TOM 12 2023

T
TOPS
M
OF THE MONTH
TOMO
RETAIL REAL ESTATE
TOPS
OF THE
MONTH
Essential News About The Players In In
The Retail Real Property Estate Market In in Germany
THE HOTTEST DEALS +++
INTERVIEWS +++ STATEMENTS
+++ PARTICULARS +++
ANALYSES +++ PROJECTS
presented by HI-HEUTE.DE
December 2023
The consumer climate appears to be on the right track at the end of the year.
Consumer sentiment brightens
at the end of the year after all
GfK: However, lasting recovery remains to be seen
Consumer sentiment in Germany
brightened somewhat
towards the end of the year:
Both income expectations and
the propensity to buy recorded
noticeable increases. The
economic outlook also improved
slightly.
The consumer climate rose to
-25.1 points in the forecast for
January 2024 - an improvement
of 2.5 points compared to the
previous month (revised -27.6
points). These are the results of
the GfK Consumer Climate powered
by NIM for December
2023, which has been published
jointly by GfK and the Nuremberg
Institute for Market Decisions
(NIM), founder of GfK,
since October 2023.
With these results, the consumer
climate is on the rise again
after a rather stagnant development
recently. The last time the
consumer climate was slightly
higher was in August of this
year at -24.6 points. „It remains
to be seen whether the current
rise is the start of a sustained recovery
in consumer sentiment,“
explains Rolf Bürkl, consumer
expert at NIM. „Consumers are
still very worried. Geopolitical
crises and wars, sharply rising
food prices and discussions about
the national budget for 2024
continue to cause uncertainty.
As a result, the level of consumer
confidence is currently still
extremely low.“ For a sustainable
upturn in consumer confidence,
GfK and NIM believe it
is necessary to tackle the causes
of the uncertainty and find a solution.
In concrete terms, this
means that further steps must be
taken towards price stability and
solutions must be found for the
various trouble spots.
The main pillar supporting the
positive development of the
consumer climate this month is
income expectations. In December,
it increased by 9.8 points
compared to the previous month,
climbing to -6.9 points. A better
value was last measured in July
2023 with -5.1 points. One of
the main reasons for the increased
income optimism is certainly
the expected significant growth
in the most important source of
income for private households:
wages and salaries or pensions.
This is confirmed by an in-depth
analysis recently carried out by
the NIM: German consumers
were asked why they expect
their financial situation to improve.
In the open survey, around a
third of respondents answered
that past or future wage/salary
increases and pension increases
would lead them to make this
positive assessment. This is by
Symbolic image: Depositphotos / Vitalik Radko
far the most important reason
given. A number of other reasons
were also given, such as
job security or career changes/
improvements, for example the
end of training. However, saving
money by reducing expenditure
was also mentioned spontaneously
by around one in ten
respondents.
I the wake of improved income
prospects, the propensity to buy
has also increased noticeably: after
a period of stagnation lasting
around one and a half years, the
indicator has gained 6.2 points
and now stands at -8.8 points.
The last time consumer sentiment
was higher was in March
2022 at -2.1 points. Despite the
significant increases, the level
of propensity to buy is currently
still below the level of the two
lockdowns during the coronavirus
pandemic in 2020/2021.

Page 2
The pan-European real estate
investment and development
company Eurofund Group
and the London-based private
equity firm Signal Capital
Partners confirm that CBRE
Retail Consulting will take
over the marketing and management
of the Rhein-Ruhr-
Zentrum (RRZ) in Mülheim
at the beginning of 2024.
CBRE Retail Consulting, based
in Düsseldorf, specializes
in leasing, consulting and management
of shopping centers
and retail parks and has more
than 30 years of experience in
this field. In September, the global
real estate services provider
CBRE acquired Prime Consulting
from CEO and owner Alastair
Green, who in turn is expanding
its consulting services
for the retail sector in Germany
with the takeover.
The Eurofund Group and
CBRE have already worked together
successfully on the Puerto
Venecia project in Spain and
the UBBO project in Portugal.
