.
Pet product retailers, on the other hand, gained revenue both in nominal (+5.5 percent) as well as real
terms (+4.8 percent).
Growth in the DIY segment cooled noticeably in 2012 against the previous year. While nominal revenue
gains in 2011 had come to 2.2 percent, they reached only 0.7 percent in 2012, which translates into a
1.9 percent drop in real terms.
Developments in the household furniture retail look much the same. The 2011 nominal growth of
5.4 percent has shrunk to 1.8 percent in 2012, which still equals real revenue gains of 1.1 percent.
4.2 DEVELOPMENTS AND TRENDS IN SHOE RETAIL
According to figures from the Federal Statistical Office, the German shoe retail generated a small
nominal revenue gain of 0.2 percent in 2012. This means that the shoe segment is a little behind the
wider developments in the German retail market. For years German consumers have been spending
less on shoes, with the share in total consumer spending down 4.3 percent in the period from 2008 to
2012.
According to data from the federation of German shoe retailers (BDSE), the revenue volume generated
in this tricky market environment by shoe retailers was roughly EUR 8 billion in 2012. Adding in sales
with shoes that are made in other stores types, such as mail order, department or fashion stores, the
total market volume for last year amounted to around EUR 11.5 billion.
The undisputed market leader in Germany is the Deichmann Group. With its different formats,
Deichmann, Roland and MyShoes, the Group generated sales of around EUR 1.89 billion last year,
a gain of 3.7 percent. At present Deichmann has a market share of over 16 percent in the German
shoe retail. The Essen-based company continues its expansion drive and managed to raise revenue
like-for-like (I doubt if this will be understood!) in 2012 by 1.5 percent. Growth is based above all
on higher unit sales generated over the Deichmann counter. According to company data the average
purchase volume of roughly EUR 20 has stayed almost constant. In 2013 further locations will be
added to the existing 1,300 stores on the German home market. The plan is to open up 72 new stores,
modernize over 100 branches and close 32 non-profitable sites. The Essen-based company is equally
successful with its online shop. Deichmann is setting itself apart from the competition as it offers
delivery free of shipping costs, irrespective of the order value, and the option of returning the order in
its nationwide dense network of stores.
Coming in well behind in second place is still the HR Group from Osnabrück. Its key sales channel
is the shoe chain Reno. According to company data, the Group managed to generate a small revenue
gain last year. In February of this year Reno opened up a large inner-city branch in Kiel. Alongside
numerous brands such as Dockers, Esprit, GE, s.Oliver or Tampa, the 2,000 m² store for the first time
also includes an Adidas Neo shop. For the current year the company has announced that it wants to
review 10 percent of its portfolio of existing branches. The Osnabrück-based company is likely to close
some locations, although additional new openings are already in the pipeline.
The Siemes Group is the third biggest player among the shoe chains. In 2012 it generated revenue
of around EUR 410 million. With its registered offices in Mönchengladbach the company has a
nationwide presence of 150 locations. Next to the Schuhcenter sales channel with its 140 branches
on sales areas between 800 m² and 2,500 m², mainly located in retail warehouses, the Group also
operates its Siemes Schuhhaus and Leone concepts at downtown sites in Aachen, Düsseldorf and
Mönchengladbach. Since 2010 the company has also maintained an online shop.
The long-established Hamburg based Görtz company is looking back on two difficult years, though
the four percent revenue drop in 2012 was slightly less than the year before. All in all Görtz made
sales of around EUR 387 million last year, which resulted in an annual shortfall of approximately one
million, according to company figures. Last year the company closed 16 locations to lift itself out of
the crisis. Most of the closures affected the Görtz 17 sales channel, which had been geared toward
young consumers but had suffered from a heterogeneous site structure and inconsistent branch
concepts for stores between 30 m² and 400 m². At present the sales channel is being realigned to
focus on higher quality collections, among other things. First successes have been achieved with this
according to corporate statements. The latest press releases, however, suggest that the Otto Group
is considering acquiring a stake in or even taking over the company. Görtz has also been offering its
customers the means to shop online for some time.
In March 2012 the Augsburg-based Bahner Group (Schuh Leiser, Schuhhof etc.) filed for selfadministered insolvency proceedings and thereby laid the groundwork for the comprehensive
restructuring of the company. These insolvency proceedings were terminated after a few months
with the take-over by the Josef Seibel Group. The realization of the restructuring concepts provides
for the closure of around 30 of the 170 Leiser and/or Schuhhof stores, as well as extensive investment
in the existing branch network. At the end of last August, Leiser opened its biggest flagship store
to date (3,000 m²) on the Frankfurt‘s Zeil shopping mile, which includes private labels and above all
labels from the mid- to upper price segment. In addition, Leiser is counting on the cost-reducing
combination of service and self-service, with sales areas also doubling up as storage area.
Alongside the above-mentioned brick-and-mortar providers that have extended their sales channels
with online stores, one of the strongest actors on the German shoe market is the pure Internet player
Zalando. According to the company‘s own figures, Zalando has reached a market share of around four
percent of German shoe retail, which is almost on a par with the HR Group. Despite lower double-digit
growth rates in E-commerce with shoes, Zalando and its peers still have to cope with very high return
ratios, which are often above 50 percent and thus lead to high costs.
The Polish shoe chain CCC is another international player to have announced its market entry into
Germany. This will further stiffen competition. Its first pilot stores are earmarked for Frankfurt and
the surrounding area. If these are successful, the plan is to roll out a Germany-wide expansion.
The envisaged potential is for 800 to 900 locations. So far the Polish company operates over
700 stores in Eastern Europe and is eager to get started in Austria this year. CCC will have its sight
primarily on Deichmann customers, as the CCC range will also be made up solely of low-priced
shoes of their own private label.
4.3 TRENDS IN RETAIL WAREHOUSES FOR ELECTRONICS AND HOME ENTERTAINMENT
According to the Association for home and communication electronics (gfu) and the Gfk, the retail
trade with electronics and home entertainment generated revenue of around EUR 28.8 billion, which
amounts to a 3.8 percent increase over the previous year‘s result. The major sports events of 2012, the
European Football Championship and the Olympics, boosted revenue performance. The termination of
analog satellite broadcasts at the end of April 2012 was another sales impulse.
The current year has witnessed a much more restrained start, with the segment for televisions
recording heavy losses compared to last year‘s revenue.
Nonetheless, for the full year the entire segment can realistically expect a revenue gain of two
percent. The industry recorded growth primarily with telecommunication devices, above all
smartphones, which clocked up double digit revenue increases.
REVENUE PERFORMANCE AT RETAIL WAREHOUSES FOR ELECTRONICS
AND HOME ENTERTAINMENT IN 2012
in EUR bn (net)
12
10
9.6
8
6
4
1.7
2
1.7
2.0
0.5
0
Change from
year before in %
Þ
4.0 %
à
-2.9 %
Þ
1.0 %
Source: Annual reports and press releases of individual companies. These are internal revenue statements.
Ú 0.1 %
-15.5 %
Media-Saturn
EP
Euronics
expert
ProMarkt
According to the bvh, e-commerce in the merchandise groups of home entertainment / electric
articles, computers and peripherals, household goods and telecommunication devices showed a
double-digit increase last year (+33 percent). Taken together, these goods make up around 30 percent
of the entire volume of German online trade. This illustrates once again the great relevance
e-commerce has for the revenue performance of street side merchants.
A look at the revenue volumes of the different German electronics and home entertainment retailers
shows Media-Saturn Holding once again to be the indisputable leader. For the first time since 2009
Media Saturn managed to generate a revenue gain of around four percent. Like-for-like growth comes
to around one percent. Both MediaMarkt and Saturn have meanwhile come to count on multi-channel
strategies and are supplementing their brick-and-mortar outlets with an online store. Media-Saturn
actually expanded its business field last year with its investment in Flip4New. This company from
the state of Hesse is a so-called re-commerce provider, offering customers the means to swap used
electronic articles for vouchers either on saturn.de or in selected Saturn markets. The articles are
inspected and then offered for resale via various sales channels, such as online platforms.
The ElectronicPartner (EP) cooperative and the expert AG specialty retail cooperative also generated
higher revenue volumes last year, climbing 1.0 percent to around EUR 1.7 billion (net, internal revenue)
or by around 6.9 percent to approximately EUR 2.0 billion (net, internal revenue). Both providers are
set to expand in the current year, among other things, because of their acquisition of various Promarkt
sites that the Rewe Group is offering for sale. Not least because of their negligibly small share in the
home entertainment market, the Rewe Group considered the German Promarkt stores to hold no future
as they suffered a 15.5 revenue drop in 2012. Specialist electronics retailers are therefore also seeing
increasing concentration trends.
Subject to the approval by the Federal Cartel Office, the EP cooperative is set to take over ten
Promarkt locations and integrate these into its Medimax specialist retail concept. Parallel to
expanding its branch network through acquisitions, EP is planning ten new openings in the current
year to increase its German-wide presence to over 125 locations. By the end of October this year,
expert AG plans to gradually take over an additional 16 locations from Promarkt.
While Media-Saturn, EP and expert have all returned to the growth path, Euronics continues to record
declining revenue figures (-2.9 percent in 2012). According to the company, Euronics is planning to
vigorously extend the retail warehouse segment and will not preclude the possibility of taking over
selected Promarkt branches.
4.4 DEVELOPMENTS AND TRENDS IN THE DIY MARKET SEGMENT
In 2012 the DIY market segment could not continue the positive revenue trend of previous years.
According to the BHB trade association for DIY companies, the segment generated gross revenue of
around EUR 18.6 billion, thereby maintaining its high sales level, even though the nominal volume was
0.6 percent lower than the year before. With the exception of the rain-drenched April, revenue for
the first eight months was generally satisfying. Demand fell, however, in the late fall so that 2012
as a whole closed with a decrease in revenue.
The nationwide number of DIY markets declined in 2012. According to the BHB and GfK it fell by
52 to 2,390 markets (minus two percent). These statistics list those markets that have at least
1,000 m² heated sales area and a separate invoicing system, as well as a product range consisting in
the main of DIY, building and gardening merchandise. The total sales area for German DIY markets
came to 13.4 million m² in 2012, slightly less than the figure for the previous year (13.5 million m²).
The disproportionate drop in total sales area in relation to a reduced store network would suggest on
the one hand that it was primarily the smaller objects that were being discontinued, and on the other
hand that new markets were opening with above average bigger sales areas.
FLOOR SPACE DEVELOPMENTS FOR DIY MARKETS
IN 2012
in million m2
3.0
2.7
2.5
2.1
2.0
2.0
1.5
2.2
1.3
1.0
1.0
0.7
0.7
0.5
0.2
0
Change from
year before in %
Þ
1.2 %
à
-3.6 %
Þ
1.5 %
* Newly founded
Source: GfK GeoMarketing GmbH based on Dähne Statistik diy 2013
Þ
2.0 %

-0.7 %

0.6 %
Þ
Obi
Praktiker / Extra / Max Bahr
Bauhaus
1.4 %

5.1 %
Zeus
Rewe (Toom / B1)
Hornbach
Globus / Hela
Hellweg
Baywa / Hellweg*
Though these figures reflect market saturation trends within the industry segment, a second look
reveals that the situation in the DIY market is very differentiated. Developments are highly dependent
on the operator and essentially influenced by the varyingly successful policies of the different actors
as regards their site, assortment and price policy.
Thus, the market leader OBI managed to extend its lead in 2012 with revenue gains of around
1.4 percent to now EUR 3.8 billion, setting itself very much ahead of Praktiker / Extra / Max Bahr.
OBI also extended its total sales floor space to around 2.7 million m², an increase of 1.2 percent, by
opening new branches in Göppingen and Schwäbisch Gmünd in the Spring of 2012. The agenda for
2013 includes further new openings. OBI‘s productivity per unit of floor space of EUR 1,410 per m²
matches the performance of the previous year and sits squarely in the middle of the peer group.
Due to a 4.3 percent drop in revenue to EUR 2.6 billion, the markets Praktiker, Max Bahr as well as
Extra by Praktiker AG, which had come second the year before, could not defend their position in
2012. Among all German DIY operators their revenue puts them into third place behind Bauhaus.
REVENUE PERFORMANCE OF DIY MARKETS
IN 2012
in EUR bn (gross)
4.0
3.8
3.5
3.0
2.6
2.7
2.4
2.5
2.4
2.1
2.0
1.5
1.3
1.0
0.6
0.3
0.5
0
Change from
year before in %
Þ
1.4 %
à
-4.3 %
Þ
1.1 %
* Newly founded
Þ
1.7 %
Þ
1.1 %
Ú 0.0 %
Þ
Obi
Bauhaus
1.4 %
Þ
4.6 %
Zeus
Rewe (Toom / B1)
Hornbach
à
-8.6 %
Globus / Hela
Hellweg
Baywa / Hellweg*
Despite strong financial injection, the situation of Praktiker worsened in 2012, so that the company
had to file for insolvency proceedings in July 2012. Just beforehand, Praktiker reflagged various sites
to Max Bahr. The root problem of Praktiker is to be found in the inorganic growth of its branch
network. In the last thirty years it had taken over various different regional DIY concepts, always
making it difficult to pursue a consistent strategic course. Its putative escape from this situation and
attempt to achieve a stable market position and sufficient liquidity with an eternal rebate strategy, in
the end led to ever decreasing margins. They were forced to cut costs and personnel for each branch,
which led to noticeable deficits in service and customer care.