The 206,000 square meter Puerto
Venecia project opened in
2012, marked the birth of the
shopping resort concept and
now attracts over 20 million
visitors annually. The Eurofund
Group has also pursued
the same concept in the transformation
of UBBO Lisbon,
which has established itself as
one of the city‘s leading centers
and recently broke through the
20 million visitor barrier. With
the Rhein-Ruhr-Zentrum, Eurofund
Group, Signal and CBRE
will bring the shopping resort
concept to Germany, combining
the best of retail with a
comfortable public space and
leisure activities for the whole
family.
NEWS
CBRE takes over management
of the Rhein-Ruhr-Zentrum
The partners are implementing a shopping resort concept in Mülheim
CBRE will manage the Mülheim Rhein-Ruhr-Zentrum in the future.
Visualization: Eurofund
Ian Sandford, President of Eurofund
Group: „We are delighted
to have selected CBRE as a
strong strategic partner for this
project, who will support us in
realizing our vision of transforming
the Rhein-Ruhr-Zentrum
in Mülheim back into a regionally
significant and innovative
district center. We will be working
with one of the most experienced
retail specialists in the
whole of Germany, led by Alastair
Green with over 20 years
of retail experience and a team
of 50 retail experts. As well as
building on our strong relationships
with existing tenants, our
joint aim is to attract new partners
to the building and offer an
attractive and innovative mix of
retail, food and leisure.“
December 2023
Ifo does not yet see a
decline in inflation
According to the economic research
institute Ifo, the easing of
consumer prices is likely to stall
for the time being. The proportion
of companies in Germany
that want to raise their prices in
the coming months is increasing
again, the Munich-based researchers
announced this morning.
Ifo price expectations rose to 19.7
points in December from 18.1
points in November. Expectations
had reached a temporary low
in August with a balance of 14.5
points.
The experts expect more price
increases in consumer-related
service sectors. „Restaurateurs in
particular want to increase prices
noticeably“, the institute reported.
In this area, the balance rose
from 45.9 to 87.6 points.
Deutsche Konsum:
FFO significantly below
the previous year
Deutsche Konsum REIT-AG recently
published its final and audited
figures for the past financial
year 2022/2023: Rental income
increased by 7% to 79.7 million
euros, while rental income rose
slightly by 1.8% to 48.3 million.
Further facts: FFO decreased to
EUR 33.1 million due to interest /
FFO per share is EUR 0.66 (fully
diluted). The real estate portfolio
has a balance sheet value of EUR
1.0 billion.
URW opts for green electricity at Ruhr Park
Germany‘s largest photovoltaic system on the roof of a shopping center
Together with Stadtwerke Bochum,
Ruhr Park is taking a
major step towards sustainability:
by spring next year, the
Bochum-based energy supplier
will install a photovoltaic
system on the roof of Ruhr
Park. With over 3,600 modules
and an annual electricity
yield of over 1.4 million kilowatt
hours, this will be Germany‘s
largest photovoltaic
system on the roof of a shopping
center.
The project underlines the fact
that the retail and leisure destination
takes its corporate responsibility
in the city and region
seriously and is expanding
and strengthening strategic partnerships
with local companies
Ruhr Park Bochum is getting a large photovoltaic system.
Photo: URW
and organizations. The state-ofthe-art
system is an important
milestone on the way to achieving
the medium and long-term
goals of Ruhr Park‘s operator
and owner, Unibail-Rodamco-Westfield:
to reduce CO2
emissions along the entire value
chain by 50 percent by 2030 and
by 90 percent by 2050 compared
to 2015. The first work on
the plant has lready begun and it
is scheduled to go into operation
in April 2024. The photovoltaic
system, which consists of a total
of 3626 modules, will then
generate around 1,434,000 kilowatt
hours of green electricity
per year. This is roughly equivalent
to the electricity consumption
of 410 single-family homes.
T643,000 kilowatt hours from
the plant will cover 44.8 percent
of the total electricity consumption
of the public areas of Ruhr
Park. Lars Horn, Center Manager
at Ruhr Park, says: „Making
renewable energy usable for our
shopping center is an important
step in our sustainability concept.