Praktiker‘s subsidiary, Max Bahr, which had operated profitably so far, has also file for insolvency in
the wake of the parent company‘s bankruptcy. After a commercial credit insurer had withdrawn its
cover notes to suppliers, the reliable supply of goods to the branches could no longer be guaranteed.
As a consequence Max Bahr filed for self-administered insolvency proceedings. The search for
potential investors for Praktiker and Max Bahr has already started, with first results expected for
September. Though OBI, Hornbach and the likes have publicly announced their interest in selected
Praktiker locations, the take-over of all sites by one investor is deemed to be fairly unlikely. Alongside
numerous financial investors, the British DIY chain Kingfisher has been named as a potential buyer.
In early August the preliminary insolvency administrator announced the sale of all merchandise in
51 stores that have no going-concern perspective. The sale is to be completed by the end of October.
Unlike the negative headlines at Praktiker, the segment‘s number two, Bauhaus, completed a
successful 2012 with revenue up by 1.1 percent to EUR 2.7 billion. This growth was generated
essentially by sales area expansions (+1.5 percent to 1.3 million m²). Productivity per unit of floor
space decreased 0.5 percent to around EUR 2,080 per m². This puts Bauhaus a tick behind Hornbach
but still at the forefront of the industry segment. Bauhaus is vigorously driving forward its expansion
in the current year with new locations opening up in Wuppertal, Hattersheim, Gießen, Dresden and
Bochum, with a site relocation in Singen in the pipeline.
Hornbach continues to achieve the highest productivity per unit of floor space in the German
DIY market segment at EUR 2,090 per m², although this is the same 0.5 percent drop as its
competitor Bauhaus. As sales floor area increased slightly (0.6 percent to 1.0 million m²), revenue
remained on a level with last year at EUR 2.1 billion. For the current year Hornbach plans to open
another location in Rostock.
One of the key changes in the German DIY market segment in 2012 was the spin-off of 56 BayWa
DIY markets into the newly founded BayWa Bau & Gartenmärkte and their gradual take-over by the
Semer Beteiligungsgesellschaft (Hellweg Group). This restructuring is essentially geared to generate
synergies. The shared market competence as well as the specific retailing structures are intended to
strengthen the new company for the competition. The launch of an online shop is also planned as part
of this strategic reorientation.
The DIY segment is also beginning to accustom itself to the Internet. According to IfH Retail
Consultants, Cologne, the side street DIY markets increased their online revenue in 2012 by 33 percent
to a total of EUR 343 million. However, compared with the revenue volume of EUR 18.6 billion that is
generated on the street side, these are still early days for the DIY segment‘s online trade volume.
As the DIY segment has been stirred up the following might apply: as long as prices and costs keep up
the pressure is a tight market, the trend towards fewer but bigger markets will prevail. To that extent,
one can assume that the number of DIY markets is generally set to decline further (2006 - 2012:
-3.3 percent(. Like any other industry the segment is dependent on innovations. As the market leaders
Bauhaus, Hornbach and OBI show this includes such innovations as the successful development of
drive-in concepts or the orientation of product ranges and services towards professionals and
craftsmen.
DEVELOPMENT OF PRODUCTIVITY PER UNIT OF FLOOR SPACE FOR DIY MARKETS
IN 2012
in EUR / m2 (gross)
2,500
2,090
2,080
1,930
2,000
1,500
1,410
1,420
1,260
1,200
1,100
990
1,000
500
0
Change from
year before in %
Ú 0.0 %
à
-0.8 %
à
-0.5 %
* Newly founded
Ú 0.0 %
Þ
1.9 %
à
-0.5 %
Ú 0.0 %
Obi
Bauhaus
à
-1.0 %
Zeus
Rewe (Toom / B1)
Hornbach
Globus / Hela
Hellweg
Baywa / Hellweg*
SIDELINE DISCUSSION: FOCUS ON MEDIUM-SIZED CITIES - SUCCESS FROM TAKING THE CENTER GROUND | 49
SIDELINE DISCUSSION: FOCUS ON MEDIUM-SIZED CITIES SUCCESS FROM TAKING THE CENTER GROUND
„Retail is detail“ as the saying goes, or as the German version has it „Trading is changing“.
The constant change in structures has been cited for quite a few developments in retailing; no matter
whether it was ever faster, ever bigger or forever cheaper. The focus has always been on the strong
dynamic forces that affect the life cycles of trading platforms.
Brick-and-mortar retailing will only be able to secure its long-term success, despite all online
innovations, if it remains present on the street side, or - if it has already retreated - if it returns to
the street side. Only those with a presence close to residential areas in the boroughs and centers
around the periphery have sufficient points of contact to retain physical customer contact.
Spatial expansion, especially into locations eliciting lesser attention, would therefore constitute not
only a survival strategy but could offer true growth potential. While further additions to existing
store networks in the well-known high streets and best shopping centers reap proportionately less
revenue for the retail chains, a wider spatial presence opens up development potential for real revenue
additions. E-commerce is also recording its strongest growth rates in the rural areas that are less well
developed by retailers. This by itself indicates the revenue potential that is left over to Amazon and
the likes.
The investments required for spatial expansion are high and therefore only possible for chains with
strong capital underpinning. Another precondition, however, is the availability of up-to-date and
largely standardized retail properties.
The unification, standardization and consolidation of stores in the best locations of larger cities
and shopping centers still means that outdated stores are closed in other secondary locations or that
the smaller locations don‘t even see concepts being developed anymore. Focusing brick-and-mortar
retailing only on larger cities runs the risk that more and more customer requirements will no longer
be covered by street side retailers, neither in the depth of their product ranges nor in the stores‘
proximity to the customers‘ place of residence, thus carelessly relinquishing market potential to
e-commerce.
The indications are in fact that retail chains will increasingly review their expansion strategies and
begin to look out for the „white spots“ in Germany. They are indeed looking to be close to their
customers.
50 | SIDELINE DISCUSSION: FOCUS ON MEDIUM-SIZED CITIES - SUCCESS FROM TAKING THE CENTER GROUND
Against this background, mid-sized towns are gaining their own significance as against the large cities.
The importance of mid-sized cities and towns for German retailing has been shown by this year’s study
of GfK GeoMarketing. It shows that around 30 percent of the entire German populace lives in the
catchments areas of all German cities with populations between 40,000 to 100,000 inhabitants (minus
any potential overlaps). The mid-sized town as a location category is therefore becoming a distinct
sales channel without which a nationwide presence on the German market could not be achieved.
The study also reveals that the socio-demographic conditions of mid-sized cities and towns are much
akin to those of big cities, and in some cases even offer better conditions.
At the same time, besides the opportunity of increased customer proximity, mid-sized towns are also
characterized by a number of restrictions and risks. Thus the pull of some mid-sized inner cities barely
reaches beyond the town limits or holds insufficient appeal of its own, making it hard to find suitable
synergy partners for new services. Often there is a lack of modern retail properties for short-term
leases. Small-scale land parceling and building structures may stand in the way of realizing the
necessary area concepts, with statutory planning obstacles and the lack of suitable land for
development hindering new constructions.
Concurrent with an increasing consolidation of centers in Germany, the development is by necessity
heading into secondary locations, despite building and planning restrictions. Though their number
is few and far between today, the small shopping center in mid-sized towns is becoming a typical
development assignment for architects, developers, banks and investors alike. Some project
developers have already made this their specialty. As they are partly entering unchartered territory
as far as location, concept, floor height, segment mix, revenue and rental profitability is concerned,
empirical findings are scant. Generally one can note that as the specialization of the properties
increases, demands on the concept also rise.
The development of contemporary retail properties in mid-sized cities also shows that demand and
supply are mutually contingent. Only where tenants show a principal interest in expanding into
mid-sized towns, will it be possible to generate the necessary pre-letting ratio for project financing.
On the other hand, without the availability of suitable retail properties, a professional branch
expansion into mid-sized towns will not bear fruit. The next few years would suggest that there is
growing demand for negotiations and cooperation between all actors. More exchange will be called
for in particular between mid-sized project developers and investors, savings banks and cooperative
banks with their local expertise, their corresponding branches, federations and franchise systems in
retailing and catering, as well as a regional expansion strategy.
SIDELINE DISCUSSION: FOCUS ON MEDIUM-SIZED CITIES - SUCCESS FROM TAKING THE CENTER GROUND | 51
CATCHMENT AREAS OF GERMAN MID-SIZED TOWNS AND CITIES
Source: GfK GeoMarketing GmbH
Medium-sized cities (pop. 40,000 to 100,000)
Catchment areas of mid-sized cities
Other areas in Germany
RETAIL WAREHOUSE CENTER KAISERWIESEN FULDA
8.8
EUR BILLION
2012 transaction volume
in retail properties
4.5
05
THE GERMAN RETAIL
INVESTMENT MARKET –
2012 TO SUMMER 2013
DEMAND FOR GERMAN RETAIL
PROPERTies REMAINS STRONG
HIGH STREET PROPERTIES AND RETAIL
WAREHOUSE CENTERS SEE STRONGEST
GAINS
EUR BILLION
2012 investments by
international players
30.4
PERCENT
2012 market share of
retail warehouse stores and
retail warehouse centers
RETURNS REMAIN STABLE AS DEMAND
REMAINS HIGH
SHORTAGE OF PRODUCT IN TOP
LOCATIONS BUILDS INTEREST IN
REGIONAL CENTERS AND B LOCATIONS
AND IN MORE MANAGEMENTINTENSIVE PROPERTIES
INTEREST IN GERMAN RETAIL
PROPERTIES EXPECTED TO CONTINUE
54 | THE GERMAN RETAIL INVESTMENT MARKET – 2012 TO SUMMER 2013
5.1 COMMERCIAL REAL ESTATE MARKET STILL SURGING AHEAD
The German investment market continues to be viewed as a very safe investment haven by the world’s
investors. Their confidence is based on the German economy’s good fundamentals: though these
lagged behind expectations at mid-year, they were still relatively robust in the midst of a crisis-prone
euro area.
This stability is especially clear in the German employment market. Historic high employment levels
and good collective bargaining agreements have lent further buoyancy to households’ income
expectations, and therefore their propensity to buy, and have given rise to consistently optimistic
consumer sentiment. It is no surprise, then, that retail properties with high occupancies are still
among the most sought-after classes of assets.
In 2012, the investment market for commercial real estate in Germany, at roughly EUR 25.2 billion,
saw over 11 percent more investment than in 2011 – the best showing since the record years of 2006
and 2007. More than half of the invested capital, nearly EUR 13.7 billion, went into the Top Five
investment centers: Berlin, Düsseldorf, Frankfurt, Hamburg and Munich. This represented an increase
of more than 23 percent from the year before.
Retail properties, at EUR 8.8 billion and about 35 percent of the transaction volume in commercial real
estate, represented the second-largest asset class in 2012, after office buildings, which had roughly
EUR 11 billion (about 45 percent). The uptrend in the German investment market continued in 2013.
Some EUR 12.6 billion was invested in commercial real estate during the first half. That represents a
transaction volume increase of EUR 3.2 billion, or 34 percent, over the same period last year, and is
the highest first-half figure since the boom of 2007. Office buildings were again the dominant form of
use, with a volume of EUR 5.6 billion or 44 percent of the total.
But the attraction of retail properties in the German investment market also continues to rise.
In the first half of 2013, retail investment volume grew 33 percent from the prior-year period, to
EUR 4.2 billion, despite the short supply in the high-demand core segment. In the Top Five locations
especially, investment volume was up a very substantial 142 percent to more than EUR 1.5 billion,
about 37 percent of total retail investments.
THE GERMAN RETAIL INVESTMENT MARKET – 2012 TO SUMMER 2013 | 55
5.2 RETAIL PROPERTIES STILL IN DEMAND
Retail investment volume in 2012 decreased about 16 percent from 2011, to EUR 8.8 billion. The main
reason here was the still-shrinking supply of first-class investment properties, especially in the Top
Five investment centers. The decline in investment volume from the year before in these locations,
at 35 percent, was accordingly larger. Despite some large-volume transactions, 2012 total retail
investments in the Top Five locations came to just under EUR 2.3 billion, a bit more than one-quarter
of all investments in this asset class. More than EUR 4.2 billion in all was invested in German retail
properties during the first half of 2013.