The plant is not only a sign
of the ecological responsibility
that we are assuming locally,
but also offers direct economic
benefits because it has a positive
impact on energy purchasing.“

Page 3
TOP STATEMENT OF THE MONTH December 2023
TOP STATEMENT
December
„Energy subsidies help
to remedy urban development
problems.
It doesn‘t get any
better than that.“
Architect Michael Maas (Mass
& Partner) in an interview with
Immobilien Zeitung, Germany

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Page 5 ANALYSES December 2023
A look into the future based on inflation
Gfk experts provide consumer forecasts for 2024
Multiple crises and a high
inflation rate have characterized
the year 2023. Many
consumers are unsettled, the
consumer climate is stagnating.
How has this year
changed consumers and their
values? And what will be important
in 2024? Experts from
GfK and NIQ look back and
provide data-based forecasts
for the new year.
The current crises are leading
to a growing need for security.
Women, people on low incomes
and young people in particular
show an above-average
orientation towards security.
„Generation Z and millennials
are unsettled by a variety of
issues, such as terrorism, environmental
pollution, the quality
of education, the impact of disruptive
technologies on society,
recession and unemployment.
As a result, they are probably
looking for stability more than
older people,“ explains Petra
Süptitz, consumer trends expert
at GfK. „This is also reflected
in their purchasing behavior.
Young consumers trust established
brands more often than older
people because they rely on
their proven quality. They will
continue to do so in the coming
year.“
Trend towards
retreating into the
home
Consumption and inflation in the coming year - GfK and NIQ provide
forecasts. Symbolic image: Depositphotos / Igor Vetushko
Older and financially less crisis-proof
people in particular
are retreating into their homes.
This is accompanied by a trend
towards domestic activities such
as cooking and repair work. Social
activities are also shifting to
the home: while 30% of 20 to
29-year-olds had guests at home
at least once a week in 2019,
this figure had risen to 37% by
2023. This is presumably also
due to price increases in the catering
industry and may increase
further with the return of VAT
from January 2024. Already,
43% of Germans are eating out
less often to save money. Climate
change remains the third biggest
concern for Germans. This
means that sustainability will
remain a relevant topic in 2024,
although the latest GfK Sustainability
Index showed that the
willingness to pay for sustainable
purchases has decreased
slightly.
The situation is different for
technical consumer goods,
especially larger household appliances:
Consumers are willing
to pay more for sustainable refrigerators,
washing machines
or dishwashers, as it is not only
the environment that benefits,
but also the consumer. Buyers
pay eleven percent more than
the average for washing machines
with an A energy efficiency
label. At the same time, their
market share is increasing: while
37% of all washing machines
were in energy efficiency class
A in 2022, for example, this figure
had risen to 60% in the first
ten months of 2023. These appliances
are attractive because
they consume less energy and
allow consumers to save money
during operation. Consumers
are also increasingly opting for
durable appliances - as this also
reduces the life cycle costs of
the product. „Consumers want
to make their everyday lives
easier with technical aids. In
a time of many simultaneous
crises, at least the home should
be an uncomplicated, stressfree
retreat,“ says Alexander
Dehmel, expert for technical
consumer goods at GfK. „And
they are willing to pay for it:
52% of Germans say they are
prepared to spend more money
on products that make their lives
easier. This is where growth
opportunities lie for 2024.“ In
the FMCG sector - i.e. food and
drugstore products - consumers
are becoming more price-sensitive.
In 2023, private labels
were on the rise: on the one
hand due to lower prices, on the
other hand the image of private
labels has also changed. According
to NIQ data, many consumers
see private labels as a good
alternative to branded products
(51%) and often consider them
to be of equal or even better
quality (41%). In competition
with stronger private labels,
it is important for traditional
brands to sharpen their unique
selling points and rethink their
value proposition. For example,
a stronger focus on certain
product characteristics such as
effectiveness or sustainability
can help them remain competitive.
„The industry is aware of
the challenge of finding a balance
between price and image.
Our recent NIQ Insider Survey
of industry executives revealed
that in 2024, they believe products
must offer good value for
money and be affordable in order
to be successful,“ explains
Enrico Krien, consumer expert
at NIQ.