Out of the EUR 13.0 billion invested in German retail properties over the past year and a half,
EUR 3.8 billion, or about 29 percent, was in the Top Five investment centers (Berlin, Düsseldorf,
Frankfurt, Hamburg and Munich). While the figure for those areas represented about one-quarter of
all investments in 2012, it rose to 37 percent in the first half of 2013. Most of the increase was because of large-volume transactions in the High Street segment, including the sale of the Kö-Bogen in
Düsseldorf, OneGoetheplaza in Frankfurt, and the property at Kurfürstendamm 195 in Berlin.
These three transactions alone totaled more than a billion euros.
EVOLUTION OF RETAIL PROPERTY TRANSACTION
VOLUME
in EUR bn
4.5
4.1
4.0
3.7
3.5
3.0
2.6
2.5
2.3 2.2 2.3
1.9
2.0
1.5
1.0
0.7
0.5
0
Q1
Source: CBRE
1.1
1.1
2009:
Q2
Q3
Q4
2.0
2.0
1.5
1.4
1.7
2.2
1.6
0.5
Q1
2010:
Q2
Q3
Q4
Q1
2011:
Q2
Q3
Q4
Q1
2012:
Q2
Q3
Q4
2013:
Q1
Q2
Average transaction volume, Q1 2009–Q2 2013: EUR 1.94 billion
Since most investors continue to pursue conservative investment strategies, demand for core products
remains consistently high. But the short supply limits investment options, especially in top locations.
For that reason, more and more investors are turning to regional centers and B locations with attractive
returns. Assets that require more intensive management are also coming under greater attention.
The retail segment’s total share of the portfolio over the past year and a half has been 39 percent.
While the figure was still 45 percent in 2012, for the first half of 2013 it was only 26 percent. Signa
Holding’s portfolio purchase for more than a billion euros, along with Unibail-Rodamco’s acquisition of
a share of mfi AG, particularly served to keep the share of package deals high in 2012. There were only
three portfolio deals for retail properties above EUR 100 million in the first half of 2013, including
Patrizia Immobilien’s investment in 86 retail warehouse stores and supermarkets acquired from the
Deikon insolvency estate. The modest performance of portfolio deals was not least of all the
consequence of a predominantly conservative investment strategy among investors, who tended
to prefer to choose specific assets one by one.
In terms of asset classes, shopping centers represented the largest share in 2012, at 35 percent of the
retail investment volume. They were followed in roughly equal proportions by high street properties
(about 31 percent) and retail warehouse stores and retail warehouse centers (about 30 percent
combined).
RETAIL INVESTMENTS BY
ASSET CLASS
in %
100
90
80
2.1
4.1
1.9
28.5
31.0
40.5
24.8
30.4
70
60
50
27.3
40
30
30.3
10
0
Source: CBRE
34.5
44.6
20
7,3
2011:
EUR 10.6 bn
2012:
EUR 8.8 bn
2013:
EUR 4.2 bn
Other retail
Retail warehouse stores / Retail warehouse centers
1-A retail properties
Shopping centers
Nine shopping center transactions with a volume of more than EUR 100 million each were recorded.
Only two of them were in Top Five sites (MyZeil in Frankfurt and the Europa-Passage in Hamburg).
The other large-volume shopping centers were located in such areas as Stuttgart (Milaneo), Bochum
(Ruhr-Park), Münster (Münster-Arkaden), Norderstedt, Saarbrücken and Darmstadt.
Another five shopping center transactions with a volume of more than EUR 100 million each took
place in the first six months of 2013. With one exception (Hallen am Borsigturm in Berlin), all of these
were in regional centers and B locations. They included the sale of the Kaiserplatz-Galerie in Aachen
to KG Farmsen, an investment company held by Hamburg’s Otto family of entrepreneurs, as well as
Dresden’s Altmarktgalerie and the Leine-Center in Laatzen. Shopping centers represented more than
30 percent of retail investments for the first half of 2013.
The share of high street properties grew from 31 percent (about EUR 2.7 billion) in 2012 to nearly
41 percent in the first half of 2013. Particularly significant transactions during the year included the
sale of Düsseldorf’s Kö-Bogen for about EUR 420 million, and two acquisitions by IVG Institutional
Funds in Berlin and Frankfurt.
Investments in retail warehouse stores and retail warehouse centers, at EUR 2.7 billion, represented
more than 30 percent of the retail investment volume for 2012 as a whole. Among the deals, Cerberus
Capital Management acquired a portfolio of 43 retail warehouse stores and retail warehouse
centers from the bank sale of collateral of the insolvent JER Partners. MGPA acquired a portfolio of
11 properties for an institutional investor, and a joint venture between Morgan Stanley Real Estate and
Redos Real Estate bought 11 properties leased to Toom Baumarkt from the Marktkauf Group.
Investors especially came up with finds in regional centers and B locations, investing for example
in the Alex-Center in Regensburg and the retail warehouse center on Durlacher Allee in Karlsruhe.
The largest individual transactions in this segment included the acquisition of the Iller Center in
Senden (Bavaria) by Rockspring-Fonds GRBF, and Württembergische Lebensversicherung’s purchase
of the retail warehouse center in Munich-Aubing.
About EUR 1.2 billion, or 27 percent of the total volume for the first half of 2013, was invested in
retail warehouse stores and retail warehouse centers. Large-volume portfolio transactions dominated
the scene here. In addition to the sale of 86 properties from the Deikon insolvency estate to Patrizia
Immobilien, the three BayWa portfolios, and the investments by Mondial KAG, the sale of two retail
warehouse centers in Mannheim and Dortmund by Metro AG to Württembergische Lebensversicherung
also contributed to the figure. Compared to the first half of 2012, over 60 percent more was invested
in this asset class. But average volume per asset, at only about EUR six million, was nearly 63 percent
below the figure from the comparable period, since the transacted portfolios also included a great
many smaller assets.
SELECTED RETAIL INVESTMENTS
IN THE FIRST HALF OF 2013
Name
Type of investment
Property type
Location
Kaiserplatz-Galerie
Single Asset
Shopping center
Aachen
Hallen am Borsigtum
Single Asset
Shopping center
Berlin
Portfolio
Discounter
Misc.
Altmarkt-Galerie (33 % share)
Single Asset
Shopping center
Dresden
Leine-Center
Single Asset
Shopping center
Laatzen
Portfolio
Retail warehouse center
Mannheim / Dortmund
Karstadt Oberpollinger Sporthaus
Single Asset
Department store
Munich
Hanse-Center
Single Asset
Shopping center
Bentwisch
Karstadt
Portfolio
Department store
Braunschweig / Hannover
BayWa Package No. 3
Portfolio
Retail warehouse store
Misc.
Name unknown
Single Asset
Erding
Name unknown
Single Asset
Celle
ÖVA-Passage
Single Asset
Shopping passage / galleria
Mannheim
Name unknown
Portfolio
Misc.
Name unknown
Single Asset
Pattensen
Karstadt
Single Asset
Department store
Esslingen
Norder Tor
Single Asset
Norden
Itter-Karree
Single Asset
Hilden
Edeka Zurheide Center Düsseldorf
Single Asset
Supermarket
Düsseldorf
DEIKON-Portfolio
Name unknown
Source: CBRE
Purchase price (in EUR m,
in some cases estimated)
Buyer
Seller
290
KG Farmsen
ECE Projektentwicklung / Strabag AG
250
ECE
Whitehall Fund (Vernal Asset 2 BV)
178
Patrizia Immobilien
DEIKON GmbH i.I.
132
Deutsche EuroShop AG
TLG Immobilien GmbH
117
CBRE Global Investors /
LEGII Laatzen
Teacher Retirement System
107
Württembergische Lebensversicherung AG
Metro AG
95
Wilhelm-von-Fink
JV Signa Holding und Centrum Group ( 50 % each)
70
Brack Capital Properties
Dubai Investment Group
68
Friedrich Knapp
Highstreet consortium
60
Volks- and Raiffeisenbanken from Bavaria
Baywa AG
38
CBRE Global Investors
LHI Leasing GmbH
30
Brack Capital Properties
Admirality Holdings
30
Aachener Grundvermögen
SV Sparkassen Versicherung
Kapitalanlagegesellschaft
25
mondial KAG
May & Co.
25
ILG Fonds GmbH
Ten Brinke
24
Carlyle Group / PBG / 3W Immobilien
Highstreet consortium
23
Henderson Global Investors
Norder Tor GmbH & Co. KG
20
Institutional investor
Hahn Group
19
Private investor
DIC Asset AG
The Top Five areas – Berlin, Düsseldorf, Frankfurt, Hamburg and Munich – accounted for about
one-quarter (about EUR 2.3 billion) of the total retail investment volume in 2012. For the first six
months of this year, these five metropolitan areas already represented about EUR 1.5 billion in
transaction volume.
In Berlin, retail property investments totaling EUR 1.7 billion had been recorded since the beginning
of 2012. The strongest demand was for high street retail, which accounted for about 66 percent of
the investment volume. The most conspicuous transaction here was the Highstreet consortium’s
sale of KaDeWe to Signa Holding at the end of 2012. Second place was held by shopping centers, at
16 percent, much of which was represented by the sale of the Hallen am Borsigturm, which changed
owners in the second quarter of 2013. The shopping centers were followed closely by retail warehouse
centers, at 14 percent. There were no such large-volume transactions in this segment. Instead, volume
was based on numerous smaller packages.
In the Düsseldorf investment market (including Erkrath, Hilden, Ratingen and Neuss), retail investment
volume over the past 18 months exceeded EUR 522 million. A principal feature of this rather high
volume for this market was the sale of the Kö-Bogen project in downtown Düsseldorf for about
EUR 420 million in the first half of 2013. The segment of high street properties is therefore
overrepresented here.
Some EUR 839 million was invested in retail properties in the Frankfurt investment market during the
period under review. Here too, as a consequence of the sale of OneGoetheplaza in the first quarter
of 2013, as well as the Karstadt building on the Zeil in the last quarter of 2012, the emphasis was on
downtown commercial buildings in top locations. This asset class accounted for about 62 percent of
the investment volume. KP Investments’ sale of shares of MyZeil in 2012 meant that shopping centers
accounted for the second largest share, 34 percent, in Germany’s financial metropolis.
Nearly EUR 481 million has been invested in the retail segment in the city of Hamburg since the
beginning of 2012. Here too, investors focused on high street properties, but at 44 percent of the
investment volume the emphasis was not as strong as in the other top areas. Another 40 percent of
volume was represented by shopping centers, including the purchase of a share of the Europa-Passage
at the beginning of 2012.
Volume invested in retail properties in Munich in 2012 and the first half of 2013 totaled
EUR 281 million. About half this figure was for high street properties. Retail warehouse stores and
retail warehouse centers accounted for about 21 percent, a large share of which was represented by
Württembergische Lebensversicherung’s purchase of the retail warehouse center in Munich-Aubing.
TRANSACTION VOLUME FOR RETAIL PROPERTIES
IN THE TOP FIVE CITIES
in EUR m
1,237.6
Berlin
Düsseldorf
452.3
29.7
492.6
466.2
Frankfurt
Hamburg
373.2
353.1
25.1
179.3
Munich
101.6
Source: CBRE
2012
H12013
5.3
PLAYERS IN THE GERMAN RETAIL INVESTMENT MARKET
Looking at 2012 by itself, asset and fund managers were the most active group of buyers in retail real
estate, accounting for more than EUR 2.1 billion of the total volume, or about 24 percent. Nearly half
of this, in turn, was for the TLG Portfolio bought by Lone Star. Private investors came next, with
EUR 1.9 million or nearly 22 percent, including the Karstadt portfolio acquired by Signa Holding,
Austria’s largest closely held real estate firm. Some distance behind, in third place, came open-ended
real estate and specialty funds, with a share of nearly EUR 1.2 billion, or 13 percent. Their acquisitions
included the Münster Arkaden and the Europa-Galerie in Saarbrücken.
During the first half of 2013, open-ended real estate and specialty funds were the liveliest investor
group, at EUR 1.3 billion or 31 percent of total retail investments. Specialty funds conceived for
institutional investors (such as IVG Institutional Funds) predominated in the first half of the
current year. They were followed by private investors, with about EUR 737 million (about 18 percent).
The largest acquisition by this investor group was KG Farmsen’s purchase of the Kaiserplatz-Galerie
in Aachen. Insurance companies and pension funds were the third-liveliest buyer group, with direct
investments of EUR 589 million or about 14 percent of the total volume. This was primarily the
consequence of the Kö-Bogen purchase by a fund managed by Art-Invest Real Estate Funds GmbH
on behalf of two pension funds for independent professionals, as well as the acquisitions by
Württembergische Lebensversicherung AG in Dortmund and Mannheim for a total volume of more
than EUR 120 million.
Investors from outside Germany accounted for about EUR 5 billion, or about 38 percent of the total
transaction volume in German real estate properties since the beginning of 2012.
Though international investors represented more than half of all retail investments in 2012, at
EUR 4.5 billion, they were considerably less active in the first half of 2013, with a 12 percent share.
However, the decline is not an indication of declining interest in the German market. On the contrary,
surveys of international investors regularly rate the German real estate market very positively and as
distinctly attractive.
Investors from the USA and Austria were especially active in the German retail market, in part as
a consequence of large single deals like the acquisition of the Highstreet portfolio by Austria’s Signa
Holding, and portfolio deals by Lone Star (TLG Portfolio) and Cerberus Capital Management
(JER Partners Portfolio). Because of the rising demand for core properties in top areas, combined
with a shortage of product, international investors have increasingly turned to regional centers and
B locations. Here their share of the total volume for the first half of 2013 was well above the figure
for all of Germany, at 17 percent.
TRANSACTION VOLUME FOR RETAIL PROPERTIES
BY BUYER’S NATIONALITY
in %
100
90
80
59.0
70
49.1
60
50
88.0
40
30
50.9
41.0
20
10
12.0
0
2011
Source: CBRE
2012
H1 2013
Germany
Foreign buyers
Asset and fund managers predominated on the seller’s end in 2012. They sold retail properties worth about
EUR 3.9 billion, nearly 45 percent of the total.
They were followed in second place by project developers and prime contractors, at EUR 1.4 billion
(16 percent). The largest sale by this group was the Milaneo in Stuttgart, followed by several transactions
for less than EUR 100 million. The third seller group was the public sector, at roughly EUR 900 million, or
10 percent. This figure results primarily from the sale of the federally owned TLG Immobilien GmbH.
By contrast, the group of project developers and prime contractors was the most active seller group in
the first half of 2013, at EUR 1.8 billion or nearly 43 percent of the retail transaction volume. Transactions
for four prominent properties alone – the Kaiserplatz-Galerie in Aachen, the Kö-Bogen in Düsseldorf,
OneGoetheplaza in Frankfurt, and Kurfürstendamm 195 in Berlin – came to more than a billion euros
combined. Asset and fund managers came second, at EUR 831 million, or 20 percent of the total volume.
Corporates were some distance behind in third place. They sold retail properties worth EUR 359 billion
(9 percent), including the properties of Metro AG in Dortmund and Mannheim and properties in Hamburg
(Saturn, Mönckebergstrasse).
TRANSACTION VOLUME FOR RETAIL PROPERTIES BY TYPE OF INVESTOR
IN THE FIRST HALF OF 2013
in %
5.5
Open-ended funds / Specialty funds
30.7
Private investors
4.9
17.5
Insurance companies / Pension funds
2.1
Real estate AG companies / REITs
2.6
Asset / Fund managers
11.5
19.7
8.5
Corporates
Project developers / Prime contractors
4.8
42.8
4.7
Closed-end real estate funds
1.3
3.7
5.8
Other real estate companies
Other
1.2
6.7
40
Source: CBRE
14.0
11.9
20
0.0
0
20
40
Sell
Buy
5.4 STABLE PEAK RETURNS IN THE RETAIL SEGMENT
The investment market for retail properties continues to be defined by a flight to safety among investors.
Demand for core properties, accordingly, has remained consistently high among both domestic and
international investors. At the same time, such properties remain in scarce supply, so that returns are still
at low levels, and some commercial buildings and shopping centers in 1-A locations have returned to the
pre-crisis level of 2007.
Peak returns for retail properties remained stable in the second quarter of 2013 compared to the quarter
before. Compared to the same time last year, net initial returns for high street properties had declined
25 basis points in Berlin, to a current 4.50 percent, and by 10 basis points in both Düsseldorf and Frankfurt,
to 4.40 percent. They also had declined 10 basis points in Hamburg and Munich, to 4.30 percent. Shopping
centers in A locations, as at the beginning of the year, generated 4.75 percent, or 25 basis points less than
in mid-2012. Net initial returns for retail warehouse stores and retail warehouse centers were unchanged at
7.00 and 6.00 percent, respectively.
EVOLUTION OF PEAK RETURNS
OF RETAIL PROPERTIES
in %
8
7
6
5
4
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Source: CBRE
* Average net initial return in Berlin, Düsseldorf,
Frankfurt, Hamburg, Cologne and Munich
1-A retail properties*
Shopping center (A location)
Shopping center (B location)
Retail warehouse store / Supermarket
Even if the spread in returns between first-class real estate investments and long-term federal debt
paper has recently narrowed slightly, real estate still remains an attractive class of investment for
both institutional investors and well-to-do private investors, especially as interest rates on the capital
market are likely to remain low.
5.5 OUTLOOK
Current figures indicate that investment will remain very dynamic in retail properties as well, even
though limited availability, especially for core properties, is still the limiting factor. Safety is still
real estate investors’ top priority. In addition to focusing on top investment centers, they are also
becoming involved in regional centers and B locations. It is still evident that thanks to stable
employment conditions and good collective bargaining agreements that continue to buoy households’
income expectations, the German retail market remains extremely robust. In light of the optimistic
consumer sentiment in Germany, retail properties with good occupancy and income generation are
much sought after as an asset class.
DIFFERENCE BETWEEN PEAK RETURNS AND RISK-FREE INTEREST RATE
(10-YEAR BUND)
in %
7
6
5
4
3
2
1
0
-1
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Source: CBRE
Shopping center (A location) Shopping center (B location)
Retail warehouse store / Supermarket
German institutional investors’ rising interest in well-positioned retail warehouse centers, which
had already been noted in the last reporting period, continued undiminished. Here too, there was
increasing competition for top products. Investments entirely financed out of equity are increasing,
in spite of the attractive low interest rates for borrowings. Moreover, investment pressure from
international investors remains high because of limited alternative markets on the European continent.
Competition for the few core retail properties is not likely to wane. By contrast, there is still a large
supply of product in the value-added and opportunistic segments, so that more movement, and
therefore more investment activity, is likely to appear here over the further course of the year.
In 2014, moreover, the general economic environment is expected to brighten significantly, further
increasing the attraction of the German real estate market. In the medium term, therefore, domestic
and international investors’ interest in German retail properties is likely to remain stable.
RETAIL WAREHOUSE CENTER ALSDORF
SIDELINE DISCUSSION: THE CURRENT ENVIRONMENT FOR REAL ESTATE FINANCING | 69
SIDELINE DISCUSSION: THE CURRENT ENVIRONMENT FOR REAL
ESTATE FINANCING
The financing environment in Germany remains quite favorable, especially because the overall
parameters for commercial real estate financing have recently improved moderately. However, the
implementation of the regulatory requirements of Basel III and Capital Requirements Directive IV
interferes with any overreaching by the banking industry, so that lending practices to some extent
still appear quite restrictive. Concepts like risk-bearing capacity, core capital ratio and liquidity
coverage ratio play the main role in banks’ lending, and therefore limit their leeway for action.
Last year the bank stress test made reducing risk and shrinking the balance sheet the first priority for
banks. But lately they have recovered their interest in new business, especially because the domestic
banking scene is now exposed to increasing competition from institutional investors like insurance
companies and pension funds, as well as debt funds. This is also reflected in the Bundesbank’s latest
survey about the lending business. The surveyed German banks reported that guidelines for lending to
corporations had eased moderately in the first quarter of 2013 because of increasing competition in
the banking sector, and banks are seeing an appreciable improvement in refinancing terms on
the whole.
Accordingly, loan-to-value figures for some selected lending are rising, while banks are competing,
especially by way of margin, for conservative loans on high-quality core properties with top ratings
and secure long-term cash flows. Project financing is also getting selective support from banks,
provided the borrower has not only a good credit rating and a good record of success in marketing
projects, but also a high level of equity to advance and a high advance occupancy of 50 to
60 percent. Nevertheless, the quality of the underlying property, or its eligibility as coverage
assets for an insurer, together with the borrower’s credit rating, remains the main focus of any
potential loan.
70 | SIDELINE DISCUSSION: THE CURRENT ENVIRONMENT FOR REAL ESTATE FINANCING
Retail properties in general remain the favorites of banks’ lending departments. But sharp
distinctions must be drawn within this asset class. Downtown properties in the best locations for
foot traffic, as well as well-located, well-established shopping centers with major-name anchor
tenants with good credit, are very much in favor among both investors and banks. Retail warehouse
centers with a sustainable mix of tenants and a professional borrower or operator with a longstanding track record are also highly approved by banks, although here conservative loan-to-value
ratios are the rule.
Persistent historically low refinancing terms are undoubtedly another important reason for the
upbeat trend. While interest rates in the five-year range recently rose about 12 basis points from
last year because of speculation in the USA about a possible impending abandonment of the “cheap
money” policy, rates are still nearly 130 basis points lower than they were in 2011.
YIELD CURVE, SUMMER 2012 VS.
SUMMER 2013
in %
2,0
1,5
1,0
0,5
0
Term
3 Months
Source: Bloomberg
6 Months
1 Years
2 Years
3 Years
4 Years
5 Years
6 Years
7 Years
Swap-Rates 30.07.2012
8 Years
9 Years
10 Years
Swap-Rates 30.07.2013
SIDELINE DISCUSSION: THE CURRENT ENVIRONMENT FOR REAL ESTATE FINANCING | 71
All in all, it can be assumed that lenders’ better lending conditions combined with investors’ very
strong interest in the German real estate market should lead to more financing activity over the rest
of the year.
Increasing importance here will attach to alternative lenders, in the form of insurance companies
and pension funds, but these can at most be an accompaniment to conventional bank loans.
In addition, more and more debt funds being set up primarily by international private equity firms,
most of which pursue opportunistic investment strategies with correspondingly higher return
expectations in the 10 to 15 percent range, are also taking up positions in the market at present.
Because of the relatively low real estate returns in Germany, however, those funds will be only a
very selective alternative to equity capitalization. For that reason, debt funds offering interest
rates at levels similar to banks cannot be expected for the foreseeable future.
By contrast, CBRE foresees greater growth opportunities for some market participants if they make
use of the capital market. In addition to IPOs of real estate firms and the associated increase in
financing by way of equity from institutional investors, CBRE expects more activity in corporate
bond issues in this sector. Here too, the issuer’s skill and quality in asset management, center
management and property management are likely to be the deciding factors for financing costs
and the bond issue’s success.
ALEX-CENTER REGENSBURG
40.0
PERCENT
Percentage of space occupied
by the food segment at
retail warehouse centers
12.70
EUR M2 / MONTH
Average rent for retail warehouse
centers in the Top Seven locations
24.50
EUR M2 / MONTH
Average rent for shopping centers
in the Top Seven locations
06
CBRE ANALYSIS OF
GERMAN RETAIL PROPERTY
RENTS
IN THE RETAIL WAREHOUSE CENTER
SEGMENT, PROPERTIES WITH OVER
35,000 m2 OF RENTABLE SPACE
GENERATE THE HIGHEST AVERAGE
RENTS
ON AVERAGE, HALF OF THE RENTAL
INCOME FROM RETAIL WAREHOUSE
CENTERS IS GENERATED BY THE FOOD
SECTOR AND THE TOILETRIES/HYGIENE
SECTOR
ON AVERAGE, THE HIGHEST RENTS
ARE GENERATED AT SHOPPING CENTERS
WITH BETWEEN 35,000 AND 49,999 m2
OF TOTAL RENTABLE SPACE
ON AVERAGE, HALF THE RENTAL
INCOME FROM SHOPPING CENTERS IS
GENERATED BY THE FASHION (APPAREL
AND SHOES) SECTOR
SHOPPING CENTERS IN THE TOP SEVEN
LOCATIONS GENERATE THE HIGHEST
AVERAGE RENTS
74 | CBRE ANALYSIS OF GERMAN RETAIL PROPERTY RENTS
6.1 METHODOLOGICAL APPROACH
The development of the rental market, with its regional, sectorial and format-specific differences, is
directly connected with the investment market for retail properties. Given that fact, for the first time
CBRE has conducted a nationwide analysis of rents at shopping centers and retail warehouse centers on
the basis of selected indicators for format, location and concept. In addition to property-specific factors
like floor space and use concept (sector, principal user group), the analysis also included regional
parameters. For this purpose, the results of the CBRE Real Estate Investment Score (see previous issues
of the Retail Real Estate Report) were used to identify and evaluate seven top investment regions,
18 regional centers, and 102 B and other locations, on the basis of various socioeconomic and retailspecific criteria.
An analysis of several thousand retail leases from 90 shopping centers and 126 retail warehouse centers
provided detailed information about average and peak net “cold” rents for these classes of properties.
All rents were adjusted for inflation as of July 2013 for the data analysis. In addition, outliers were
screened out for the analysis. The top and bottom 10 percentiles of the data were left out of
consideration in evaluating ranges. The graphed analyses therefore represent ranges commonly
found in the market which may nevertheless deviate up or down in specific cases.
CBRE 2013 RENT MATRIX –
FORMAT, LOCATION AND CONCEPT
Shopping center
F
S
Floor-space class
CBRE site category
Indicators
Segment group
K
Principal user group
Source: CBRE
CBRE ANALYSIS OF GERMAN RETAIL PROPERTY RENTS | 75
No analysis of individual site factors (such as catchment area, competitors) was conducted for the study,
but the analysis did include a location categorization based on the German investment regions defined
with the CBRE Retail Investment Score model.