Price and promotion management
will play a decisive role
in the coming year, not only for
manufacturers but also for retailers.
In view of limited consumer
budgets, retailers will
have to find the right balance
between attractive prices and
promotions with relevant margins
in order to attract consumers
on the one hand and secure
important margins on the other.
Category management will also
be even more relevant in 2024
in order to identify growth areas
and better exploit them with
products and services relevant
to the respective target group
segments. New product ranges,
products or brands can also secure
important sales. To do this,
retailers must have a precise
understanding of customer preferences
and market conditions.
Relying on gut instinct is no
longer enough in such volatile
times - not least because consumer
segments are becoming
increasingly fragmented. Additional
margins are offered by
the monetization of data and
specific retail media offerings,
which also enable the industry
to address relevant buyer segments
in a targeted and efficient
manner.
Customer
centricity and
customization
„In a digitalized world where
change is the new normal, unconditional
customer centricity
and adaptability are important
keys to success. Retailers who
set up their strategy based on
data and constantly adapt it will
be better positioned to meet the
ever-changing demands of consumers.
This is how retailers ensure
long-term success,“ summarizes
Oliver Schmitz, retail
trends expert at NIQ and GfK.
T
TOPS
O M
OF THE MONTH
TOM
TOPS
OPS F THE ONTH
OF THE
RETAIL REAL ESTATE
Essential News About The Players In In
The Retail Real Property Estate Market In in Germany
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URBAN CREATORS.
Architecture | Development & Project Management
European Council of Shopping Places (ECSP) Awards: Commendation for Best Renovation/Expansion for centres between 15.000 – 45.000 sqm

Page 7 NEWS December 2023
Battle for market share
with non-food discounters
Atradius expects a wave of consolidation
Stinginess is cool - this consumer
leitmotif seems more
relevant than ever in view of
the inflation rate, high energy
prices and declining propensity
to consume. But not everyone
benefits from this motto.
While it‘s all sunshine and roses
at the food discounters, the competitive
pressure is increasing at
non-food discounters - i.e. suppliers
of inexpensive textiles,
shoes, drugstore products and
household goods. „We expect
a wave of consolidation among
non-food discounters in the medium
term,“ says Frank Liebold,
Country Manager Germany at
international credit insurer Atradius.
Tedi, Kodi, Thomas Philipps,
Woolworth, Pfennigpfeifer and
Co. are facing numerous challenges.
In particular, the increases
caused by inflation, minimum
wage increases and higher personnel
costs are weighing on the
companies. Energy costs and rent
increases are also leading to considerable
additional expenditure.
This is because companies pay
index-linked rents linked to the
consumer price index, and these
have developed well to well
in recent years. „However, as
companies cannot pass on cost
increases to their customers on a
one-to-one basis, this is at the expense
of profitability,“ explains
Frank Liebold. The margins of
non-food discounters have already
fallen from six to ten percent
to just two to four percent. They
are also suffering from declining
footfall in city centers, where
most of their stores are located.
„Discounters that don‘t sell food
are coming under increasing
pressure. And only the large market
players with the corresponding
purchasing power will be
able to survive on the market,“
emphasizes Frank Liebold.
According to Atradius, additional
pressure is being exerted on the
domestic top dogs by internatio-
Photo: Tedi
nal competitors who are forcing
their way onto the German market
- above all the Dutch company
Action and the Polish provider
Pepco. According to market research
institute GfK, Action grew
by 39% in the first six months of
2023, while Tedi, previously the
market leader, only grew by 19%.
Pepco is also pursuing ambitious
goals. The Polish chain for clothing
and household goods wants
to open 2,000 stores in Germany.
Pepco already has around 3000
stores across Europe. As a result,
the battle for customers is intensifying.
„The cake isn‘t getting
any bigger, but has to be spread
across more providers - and that
intensifies the battle for market
share,“ says the head of Atradius
Positive trend at the Schwarzwald-Baar-Center
New anchor tenant and refurbishment in Villingen-Schwenningen
Action Deutschland GmbH
(Action) has opened its doors
in the Schwarzwald-Baar-
Center in Villingen-Schwenningen.