Sectors were analyzed using the CBRE segment catalog, which subdivides retail tenants into a total of
12 segment groups. The analysis also investigated the most important segments for shopping centers and
retail warehouse centers.
The location category and size class were analyzed looking at the weighted average rent at the center,
while sector-specific analyses were based on the total space of all centers.
AVERAGE RETAIL RENTS BY LOCATION CATEGORY
FOR SHOPPING CENTERS
in EUR / m2 / month
40
35
30
25
20
15
10
5
0
Total
Top 7 location
Regional center
Source: CBRE; analysis omitting outliers in the 10-percent and 90-percent quantiles
B location
Mean
Other
Upper and lower range
6.2 ANALYSIS OF SHOPPING CENTER RENTS
In the shopping centers in the study, the average rent weighted for space was EUR 20.50 / m2 / month.
In the Top Seven locations, average rents are about 20 percent above the overall average, at
EUR 24.50 / m2 / month, while rent levels in the B locations and regional centers are roughly
equivalent to the average for all studied shopping centers, at about EUR 20.00 / m2 / month.
Shopping centers in other locations have rents well below average, at roughly EUR 17.10.
The data analysis shows that some first-class shopping centers in the Top Seven locations generate
average rents of roughly EUR 35 / m2 / month, while the maximum average rents for first-class shopping
centers in regional centers and B locations are roughly 14 and 9 percent lower, respectively, at
EUR 30 to 32 / m2 / month. The slightly higher maximum achievable average rents in B cities are due
in part to the large number of B cities with very attractive socio-demographic, regional economic, and
commercial environments. Furthermore, some B cities have substantially more dynamic development
than the regional centers. In the “other” category, maximum average rents are about 20 percent lower
than in the Top Seven locations.
AVERAGE RETAIL RENTS BY SIZE CLASS AT THE
STUDIED SHOPPING CENTERS
in EUR / m2 / month
40
35
30
25
20
15
10
5
0
10,000–14,999 m 2
15,000–24,999 m 2
25,000–34,999 m 2
Total rentable space
35,000–49,999 m 2
Mean
über 50,000 m 2
Upper and lower range
When average rents are related to center size, shopping centers with between 35,000 and 49,999 m2 of
total rentable space generate the highest rents, at up to EUR 34.60 / m2 / month. First of all, shopping
centers of this size typically have a strong magnet effect, and therefore draw from a broad catchment area.
Second, they generally have a broader mix of sectors, with a large percentage of apparel, which in turn
raises the shopping center’s overall rent level because of the above-average rents in this segment.
Centers with more than 50,000 m2 of rentable space as a rule have retail warehouse stores and department
stores as their anchor tenants, which take up above-average rental space but generally pay below-average
rents, so that the average rent for these centers is considerably lower than for properties with 35,000 to
49,999 m2 of space.
At the smaller centers, with between 10,000 and 14,999 m2 of rentable space, often a disproportionately
large share of the space is occupied by large-area food stores, which often serve as an anchor tenant.
These push rent levels downward overall because of moderate rents per square meter.
SECTORS’ SHARES OF RETAIL SPACE BROKEN DOWN BY SIZE CLASS AT
in %
100
9.7
8.2
80
8.1
8.1
9.9
70
12.3
90
60
18.2
11.9
6.9
10.5
9.6
15.8
36.7
40
23.2
23.7
9.6
4.9
8.4
17.4
18.6
50
8.8
18.6
16.8
11.5
14.7
30
20
25.2
10
35.6
34.4
33.3
29.7
0
10,000–14,999 m 2
Source: CBRE
15,000–24,999 m 2
25,000–34,999 m 2
Apparel
Shoes and leather goods
35,000–49,999 m 2
Food Body and healthcare
über 50,000 m 2
Multimedia, books and gifts
Other
Shopping centers with 25,000 to 34,999 m2 of rentable space are conspicuously the size category with the
lowest peak value. By contrast, rather compact shopping centers with between 15,000 and 24,999 m2 of
space are relatively strong, primarily because they are typically located downtown and therefore have a
stronger power of attraction.
In addition to micro and macro location, competitive situation and architectural design, segment mix is
also a crucial factor for a shopping center’s success. The mix not only makes a significant contribution to
a shopping center’s attractiveness, but also considerably influences average rents.
The largest average shares of space and rent at shopping centers are represented by the apparel sector.
The analysis showed that on average, some 32 percent of rentable space is rented to vendors in the apparel
segment, who generate on average around 37 percent of the rent. If one groups the shoes and leather
goods category together with apparel, the fashion segment represents on average more than 40 percent
of the space, and nearly half the rental income. Newer shopping centers often have an even higher fashion
percentage, which then occupies more than half the rentable space.
AVERAGE SHARE OF SPACE AND RENTS BY SEGMENT AT THE
SHARE OF RENTAL SPACE
SHARE OF RENTAL INCOME
Body and
healthcare 7 %
Shoes and leather
goods 9 %
Body and
healthcare 10 %
Apparel 32 %
Other
17 %
Multimedia,
books and
gifts 17 %
Shoes and leather
good 11 %
Apparel 37 %
Food 13 %
Food 18 %
Source: CBRE, based on total rentable space and rents paid by all retail tenants
Other 14 %
Multimedia,
books and
gifts 15 %
By contrast, the segments with the second and third largest shares of space generate proportionately
lower rental income. Food does occupy about 18 percent of space, and multimedia, books and gifts occupy
17 percent, but these two segments respectively contribute only about 13 and 15 percent of a shopping
center’s rental income.
The apparel sector’s larger share of rent compared to share of space is because of the typically
above-average rents per square meter in this segment. At the analyzed shopping centers, average
monthly rent in the apparel sector was EUR 23.70 / m2, with a maximum of around EUR 58 / m2.
Higher average rents are paid only by the Body and healthcare segment (EUR 27.30 / m2 / month) and shoes
and leather goods (EUR 24.10 / m2 / month).
The biggest spread between the average and maximum rents is in the food segment. It occurs because the
segment’s average rent is significantly determined by the relatively low rents of large-area food markets,
and lies at a rather moderate level of around EUR 15 / m2, while small-area food vendors like bakeries and
delicatessens can support significantly higher rents because of their high productivity per unit of space.
AVERAGE RETAIL RENTS BY SEGMENT AT THE
in EUR / m2 / month
90
80
70
60
50
40
30
20
10
0
Source: CBRE
Total
Apparel
Body and healthcare
Food
Multimedia, books
and gifts
Shoes / leather
goods
Mean
Other
Upper and lower spread
The same applies for the category of multimedia, books and gifts, where large book and electronics dealers
have relatively low rents per square meter, while small-area telephone vendors can pay higher rents,
analogously to their above-average revenue per unit of space.
Because of the apparel business’s importance to shopping centers, the detailed discussion below will delve
more deeply into the space breakdown and rent levels within this segment.
The young fashion subcategory has the segment’s largest share of space, around 40 percent. For many
years, Hennes & Mauritz, Zara and New Yorker have been among the most significant vendors in this
segment. Over the past few years, moreover, international big names like Primark and Hollister have become
established in the German market. Because of the large floor spaces (typically between 500 and 1,000 m2),
average rents in this segment are about EUR 26.10 / m2 / month.
The second most important subcategory in terms of amount of space is the apparel department stores,
which average about 30 percent of rentable space within the apparel segment. The most important vendors
include C&A, P&C and Pohland. This subcategory typically occupies very large spaces (as a rule between
1,000 and 3,500 m2), and accordingly pays the lowest rents within the apparel category, averaging
EUR 14.90 / m2 / month.
In third place, with about 15 percent of the space in shopping centers, is the women’s wear subcategory.
Vendors in this category usually occupy units with significantly smaller spaces (typically between 80 and
250 m2) and can bear significantly higher rents than the above subcategories. On average, rents in the
women’s wear category are around EUR 38.10 / m2 / month. Mango, Cecil and Street One can be mentioned
as significant vendors in this segment.
The highest average rents are generated by the underclothing subcategory. Tenants in this segment pay an
average of EUR 45.20 / m2 / month. These comparatively high rents are primarily the result of the usually
relatively small sizes of the shops (typically between 60 and 150 m2).
6.3 ANALYSIS OF RETAIL WAREHOUSE CENTER RENTS
The CBRE Investment Score model was also used as a basis for analyzing retail warehouse centers.
The properties were categorized on the basis of their location into Top Seven locations, large regional
centers, B locations and other locations.
The average rent, weighted for space, for the studied retail warehouse centers was EUR 10.00 / m2 /
month, with a range from EUR 5.80 / m2 / month for comparatively poor locations to EUR 17.70 / m2 /
month in the Top Seven locations.
As expected, average rents at the Top Seven locations were well above the general average, at roughly
EUR 12.70 / m2 / month. Average rents at regional centers, B locations and other locations, at EUR 9.70
to 10.40 / m2 / month, are all within the range of the overall average.
In analyzing space categories by center size, one finds that the highest average rents, at EUR 15.40 /
m2 / month, are generated at retail warehouse centers with more than 35,000 m2 of total rentable
space. These retail warehouse centers offer a broad mix of segments, and thus appeal to a broad
range of shoppers. This enables them to generate above-average revenue and therefore above-average
rents. For these large retail warehouse centers in very good locations with an optimum segment mix,
AVERAGE RETAIL RENT BY LOCATION CATEGORY FOR STUDIED
RETAIL WAREHOUSE CENTERS
in EUR / m2 / month
20
18
16
14
12
10
8
6
4
2
0
Total
Source: CBRE
Top 7 location
Regional center
B location
Mean
Other
rents per square meter can be as high as EUR 18.00 – a figure almost at the same level as the average
rent for shopping centers. Retail warehouse centers that generate very high income tend to have the
typical features of shopping centers (in terms of segment mix and management structure), and are
therefore often called hybrid centers.
The average rent at the retail warehouse centers with between 25,000 and 34,999 m2 of total
rentable space, at EUR 11.40 / m2 / month, is well below the level for the next-largest class, but
still ranks above the overall average.
Retail warehouse centers with less than 25,000 m2 generate below-average rents on average. Indeed,
average rents for retail warehouse centers with less than 10,000 m2 of space are roughly 10 percent
below the overall average for all analyzed properties. The lower rent levels, especially for smaller
properties, may well be in part because there tends to be a lower proportion of small-sized, high-rent
shop spaces in these size classes.
AVERAGE RETAIL RENTS BY SIZE CLASS AT THE STUDIED
in EUR / m2 / month
20
18
16
14
12
10
8
6
4
2
0
5,000–9,999 m 2
10,000–14,999 m 2
15,000–24,999 m 2
25,000–34,999 m 2
Mean
> 35,000 m 2
For retail warehouse centers as well, crucial significance attaches not only to location quality (macro
and micro location), competitive situation and catchment area, but to the segment mix concept.
The segment mix at a retail warehouse center typically has a different focus than at a shopping center.
The typical segment mix at a retail warehouse center has at least one food vendor, one drug store,
supplementary specialty stores in the apparel and shoe segments, and other non-food segments.
Apparel and shoes, the formats that occupy the most space and generate the most income at shopping
centers, average only 15 percent combined of space at retail warehouse centers, and about 17 percent
of rental income.
The segment that occupies the most space and also generates the most income at a retail warehouse
center is food retail. In contrast to a shopping center, the food segment typically has a positive impact
on average rents at a retail warehouse center, rather than a negative one. On average, about
40 percent of the rentable space generates about 43 percent of the rental income here.
SEGMENTS’ AVERAGE SPACE BY SIZE CLASS AT STUDIED
in %
100
0.6
3.6
6.3
10.2
90
80
15.8
70
60
50
1.6
2.4
4.0
8.4
7.5
2.7
3.0
4.8
8.7
8.0
2.2
2.2
4.4
11.6
8.5
35.4
26.8
33.5
30
40.7
20
13.3
9.5
29.7
30.0
40
3.8
3.4
5.6
45.9
37.6
34.7
33.5
10
0
5,000–9,999 m 2
Source: CBRE
10,000–14,999 m 2
Food
Apparel
15,000–24,999 m 2
25,000–34,999 m 2
DIY stores, household goods, furniture and furnishings Shoes and leather goods
Body and healthcare
> 35,000 m 2
Multimedia, books and gifts
Other
The category of DIY stores, household goods, furniture and furnishings takes second place in terms of
both space and rent. On average, this category accounts for 31 percent of space and generates about
21 percent of rental income. It includes both vendors in the low-price segment (such as non-food
discounters) and space-consuming DIY and furniture stores. These groups of vendors are characterized
by comparatively low productivities per unit of space, with correspondingly lower rents per square
meter.
The highest average rents at retail warehouse centers are paid by tenants in the body and healthcare
category. Peak rents in this segment can be nearly EUR 35.00 / m2. These high figures can be explained
by the fact that this segment includes not only drug stores, which usually occupy spaces of 300 to
800 m2 and pay monthly rents of between EUR 10.00 and 20.00 per m2, but also pharmacies and
perfume stores, which take up significantly smaller spaces and can typically bear significantly
higher rents.