The non-food discounter
has leased and refurbished
an area of almost 1,391 square
meters in the existing property
of Berlinovo Immobilien
Gesellschaft mbH (berlinovo)
on a long-term basis, of which
around 920 square meters is
retail space.
By letting this part of the space,
berlinovo is continuing the positive
trend in the development
of this important commercial
location. VÖLKEL Real Estate
GmbH, which is responsible for
center management, brokered
the lease agreement between
Non-food discounters are currently facing a number of challenges.
New anchor tenants Action and Kaufland have moved into the
Schwarzwald-Baar-Center. Photo: Schwarzwald-Baar-Center
berlinovo and the international
company Action.
Carsten Pohnke, Head of Commercial
Real Estate Management
at berlinovo: „The opening
of the Action store shows
Eurozone trade
balance with higher
surplus
The foreign trade surplus in
the eurozone increased in October.
The trade surplus as the
difference between exports
and imports rose from 8.7
billion euros in the previous
month to 10.9 billion euros
after adjustment, according to
the statistics office Eurostat in
Luxembourg. Analysts had on
average only expected an increase
to ten billion euros.
This development is due to increased
exports and lower imports.
Exports climbed by 0.7
percent, while imports fell by
0.3 percent. Foreign trade in
the 27 countries of the European
Union (EU) developed
similarly to the 20 countries of
the European currency area.
Almost one in four
Germans would pay
for gift tips with data
24% of Germans are willing
to disclose their personal data
in return for help in finding
the perfect Christmas present.
This makes Germans the most
willing to provide information
in Europe, while the Dutch
(18 percent), French (16 percent)
and British (11 percent)
responded more cautiously in
a survey conducted by Zendesk,
according to a press
release. When it comes to
the use of AI, Europeans are
that our concept of establishing
a varied mix of well-known national
and international brands
and integrating local players
is working. The Schwarzwald-
Baar-Center is one of the bestknown
and most popular shopping
centers in the region. This
makes it all the more important
to ensure that it remains an attraction
for local people.“
The opening of the Kaufland
store in September of this year
was already a noticeable stimulating
element. The retailer has
leased a section of around 7100
square meters in the Schwarzwald-Baar-Center
on a longterm
basis and acts as the anchor
tenant of the property. Kaufland
closed the gap in the food supply
that had arisen following the
withdrawal of the hypermarket
chain real in 2021. With the arrival
of Action, another vacant
space has now been put to longterm
use in line with customer
requirements.

Page 9 INTERVIEW December 2023
„Experience, empathy and creativity are
back in demand among center managers“
Skills shortage in the retail real estate sector too - interview with HR expert Jutta Heusel
Everyone is talking about the
shortage of skilled workers
and it affects all sectors; the
question is rather how badly
the respective sector is affected.
„It has certainly affected
the retail sector,“ says Jutta
Heusel, who has been working
as an independent personnel
consultant at Kollmannsperger
Executive Search in the
real estate sector for over 20
years, in an interview with
TOM. Due to the rise in e-
commerce, bricks-and-mortar
retail has been in a difficult
market situation for years. It
has been hit correspondingly
hard, which is why it is very
difficult to recruit good employees.
Other asset classes
have been booming for a long
time and have therefore been
able to attract the top people.
TOM: Ms. Heusel, how is the
personnel issue currently affecting
the retail real estate
segment?
Jutta Heusel: Shopping centers
in particular have gone through
various developments, changes,
expansions, repositioning,
etc. and with these have always
come the corresponding personnel.
Originally, one center manager
and his or her team were
responsible for each shopping
center (and thus the corresponding
center advertising association).
For cost reasons, the team
was first reduced and then, for
reasons of efficiency, the communal
area to be managed was
reduced until today‘s development,
where one center manager
is responsible for several
centers at the same time.
In a fundamentally good market
situation, there are large,
successful centers in busy locations
and smaller centers that
are more tailored to local conditions
and their players. The difficulty
of this task of managing
several centers at the same time
is evident in the current market
situation.
TOM: What are the personnel-related
challenges?