SHARES OF SPACE AND RENT AT RETAIL WAREHOUSE CENTERS
BY SEGMENT
Other 2 %
SHARE OF SPACE
SHARE OF RENT
Other 4 %
Body and healthcare 3 %
Shoes / leather goods 5 %
Shoes / leather goods 5 %
Multimedia, books,
gifts 9 %
Food 40 %
Apparel
10 %
DIY stores,
household goods,
furniture and
furnishings 31 %
Source: CBRE, based on total rentable space and rents paid by all retail tenants
Body and
healthcare 5 %
Multimedia,
books,
gifts 10 %
Apparel
12 %
DIY stores,
household goods,
furniture and
furnishings 21 %
Food 43 %
The broad spread among rents in the food sector at retail warehouse centers, just as at shopping
centers, is the consequence of the split within the segment between large food markets with low
levels of rents, and small-area specialty shops that can bear relatively high rents because of their
high productivity per unit of space.
The distribution of space and rent in the two most significant segment groups at retail warehouse
centers is explored in somewhat more detail below.
By far the largest share of space in the food segment at retail warehouse centers belongs to large
hypermarkets and superstores, at roughly 70 percent. But at small centers (5,000 to 9,999 m2), this
share is significantly lower, at roughly 34 percent, and rises significantly with the size of the retail
warehouse center. At retail warehouse centers with over 35,000 m2 of space, large hypermarkets and
superstores are usually the anchor tenants.
AVERAGE RETAIL RENTS BY SEGMENT AT THE STUDIED
in EUR / m2 / month
60
50
40
30
20
10
0
Apparel
DIY stores, household goods,
furniture and furnishings
Body and healthcare
Food
Multimedia, books
and gifts
Mean
Shoes / leather
goods
Other
The average rent for the large hypermarkets and superstores at retail warehouse centers, like that of
supermarkets of discounters, gravitates around EUR 10.50 / m2 / month.
Because of the smaller average floor spaces of supermarkets and discounters, which also have a lesser
anchor or attraction effect, these types of business lag well behind the large hypermarkets and superstores in terms of their share of space at the studied properties.
The subcategory of bread and pastry bakeries generates substantially higher average rents. Tenants in
this segment pay significantly higher rents, at roughly EUR 40.00 / m2, but as a rule they occupy very
small spaces (typically between 30 and 200 m2).
AVERAGE RETAIL RENTS IN FOOD RETAIL AT THE STUDIED
Share of total rentable space within the food segment
in %
in EUR / m2 / month
45
80
70
70.6
40
35
60
30
50
25
40
20
30
15
14.3
20
10
6.7
10
0
5
3.3
5.1
Bread / pastry bakery Other food
0
Hypermarket
Supermarket
Discounter
Share of space
Average rent
In the segment of DIY stores, household goods, furniture and furnishings, DIY stores are the most
significant, with a share of about 54 percent of the space, followed by furniture and home furnishings
stores, with a share of about 25 percent. Both subcategories, with respective averages of EUR 7.70 and
5.00 / m2, pay rents well below the overall average for retail warehouse centers.
The highest rents within the household goods, furniture and furnishings segment are paid by retailers
in the pet supplies segment, with an average of EUR 9.30 / m2, but these rates are also below the
average rent for retail warehouse centers.
AVERAGE RETAIL RENTS IN THE DIY STORE, HOUSEHOLD GOODS, FURNITURE AND
FURNISHINGS SEGMENT AT THE STUDIED RETAIL WAREHOUSE CENTERS
Share of total rentable space within the DIY store, household goods, furniture and furnishings segment
in %
60
in EUR / m2 / month
10
54.2
9
50
8
7
40
6
24.7
5
30
4
20
3
12.7
10
2
4.5
4.0
Pet supplies
Non-food Discounter
1
0
0
DIY store Furniture and furnishings
Household goods Source: CBRE; CBRE; analysis omitting outliers in the 10-percent and 90-percent quantiles
Share of space
Average rent
BAVIER-CENTER ERKRATH
3,037
Leases signed with
retailers in 2012
22.8
PERCENT
Rental market share of size class between
500 and 1,000 m2 in first half of 2013
17.0
PERCENT
International retailers’ share of rentals
from 2012 through H1 2013
07
DEVELOPMENTS IN THE
GERMAN RETAIL RENTAL
MARKET
SHARP RISE IN RETAIL RENTALS IN
2012, ESPECIALLY IN SECOND HALF
DEMAND HAS SHIFTED SINCE 2001
FROM SMALL TO MEDIUM-SIZED SALES
FLOOR SPACES, 500 TO 3,000 m2
DRESDEN, HANOVER, STUTTGART,
LEIPZIG AND DORTMUND JOIN THE TOP
CITIES AS MOST ATTRACTIVE RETAILER
LOCATIONS
LOCATIONS IN URBAN DISTRICTS AND
RETAIL WAREHOUSE CENTERS TAKE
RISING SHARES OF RENTAL MARKET
DM, TAKKO, REWE, DEICHMANN
AND ROSSMANN STILL THE MOST
EXPANSIVE PLAYERS IN RETAIL
WAREHOUSE CENTERS IN 2012
90 | DEVELOPMENTS IN THE GERMAN RETAIL RENTAL MARKET
7.1 DEMAND FOR RETAIL SPACE CONTINUES
The German market for retail rentals remains a barometer of the economy. Where the first half of 2012 in
particular was still marked by considerable caution among expansion managers, rental activity at German
retail sites showed itself to be increasingly optimistic from July onward. Volume was almost one and a half
times the 2011 figure, with a total of 3,037 new rentals registered in 2012 compared to 2,028 the year
before.
The deciding factor was the second half of 2012, which saw more than twice as many new rentals as in
the same period a year earlier: 1,930, compared to 863. The reason was a postponement effect. Rental
decisions that had been planned anyway, but postponed because of the unclear economic outlook, were
now put into action. The coalescing opinion that the debt crisis would have no lasting impact on German
consumers’ behavior, combined with the ongoing intense competition in the German retail market, may also
have been an important factor.
The first half of 2013 picked up on the momentum from the year before, and has dazzled observers with
a rental volume substantially above the previous year’s. This dynamism benefited both the traditionally
strong inner-city 1-A locations and the shopping centers and retail warehouse centers. However, it seems
questionable whether the mere increase in rentals can result in a lasting expansion of total rental space.
RETAIL RENTALS REGISTERED FROM
JANUARY 2012 TO JUNE 2013
Number of new rentals
500
450
400
350
300
250
200
150
100
50
0
January Source: CBRE
March May July September
November
2011
2012
2013
DEVELOPMENTS IN THE GERMAN RETAIL RENTAL MARKET | 91
The amount of retail space will be difficult to increase, because of the few viable locations and many legal
restrictions. But there is little doubt that the retail scene will become even more vigorous. A substantial
increase from previous years is expected again in the second half of 2013.
Developments in the second half of 2012 and the first half of 2013 were significantly driven by the food,
drug / hygiene and apparel segments, each of them with concepts in the low to medium price ranges. In the
drug store segment especially, market leaders dm-Drogeriemarkt and Rossmann profited from Schlecker’s
insolvency to expand very vigorously.
A glance at the size categories of the rentals shows a trend during the studied period away from small,
intensively managed units to medium-sized spaces in the range between 500 and 3,000 m2. Spaces
between 500 and 999 m2 saw especially substantial increases. Both established retail warehouse store
concepts and expansive restaurant and catering concepts appear in this category. Nevertheless, the range
of brands represented is surprisingly diverse, including such disparate operations as Das Depot, a variety of
organic markets, Home of Shirts by Seidensticker, Planet Sports and BoConcept.
REGISTERED NEW RENTALS
BY FLOOR SPACE
in %
100
90
80
70
10.3
11.1
14.5
9.1
11.4
11.0
20.4
50
8.1
40
22.8
9.1
8.2
22.5
30
22.1
20
17.4
23.1
10
Source: CBRE
9.5
8.9
17.7
60
0
10.5
7.3
2011
> 3,000 m2
500–999 m2
16.0
16.4
2012
1,500–2,999 m2
350–499 m2
H1 2013
1,000–1,499 m2
150–349 m2
0–149 m2
Less expensive management of the space for the retailer may also lead in some cases to a decision in
favor of a larger store unit, because larger spaces permit more flexible staff planning. Another factor
is the tension between bricks-and-mortar and online retail. Although store space is often seen at risk
of increasingly becoming a “display case” for online retail, street side retail can score with a more
in-depth presentation of products, personal advice, and an in-person shopping experience.
The regional distribution of registered retail rentals from the past year and a half presents a familiar
picture. High, stable take-up is evident primarily in the top locations of Berlin, Düsseldorf, Frankfurt,
Hamburg, Cologne and Munich. These cities have the greatest potential in terms of both space and
customers, and are the primary expansion targets for highly specialized retailers in highly
location-sensitive segments, or for international players who want, for example, to kick off their
expansion in Germany at a prominent site. The difficulty of increasing the best space, as already
mentioned above, is especially significant for luxury and alternative sites, which are almost exclusively
in the top locations just mentioned.
RENTALS BY LOCATION CATEGORY,
JANUARY 2012 TO JUNE 2013
Number of rentals registered
Downtown 1-A location
188
Downtown 1-B location
Downtown class 2 location
23
82
66
805
Shopping center
457
302
239
260
Community shopping center
140
392
Urban district
287
208
Out of town
118
0
Source: CBRE
692
370
200
400
600
800
1.000
2012
H1 2013
For example, while Dresden, Hanover, Stuttgart, Leipzig and Dortmund are regularly mentioned as other
attractive retail destinations in Germany, shopping center openings announced or already carried out in
other cities, like Koblenz and Mönchengladbach, produce exceptional effects in the form of non-recurring
high take-ups. Since these exceptional effects often represent a compensation for a wait-and-see rental
attitude from previous years, and also have a medium-term impact on demand in subsequent years,
year-on-year volatility is often high.
The following should be noted with reference to market reporting in this connection: the centralized
marketing process makes the first rentals at shopping centers highly transparent, whereas follow-up
rentals at shopping centers are often publicized only in especially spectacular cases. That means that large
numbers of non-recurring effects can be especially fast to appear. Because of the varying lease terms
involved, the highly desirable high street locations, by contrast, often turn over more steadily and usually
with less public fanfare.
In terms of retailers’ location preferences, new store openings during the period focused on sites in
downtown 1-A locations and classic shopping centers.
Nevertheless, the percentage of shopping center rentals registered during the reporting period decreased
slightly, from 27 percent (2012) to 25 percent in the first half of 2013. But this should be viewed within
the context of the pipeline of shopping center openings. By contrast, locations in non-downtown urban
districts, out of town, and retail warehouse centers showed lasting increases in their percentage of the
rental market. These types of locations can profit from the limited supply of 1-A locations and shopping
centers, where vacancies are frequently only transient and noteworthy expansions of capacity are few.
As early as the first half of 2013, rental figures outside top locations had already matched the total from
2012. Total transactions in the first six months of this year had already reached 84 percent of the 2012
volume for retail warehouse centers, 83 percent for out of town locations, and 97 percent for urban district
locations.
Accordingly, CBRE has found that the location dynamics for retail outside top locations are substantially
more volatile. Because space often becomes available on shorter notice, these locations can respond faster
to developments in the market environment. By contrast, locations where the supply is shorter call for a
longer game plan, and sometimes for anti-cyclic rental decisions.
7.2 THE MOST EXPANSIVE TENANTS AT A GLANCE
In looking at the German rental market, another point of special relevance is the location preferences
of the various retail segments. Some rather exciting changes have been evident, above and beyond the
traditional location preferences and those imposed by the form of business (e.g., out-of-town or
greenfield sites for retail warehouse centers).
The data particularly show fundamental changes in this regard in the textiles / apparel and drug /
hygiene sectors. Both show a distinct decrease in registered rentals in secondary locations (1-B and
downtown class 2 locations). Strong urban district locations and retail warehouse centers have especially
benefited in return. All in all, sites with a distinct location profile gained ground. Here retail warehouse
centers especially benefited from their structural advantages over existing properties in 1-B and
downtown class 2 locations.
Food vendors had the largest demand for urban district locations. If we include organic supermarkets
here, this segment, with 62 registered rentals, represented more than half of all documented rentals by
the top 15 tenants. However, competitors in this segment had very different approaches. CBRE found
that the discounters Penny and Aldi, which were still vigorously expansive in 2012, expanded more
MOST ACTIVE TENANTS IN URBAN DISTRICT LOCATIONS
IN H1 2013
Rossmann
Rewe
Burgeme
Alnatura
Edeka
Mrs. Sporty
dm
Netto
25 Minutes
Aldi
Domino´s Pizza
Bio Company
FitX
Sky
Temma
Vitalia
23
22
10
9
9
9
8
8
7
6
5
4
4
4
4
4
0
Source: CBRE
5
10
15
20
25
conservatively in the first half of 2013, while Netto has already exceeded its total new rentals from all
of 2012. Fitness studios were often a supplementary tenant in urban district locations. Here one may
particularly mention not only the Mrs. Sporty franchise concept, which remains expansive, but also the
“25 Minutes” chain, which uses electric muscle stimulation and has already opened seven studios in
2013. But Rossmann heads the list of tenants. This chain from Lower Saxony took the lead in the first
half of 2013, with 23 registered rentals, slightly ahead of Rewe (22).