Jutta Heusel: Smaller centers
Jutta Heusel, Managing Partner Kollmannsperger Executive Search
GmbH Photo: Kollmannsperger
in particular currently require
a lot of attention and a high
degree of time and creativity in
order to process contracts, implement
insolvencies and redesign
spaces and find new tenants
accordingly. This is the technical
side. The personnel side is
finding suitable staff for the role
of center manager. The focus is
on people with experience, but
they are hardly available on the
market. The shortage of skilled
workers is having a major impact
here. In the past, few new
positions were advertised, so
there are too few and the experienced
ones are usually valued
and satisfied. The smaller
centers are at a disadvantage
because, on the one hand, they
have fewer attractive and larger
tenants and, on the other, they
are in less frequented locations.
Nobody wants to manage difficult
centers either, as it is not a
very promising task to bring about
change here.
TOM: What does that mean
in concrete terms?
Jutta Heusel: If in the past a
center manager was primarily
defined by the size, level of
awareness and therefore also
the location of his center (and
his experience could also be
read from this), we currently
have new challenges. As there
have been more young, inexperienced
center managers in
recent times, they have not yet
been able to experience a crisis
and are not used to breaking
new ground. At the moment,
locations are very different and
are drifting further apart than
was the case in the past. Large,
well-functioning centers, which
are controlled by the center manager
from the tenant side via
the head office, contrast with
small, very regional centers that
function via local players and
also have their difficulties here.
Individual action must be taken
here. It helps to have a good and
trusting relationship with the
tenants in order to rethink solution
concepts and changes in the
use of space together with them.
In this way, attractive and functioning
centers can be managed
again.
TOM: How have the tasks in
center management changed?
Jutta Heusel: If efficiency
and maximum space utilization
were the focus in the past, individual
solutions are currently in
demand. Center managers are
being taken back into their actual
management role because
they are no longer simply the
administrators of the locations
and organizers of the advertising
communities of centers,
but must approach tenants with
creativity and empathy and get
them on board in order to develop
a successful concept in
centers and also in the district.
The shortage of skilled workers
and the lack of crisis experience
are leading to a renewed focus
on seniority, which has been
dispensed with in many centers
in recent years for reasons of efficiency.
Experience was often
not and could not be afforded.
TOM: But why is all this so
difficult in practice?
Jutta Heusel: The main difficulty
is that many center managers
are not at all familiar with
a crisis situation. Even though
online retail has been booming
for a long time and is pushing
back bricks-and-mortar retail,
insolvencies on a large scale
have fortunately only been seen
recently. Working together with
the existing tenant to implement
the insolvency and being
open to pragmatic and new approaches
is uncharted territory
for many CM staff and tends
to be frustrating. Seniority is
once again in greater demand
here, because experience also
brings strength of nerve and the
awareness that solutions can
be found with pragmatism and
empathy even in difficult times.
Perhaps the shortage of skilled
workers is also forcing centers
not only to tackle new concepts
in leasing and space management,
but also to respond to
pragmatic solutions and flexibility
in center management staffing.
If managers were shown
more appreciation and were
once again the caretakers and
doers of the center, their position
would be strengthened and
seen as more attractive in the
market.
Of course, the shortage of skilled
workers cannot be denied,
but creativity and flexibility in
every respect can provide a remedy
so that new concepts can
be implemented in a different
way and difficult locations can
become more attractive.

Page 11 NEWS December 2023
On the way to an urban commercial district
Interview with Steffen Uttich and Fabian Spahn (INBRIGHT Investment)
Shopping centers remain attractive
for investors if they
move away from the retail
monoculture. This is what
Steffen Uttich (Managing Director)
and Fabian Spohn (Senior
Portfolio Manager) from
INBRIGHT Investment say
in a TOM double interview.
Their Berlin-based company
focuses on light industrial real
estate in economically strong
regions throughout Germany.
TOM: How has the world of
institutional real estate investors
developed? Things looked
very different 20 years ago,
didn‘t they?
Steffen Uttich/Fabian Spohn:
Indeed. Back then, the world
of German institutional real
estate investors was a world of
drawers: Drawer open, type of
use in, drawer closed. The portfolio
cabinet was then sorted
according to residential, office,
retail and hotel. Sometimes it
even contained something as
exotic as logistics. In any case,
a mixture was not intended at
property level. Preferably one
tenant with one use in one building
- that made the investment
clear. The weighting of the individual
types of use at portfolio
level was a strategic decision
that investors wanted to make
themselves.
This approach was no longer
up to date, at the latest with the
upheavals that the 2008 financial
crisis brought to the real
estate market. The miracle of
risk diversification slowly but
steadily found its way from securities
investments to real estate
investments. After all, it is the
individual property that ultimately
determines the success of an
investment. And that is why risk
diversification should start right
there. Risk diversification in
real estate investment therefore
means bringing many tenants
with different types of use under
one roof. Multi-tenant/multi-use
is the recipe for success that requires
two essential ingredients:
space that can be used by third
parties and a property manager
who can deal with many tenants
and different types of use. As
a result, the investor gets what
he expects: stable rental income
and thus a stable return on his
invested capital.
Steffen Uttich und Fabian Spohn Fotos: INBRIGHT
TOM: What will the medium-term
future hold for investors?
Steffen Uttich/Fabian Spohn:
It is precisely this miracle of
risk diversification that can save
many inner-city shopping centers
their status as an established
investment property for institutional
investors in the coming
years. Of course, there will also
be shopping centers in the future
that will continue to function
due to their location and
reputation with a high customer
frequency. But these will be few
and far between. The majority
will no longer be able to cope
with the challenges posed by
online retail and changing consumer
habits. For their current
owners, they need to reinvent
their shopping centers.
That sounds more difficult than
it is. Because there are actually
only two adjustments that need
to be made. The first is to open
up the shopping center space -
including the sometimes oversized
parking areas - for other
types of use. Instead of the monoculture
of retail with a fig leaf
of gastronomy, a colorful quarter
can be created in which the
original tenant target audience
occupies at most half or less of
the current space. The rest can
be filled by city logistics companies,
craftsmen with their workshops,
educational institutions,
medical professionals with laboratories
and, last but not least,
creative companies.
Such a property strategy can
open up undreamt-of potential.
For example, it can be assumed
that the neighboring districts
will be revitalized by combining
workplaces and residential
areas. Horizontal integration
makes it possible to implement
flexible working time and family
concepts without long commuting
times. At the same time,
the other types of use can generate
new public traffic, which
revitalizes the retail and restaurant
areas and generates the necessary
turnover. This approach
can already be seen in Bochum,
where a virtue is being made of
necessity with the establishment
of urban production. Today‘s
shopping centers can play a central
role in such a concept if they
combine the production and sale
of locally manufactured goods
under one roof.
TOM: What is the major challenge
in the repurposing process?
Steffen Uttich/Fabian Spohn:
The trick is to make this transformation
into a multi-tenant/
multi-use property economically
viable. However, in view of
the ongoing price correction in
the shopping center segment,
business plans are likely to provide
more and more scope for
this. A leased multi-use center
can continue to generate attractive
returns for investors, even if
the rental income is at a lower
level than in the original use. For
example, the resulting ancillary
costs, which would otherwise
have to be borne by the landlord,
fall with the vacancy. If
the downward spiral of vacancy
and inadequate footfall is interrupted
by a new mix of uses, the
benefits increase. If, for example,
rents of EUR 15 per square
meter are consistently generated
for a year in a center with
a variety of uses, this is more
profitable than a vacancy of six
months in a space rented for an
average of EUR 30 per square
meter. If high-quality services
such as doctors and laboratories
can be located, an even higher
rent level can be expected. If the
fit-out of the multi-use space is
also geared towards the highest
possible third-party usability,
the costs for future meter extensions
can be set lower - leaving
more scope for the retail space
that is desired to remain in the
center. There are also positive
effects for sustainability, financing,
valuation and exit price.
TOM: And what else is important
in this context?
Steffen Uttich/Fabian Spohn:
Above all, property management.