In contrast to 2012, expansion activities at out-of-town locations saw a substantially greater spread
among players in the first half of 2013. While only two operators (toom and Hagebau) recorded
double-digit new rentals, and only eight retailers had more than three new rentals, 18 tenants had
two new rentals each. Although two DIY store chains head the list, this should not mislead one to
assume that a consolidation and optimization of store networks is on the agenda for the sector as a
whole. In this regard, new openings often replace old existing properties elsewhere, so that on balance
there is no increase in branch locations.
MOST ACTIVE TENANTS IN OUT-OF-TOWN LOCATIONS
IN H1 2013
toom Baumarkt
Hagebau
Edeka
Möbel Boss
Aldi
Bauhaus, OBI
Globus, Kaufland
Shoe4You
12
10
6
5
4
3
3
3
BayWa, Hellweg, Zoo & Co., Dehner
2
Famila, Lidl, Rewe, dm
2
Möbel Höffner, Poco, Küchen Treff
2
Decathlon, Futterhaus,
Kentucky Fried Chicken, Mc Trek
2
0
Source: CBRE
5
10
15
We must furthermore wait and see what effect the Praktiker / Max Bahr insolvency will have on
competitors’ plans for expansion. At least a partial change of owners for entire packages is not out
of the question in the medium term here.
Apart from their substantially faster rate of expansion, the group of vigorously expanding players
at retail warehouse centers has not changed: it is still dm, Takko, Rewe, Deichmann and Rossmann.
Typically, segments for day-to-day needs dominate. Here product lines for medium-term needs tend
to be handled by price-oriented brand vendors.
Although some concepts whose rapid expansion had already attracted attention last year maintained
the same pace in the first half of 2013 (Edeka, Dänisches Bettenlager, Fressnapf), and had already
attained half of last year’s level of new rentals, others accelerated significantly further. Takko, dm,
Deichmann, Rewe and Aldi had already matched their prior-year figures by the end of the first six
months of 2013.
MOST ACTIVE TENANTS AT RETAIL WAREHOUSE CENTERS
IN H1 2013
dm
Takko
Deichmann
Rewe
Rossmann
Aldi
Ernsting`s Family
Lidl
Dänisches Bettenlager
Edeka
Fressnapf
KiK
Media Markt
Woolworth
Das Depot
Frisör Klier
Das Futterhaus
Jeans Fritz
real,Reno
3
3
3
3
3
3
0
Source: CBRE
5
5
5
4
4
4
5
6
9
10
10
11
15
12
12
15
19
20
An analysis of the origins of seekers of retail space shows that Germany remains an attractive
market for international retailers as well, although the share of new rentals by foreign tenants
decrease from the prior year’s 24 percent to just under 17 percent. Retailers from other European
countries accounted for by far the largest share over the past 18 months, at roughly 70 percent of new
rentals. Nevertheless, the USA was the single most important country of origin, with about 20 percent
of international new rentals, followed by the UK with 12 percent.
The substantial increase in demand from Spain and Italy was conspicuous. From the viewpoint of the
countries in crisis, the German market is apparently not just an opportunity, but a necessity.
COUNTRY OF ORIGIN OF MOST EXPANSIVE TENANTS
IN GERMANY
in %
100
6.6
3.1
4.9
6.4
8.8
90
80
70
60
9.4
5.9
50
11.3
40
9.2
30
12.7
8.1
5.6
7.0
6.5
6.7
7.2
8.5
8.6
0
Source: CBRE
8.6
8.2
7.5
9.5
21.0
20.6
12.1
20
10
7.2
6.5
8.5
7.8
6.2
5.6
12.4
21.7
2011
2012
USA
United Kingdom
Denmark
Sweden
1. Halbjahr 2013
Netherlands
Spain
France
Austria
Italy
Other
Switzerland
65.0
PERCENT
Of surveyed retailers plan to
complete more locations
by the end of 2013 than in 2012
70.0
PERCENT
Of interviewed investors
assume returns will be stable
for next 12 months
37.0
PERCENT
Of surveyed investors prefer mediumsized cities (70,000-100,000 residents)
for investment
08
RESULTS OF THE HAHN
GROUP’S SUMMER 2013
EXPERT SURVEY
ABOUT 38 PERCENT OF RETAILERS
EXPECT HIGHER REVENUES IN 2013
BUILDING LAW REQUIREMENTS REMAIN
THE BIGGEST OBSTACLE TO ACHIEVING
EXPANSION GOALS
MOST EXPERTS DO NOT NECESSARILY
VIEW RETAIL SPACE ON CITY OUTSKIRTS
AND GREENFIELD SITES AS LOSERS
COMPARED TO SITES DOWNTOWN AND
IN LOCATIONS NEAR RESIDENTIAL AREAS
MOST INVESTORS BELIEVE PURCHASE
PRICES FOR RETAIL WAREHOUSE
CENTERS WILL REMAIN STABLE OVER
THE NEXT 12 MONTHS
ONLY ABOUT ONE-THIRD OF SURVEYED
INVESTORS WOULD LIKE TO EXPAND
THEIR REAL ESTATE PORTFOLIO FURTHER
100 | RESULTS OF THE HAHN GROUP’S SUMMER 2013 EXPERT SURVEY
8.1 RETAILERS’ EXPANSION PLANS AND FUNDAMENTAL FUTURE OUTLOOKS
In summer 2013, decision-makers in large-format retail in Germany were surveyed for the eighth
Hahn Retail Real Estate Report, to discover current trends and attitudes in the sector. The analysis of
the results looked at four hypotheses that had been formulated in advance:
Hypothesis
Hypothesis
Hypothesis
Hypothesis
1: Revenue will increase in the second half of 2013
2: The trend will be toward sales spaces of the same size as before
3: Future outlets will be designed appropriately for target generations in view of the
aging population
4: High street retail will especially suffer from increasing online retail
The 40 participants were the expansion officers of typical tenants of retail warehouse centers and
large-area retail properties, representing a broad mix of food and non-food segments. The food and
apparel segments provided 14 representatives each, 6 were from the DIY store segment, and 2 each
were from the shoes, drug store, and home electronics segments.
PARTICIPATING RETAILERS
BY SEGMENT
Home electronics 2
Shoes 2
Food 14
Drug stores 2
DIY stores 6
N=40
Apparel 14
RESULTS OF THE HAHN GROUP’S SUMMER 2013 EXPERT SURVEY | 101
Looking at revenue expectations for the second half of 2013, the results of the current survey are
somewhat more modest than for previous years, but still very robust. Where some 58 percent expected
rising or sharply rising revenue last year, the current figure is around 38 percent. More than half of
the retailers expect stable revenue up to the end of this year. Operators of drug stores and DIY stores
showed the greatest optimism among the various segments. Here 100 percent and 50 percent of the
retailers, respectively, expected revenues to rise. Expansion officers in the food, apparel, shoe and
home electronics segments primarily expect revenues to remain stable for the second half of 2013.
Despite the prevailing expectation that revenues will be stable for the next six months, about
65 percent of the interviewed retailers expected to have completed more locations by the end of 2013
than in 2012. Consequently these business people’s expansive attitude from previous years persists,
and pervades all segments.
EXPECTED REVENUE FOR SECOND HALF OF THE
FISCAL YEAR
Survey in summer
2013
2012
2011
2010
2009
Basis
100 %
100 %
100 %
100 %
100 %
3%
5%
–
5%
3%
Revenues will rise
35 %
53 %
49 %
72 %
8%
Revenues will be stable
52 %
40 %
42 %
20 %
70 %
Revenues will fall
8%
2%
2%
3%
13 %
No response
2%
–
7%
–
8%
Revenues will rise sharply
Looking to the next twelve months, one can also see a positive trend in demand for space, but it is
somewhat more muted than in previous years. Though about 45 percent of the respondents were
still expecting a rise in demand for space last year, 7 percent fewer in July 2013 expected an increase.
Where 50 percent of the 2012 interviewees thought demand for retail space would remain constant,
this year’s figure was only 45 percent. Accordingly, significantly more respondents this year,
around 17 percent (2012: 5 percent), expected demand for space to decrease. In particular, some
representatives in the apparel (21.4 percent), shoe (100 percent) and home electronics segments
(50 percent) were more pessimistic about the future.
In this connection, the 40 retailers’ attitude toward the development of store sizes is also interesting.
There has been an evident turnaround in the trend over the past few years. More and more
respondents think sales floor space will remain the same, instead of growing further. At present,
about 50 percent of all respondents believe store sizes in their segments are more likely to remain
constant. This opinion is especially prevalent in the DIY store segment and in apparel retail.
Only 37 percent of the respondents from all segments expected a trend toward larger spaces,
and food retailers especially (57 percent) expected their stores to continue expanding.
RESTRICTIONS AND IMPEDIMENTS
FOR DEVELOPING SITES
Survey in summer
2013
2012
2011
2010
2009
100 %
100 %
100 %
100 %
100 %
Building law requirements
75 %
68 %
71 %
73 %
43 %
Availability of suitable land, or of properties
for rent or sale
38 %
25 %
29 %
28 %
18 %
Financing terms
28 %
18 %
22 %
13 %
20 %
Intense competition
18 %
10 %
22 %
8%
25 %
3%
–
2%
3%
–
Basis
No response
Multiple responses possible
The interviewed German retailers still view restrictive zoning and planning policies as the biggest
challenge to expanding their sites. About three-quarters of the respondents cited building law
requirements as the biggest impediment to achieving their expansion goals or developing sites
(compared to 68 percent last year). Other limiting factors they cited, though far less commonly,
were the availability of land or space (38 percent) and financing terms (about 28 percent). There was
a substantial increase in mentions of potential impediments compared to last year, so that we can
conclude that the permit situation will remain difficult.
The expansion officers in large-area retail also believe demographic change will play a key role in
developing sites or stores. As a direct response, more than half of the respondents intend to
design their stores in generation-appropriate ways. Food retailers and drug store operators are
especially including this in their future plans. Furthermore, 50 percent of the respondents in each
of these segments favor locations near residential areas. It also became clear that a large share
(73 percent) of the interviewed experts do not necessarily view retail space on urban outskirts or
greenfield sites as the losers compared to downtown locations or locations near residential areas.
About 45 percent of the respondents expect the outlook outside downtown locations to deteriorate
only somewhat, and 28 percent see no risk of this at all.
THE LOSER LOCATIONS: URBAN OUTSKIRTS AND GREENFIELD VS. DOWNTOWN AND
SITES NEAR RESIDENTIAL AREAS
Gesamt
Food
Drug
stores
DIY
stores
Apparel
Shoes
Home
electronics
100 %
100 %
100 %
100 %
100 %
100 %
100 %
Yes, true for our segment.
27 %
36 %
–
50 %
7%
50 %
50 %
Has to be considered variably. Outlook away
from downtown will deteriorate only in some
cases.
45 %
57 %
100 %
–
50 %
–
50 %
We still see great potential for our segment on
city outskirts and greenfield sites
28 %
7%
–
50 %
43 %
50 %
–
Basis
This view is supported by the results from the question about preferred future types of sites. As last
year’s analyses also showed, about 50 percent of expansion decision-makers still prefer to consider
greenfield sites.
Apart from demographic change, competition from online retail is also an important concern in
retailers’ store development. The various segment representatives agree unanimously that department
stores in all types of retail properties will suffer the most from e-commerce. In second place are the
large shopping centers, followed by retail warehouse centers. Some 35 percent of the 40 respondents
mentioned that high street retail in Germany would be affected. The interviewees felt that superstores
and other food store formats that often lease space in retail warehouse centers will hardly be affected
by online retail. The street side retailers unanimously cited improving the quality of advice as the
most suitable response to increasing Internet retail. Other preferred steps included enhanced shopping
quality and experience factors, together with campaigns and events at the point of sale. There were
fewer mentions of cross-channel selling tools such as terminals or click & collect stations. Only shoe
retailers and the DIY store segment prefer this countermeasure. Most of the retail representatives
believed competition with online retailers cannot succeed on lower price alone.
TYPES OF RETAIL PROPERTIES THAT
ONLINE RETAIL IS MOST LIKELY TO
AFFECT
SUITABLE WAYS FOR STREET SIDE
RETAILERS TO COMBAT RISING
E-COMMERCE
Large and small department stores
93 %
Skilled advice
90 %
Shopping centers
58 %
Better-quality shopping and experience factors
68 %
Retail warehouse stores and retail warehouse centers
55 %
Campaigns and events at PoS
55 %
High street retail
35 %
Involvement of multi-channel sales tools
40 %
Hypermarkets
25 %
Stronger presence on social media platforms
25 %
Best-price principle
15 %
Food supermarkets and discounters
Multiple responses possible, basis: N=40
5%
Multiple responses possible, basis: N=40
There is no clear attitude discernible from answers to the question of expectations about consumers’
mobility behavior. The surveyed experts expect consumers to become less mobile by having more and
more goods delivered through the Internet. But they also believe that in ten years’ time, consumers
will still be shopping by car at today’s levels.
CONCLUSION: TWO OF THE FOUR HYPOTHESES WERE CONFIRMED.
Hypothesis 1: Revenue will increase in the second half of 2013.
Result: About half of the retailers believe revenue will remain stable until the
end of this year, but only about 38 percent expect figures to rise.
Hypothesis 2: The trend will be toward sales spaces of the same size as before.
Result: Participating retailers’ projections about store size assume sales space
will remain the same instead of growing.
FA L S E
T RUE
Hypothesis 3: Future outlets will be designed appropriately for target generations in view of the
aging population.
T RUE
Result: As an operating measure to address demographic change, decision makers plan primarily to remodel their stores to be generationally appropriate.
Food retailers and drug store operators in particular would like to do this.
Hypothesis 4: High street retail will especially suffer from increasing online retail.
Result: Almost all the retailers believe department stores, most of which are in 1-A locations,
will suffer from increasing e-commerce. But in general, only about 35 percent
believe that high street properties will be especially seriously affected.
FA L S E
8.2
RETAIL PROPERTY INVESTORS’ INVESTMENT PLANS
In addition to decision-makers from the retail sector, in mid-2013 the survey also interviewed
30 institutional investors from both Germany and elsewhere about their investment intentions for
commercial real estate. Four previously formulated hypotheses were also examined in evaluating
the investors’ results.
Hypothesis 1: The German investment market for retail real estate is currently very attractive in
comparison to other European markets.
Hypothesis 2: The transaction volume in retail real estate will exceed last year’s level by the
end of 2013.
Hypothesis 3: Returns on retail real estate will remain stable over the next 12 months.
Hypothesis 4: Investors will look more critically at investments in retail real estate because these
properties are suffering increasing adverse effects from online retail.
ASSETS UNDER MANAGEMENT BY THE
PARTICIPATING INVESTORS
PARTICIPATING
INVESTOR TYPES
3%
7%
47 %
10 %
10 %
33 %
13 %
13 %
17 %
Real estate funds Financing banks Listed property companies
N=30
N=30
20 %
Private equity, asset managers
Project developers Insurance companies
27 %
> EUR 3 billion
> EUR 0.5 billion
No response
- EUR 3 billion
EUR 0.5 – 1 bn
Thirty-three percent of the surveyed individuals work for investment funds, 20 percent for private
equity firms or asset managers, 17 percent for financing banks, 13 percent for project developers,
10 percent for real estate firms, and 7 percent for insurance companies. Almost half the various
investment strategists and corporate forms manage more than EUR 3 billion in real estate assets.
About 27 percent of the investors manage volumes of EUR 1 to 3 billion, 13 percent manage amounts
up to EUR 0.5 billion, and about 10 percent manage assets between EUR 0.5 and 1 billion.
In general, almost all investors interviewed in the current study (about 90 percent) considered the
attractiveness of the German investment market for retail properties above average in comparison
to other European markets. Three years ago, 30 percent fewer shared this opinion. In the respondents’
opinion, the high attraction is especially based on the country’s good general economic conditions,
the stability of German retail, and the size of the overall market.
EVOLUTION OF INVESTMENT VOLUME
IN 2012
Total
Real estate
funds
Listed
property
companies
Asset
managers
Insurance
companies
Financing
banks
Project
developers
100 %
100 %
100 %
100 %
100 %
100 %
100 %
Investments have decreased
moderately (–10 to –50%)
7%
–
33 %
–
–
–
25 %
Investments have remained
roughly unchanged (±10%)
63 %
80 %
67 %
67 %
50 %
20 %
75 %
Investments have increased
somewhat (+10 to +50%)
13 %
10 %
–
17 %
50 %
20 %
–
No response
17 %
10 %
–
17 %
–
60 %
–
Investor type
Basis
Multiple responses possible
This popularity is less based on financing conditions, because about half the investors felt that these
had not changed in the past 12 months. Additionally, about 13 percent feel that conditions have
actually gotten more difficult. Project developers in particular have this opinion. Real estate funds
and real estate banks, on the other hand, at roughly 10 percent, took a positive view.
The majority (about 63 percent), mostly comprising real estate funds, listed property companies, asset
managers and project developers, also indicated that their total investment in real estate remained
unchanged in 2012. About 13 percent invested more last year, while only about 7 percent (real estate
firms and project developers) invested less.
Looking to the future, about two-thirds of the investors believed that transaction volume in retail real
estate would settle in at roughly the previous year’s level by the end of 2013. The other third believes
that despite the slow start to the year, the final volume will exceed the 2012 figure.
EXPECTED EVOLUTION OF RETURNS ON
RETAIL REAL ESTATE
Survey in summer
2013
2012
2011
2010
100 %
100 %
100 %
100 %
Returns will trend downward in 2013
27 %
10 %
20 %
10 %
Returns will stabilize at current levels in 2013
70 %
87 %
60 %
50 %
3%
3%
20 %
40 %
Basis
Returns will rise further in 2013
The surveyed investors’ expectations about the evolution of returns on retail real estate for the next
12 months were somewhat less positive in summer 2013 than in past years. The cohort of investors
who expect a decline in returns in 2013 increased to about 27 percent. By contrast, the percentage
who expect stable returns decreased to about 70 percent. As in 2012, almost none of the investors
expect the figures to rise this year.
With regard to expected changes in the prices of individual types of properties over the next
12 months, the picture is varied. Investors do not have any unanimous position about prices for
commercial buildings in 1-A locations. One half expects prices to stagnate, and the other half expects
them to rise. For example, about 54 percent of investors expect prices for shopping centers to
stagnate, while only about 30 percent expect them to rise, and only about 10 percent expect them
to fall. Seven percent abstained. For retail warehouse centers, most of the respondents (about
74 percent) expected prices to remain stable. The same tendency was evident in the analyses for
superstores, hypermarkets, supermarkets and food discounters. But about 57 percent of the investors
expect prices for the category of DIY stores to decrease in the next 12 months. About 30 percent of
the respondents expect prices here to remain stable.
EVOLUTION OF PURCHASE PRICES FOR GERMAN RETAIL REAL ESTATE
IN THE NEXT 12 MONTHS
High street
Shopping
centers
Retail
warehouse
centers
Supermarkets /
Food discounters
Supermarkets /
Food discounters
DIY stores
100 %
100 %
100 %
100 %
100 %
100 %
Falling prices
–
10 %
10 %
27 %
20 %
57 %
Stable prices
40 %
54 %
74 %
60 %
74 %
30 %
Rising prices
57 %
30 %
16 %
10 %
3%
–
No response
3%
6%
–
3%
3%
13 %
Basis
When asked about their investment strategy for the next 12 months, answers were less optimistic
than in previous surveys. In summer 2013 only about one-third of the investors said they would like to
tend to increase their real estate portfolio. This was about 23 percent less than in 2010, for example.
All investors said that until summer 2014 their purchases would focus most strongly on retail
warehouse centers and high street locations. As in previous years, one-third again plan to maintain
their real estate holdings. This plan was popular with especially many representatives of real estate
firms. But no uniform strategy was apparent among the other surveyed types of investors, such as real
estate funds, insurance companies and project developers. The other respondents, moreover, included
13 percent who planned to sell their properties, and about 23 percent who preferred not to answer
about their approach.
In this regard, the size of the city where investments are made is also relevant. It is no surprise that
investors’ preference rises with the size of the population. Cities with populations above 500,000 still
lead the site preferences, while small towns with less than 30,000 generally count as a no-go.
Nevertheless, medium-sized cities (70,000 to 100,000) and small medium-sized cities (30,000 to
70,000) have become more and more popular with investors over the past few years.
INVESTMENT STRATEGIES FOR GERMAN RETAIL REAL ESTATE
OVER THE NEXT 12 MONTHS
Total
Real estate
funds
Listed
property
companies
Asset
managers
Insurance
companies
Financing
banks
Project
developers
100 %
100 %
100 %
100 %
100 %
100 %
100 %
Moderate add
33 %
40 %
33 %
16 %
50 %
20 %
50 %
Hold
30 %
30 %
67 %
–
50 %
20 %
50 %
Moderate sell
7%
10 %
–
17 %
–
–
–
Heavy sell
7%
10 %
–
17 %
–
–
–
23 %
10 %
–
50 %
–
60 %
–
Investor type
Basis
No response
Additionally, investor representatives, just like retail expansion executives, categorize demographic
change as a theme of primary importance for the future. About 70 percent of the surveyed investors
view this aspect as a significant point for their existing properties and new investments. Questions of
consumption development and competition from online retail have gained in importance since
last year’s survey, so that about half the respondents considered these important in summer 2013.
The aspect of zoning restrictions plays only a minor role among investors, in contrast to retailers.
Matters of financing, environmental protection and energy efficiency are currently only a low priority
in the investment decisions of the interviewed investors.
If one looks a bit more closely at the discussion of online retail, one finds that despite crosschanneling, investors still have confidence in retail real estate as investment properties. Most
investors (about 94 percent) believe that especially attractive real estate concepts at good locations
will still be able to compete in the future. About 67 percent and 64 percent, respectively, consider
department stores and shopping centers the type of properties that are most likely to be affected by
rising competition from online retail. Less than half (about 47 percent) of the interviewees thought
e-commerce would have an appreciable impact on retail warehouse centers. The respondents believed
superstores and high street properties will hardly be affected.
PREFERRED CITY SIZES FOR INVESTMENTS
IN RETAIL REAL ESTATE
Size of city
First choice
Neutral
No-go
No response
Metropolises above pop. 500,000
60 %
20 %
3%
17 %
Smaller-to-medium large cities (pop. 100,000 to
500,000)
57 %
23 %
3%
17 %
Medium-sized cities (pop. 70,000 to 100,000)
37 %
17 %
30 %
17 %
Smaller medium-sized cities (pop. 30,000 to 70,000)
7%
27 %
50 %
17 %
Small towns (pop. < 30,000)
3%
3%
77 %
17 %
CONCLUSION: TWO OF THE FOUR HYPOTHESES WERE CONFIRMED.
Hypothesis 1: The German investment market for retail real estate is currently very attractive in
comparison to other European markets.
Result: Most of the surveyed investors believe the retail real estate investment
market in Germany has above-average attractiveness, because
general economic conditions are very good and retail shows
fundamental stability.
Hypothesis 2: The transaction volume in retail real estate will exceed last year’s level
by the end of 2013.
Result: FA L S E
Two-thirds of the interviewed investors believe that transaction
alues are more likely to settle around last year’s levels by year’s end.
Hypothesis 3: Returns on retail real estate will remain stable over the next 12 months.
Result:
T RUE
Most of the responding investors still expect returns to
remain the same.
T RUE
Hypothesis 4: Investors will lose confidence in investing in retail real estate because these
properties will be more and more adversely affected by online retail.
Result:
Despite rising e-commerce, confidence in the good risk profile of
retail properties remains intact.
FA L S E
BoDensee-center friedrichshafen
114 | PRODUCTION CREDITS
PRODUCTION CREDITS
Published by:
Hahn Group
Research
Isabel Lenzen
Buddestraße 14
51429 Bergisch Gladbach
Tel.: 0049 (0) 2204 9490-162
Fax: 0049 (0) 9490-177
[email protected]
www.hahnag.de
In cooperation with:
GfK Geomarketing GmbH
Real Estate Consulting
Manuel Jahn
Herrngraben 3–5
20459 Hamburg
Tel.: 0049 (0) 40 5701 325–20
Fax:0049 (0) 40 5701 325–99
[email protected]
www.gfk-geomarketing.de
CBRE GmbH
Research Germany
Dr. Jan Linsin
Bockenheimer Landstr. 24
60323 Frankfurt
Tel.: 0049 (0) 69 170077- 663
Fax:0049 (0) 69 170077-77
[email protected]
www.cbre.de
All rights reserved.
© Hahn Group
Bergisch Gladbach
Design: Friedrichs | GrafikDesignAgentur
Photos: Manuel Frauendorf, Berlin
Printing: Theisen – Die DruckBeratung, Bonn
Press date: August 2013
CBRE GmbH
Retail Investment
Jan Dirk Poppinga
Hausvogteiplatz 10
10117 Berlin
Tel.: 0049 (0) 30 72 61 54–0
Fax:0049 (0) 30 72 61 54–111
[email protected]
www.cbre.de
Hahn Group
Buddestraße 14 | 51429 Bergisch Gladbach
Tel.: 00 49 (0) 22049490-0 | Fax: 00 49 (0) 22049490-119
[email protected]
www.hahnag.de

RETAIL REAL ESTATE REPORT GERMANY Hahn Group

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