Successful asset and property
management of shopping
centers has always been an art
in its own right. Striking the
right balance between the right
mix of stores and the maximum
achievable rents with the lowest
possible vacancy rate is a smart
business. But it is a business of
yesterday. Developing an understanding
that new skills are
needed here can prove to be a
major hurdle. In place of the
previous retail letting artist, the
skills of a community manager
are required who can adapt to
the particularities of very different
users.
As in a traditional business
park, it is important to keep an
eye on the needs of the tenants
at all times, provide ideal space
for the respective purposes and
respond to changes in operations
during the rental period.
When it comes to re-letting, it is
important to deal appropriately
with prospective tenants beyond
the highly professionalized expansion
departments from the
retail sector. A number of lessons
can be learned here from
the operation of co-working
spaces, especially from the light
industrial market segment. It
would therefore come as no great
surprise if light industrial specialists,
with their experience in
managing different types of use,
were soon to find themselves
in the shopping center market.

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retention and the sustained development of your centre in mind.
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Page 13 GUEST CONTRIBUTION December 2023
Trade is change, politics (too often) standstill
Guest article by lawyer Niklas Langguth (law firm Langguth & Burbulla, Dusseldorf)
The insolvency of Galeria
Kaufhof was the final, momentous
stage in a development
that began with the Hertie insolvency
several years ago and
was announced much earlier.
To date, there has been no
comparable replacement for
the loss of department stores,
which were often the mainstay
of city centers. In recent years,
it has been possible to fill most
of the Hertie vacancies with
new concepts. This in itself
has proven to be a challenge.
This makes it all the more important
to find promising and
sustainable solutions within a
reasonable period of time.
The problem
In the case of the Galeria insolvency,
it is possible to draw
on the experience gained from
the revitalization of the Hertie
stores. However, department
stores are very individual locations
and properties with commercial
and real estate law problems
that have often developed
over decades. Accordingly, these
properties can only rarely be
restructured using a template.
And where the commercial and
legal aspects are usually difficult,
there is a further problem:
as a rule, these are locations that
shape the district, and the municipal
policy requirements for
urban development are correspondingly
high and varied.
The developer‘s
dilemma
Niklas Langguth
Project developers are often
caught in a dilemma here: even
an initial rough draft for the
development of such properties
involves considerable investment.
If the developer then
approaches the local authority
with such a design, there is a
high risk that the design will be
disliked, torpedoed or discussed
over several rounds.
On the other hand, local authorities
often do not feel compelled
to embark on urban land-use
planning on their own, despite
the corresponding mandatory
tasks. In these cases, it is possible
to find out about the city‘s
planning intentions. In this
constellation, all too often something
can only be initiated
if an investor drafts a restructuring
scenario at high risk, knowing
full well that his design is
unlikely to come to fruition and
that a competitor may end up
benefiting from the impetus if a
planning process gets underway
and is often only completed years
later.
The failure of many
local authorities
The problem with this constellation
often lies in the inertia and
inactivity of local authorities. A
brownfield site the size of a department
store in the best inner
city area is an urban planning
disaster that creates an urgent
need for planning.
The local authorities are not
only entitled, they are legally
obliged to comply with this
planning requirement (Section
1 (3) BauGB). The fact that this
obligation is not enforceable because
it is not legally enforceable
against third parties often
leads local authorities to ignore
the legal obligation.
The excuses are manifold, particularly
popular and often heard:
local authorities cannot afford
it. One wonders: a local authority
that does not see itself as capable
of forward-looking planning
even in the narrowest inner
city area has obviously given
up its urban planning will. Only
when an investor appears on the
scene do most local authorities
begin to think seriously about
their urban planning ideas.
This usually leads to extensive
discussions and arguments between
the council factions until
there is nothing left of the investor‘s
design. Only then does
the city start a planning process,
but it often comes to a standstill
again when the investor leaves
in frustration. Then the game
often starts all over again with a
new investor.
What the local authorities overlook
is that times have changed.
When the Hertie bankruptcy
had to be overcome, online platform
retail took its first steps. In
the meantime, online retail has
taken substantial market shares
from bricks-and-mortar retailers.
A city center location is no
longer a guarantee that an investor
will take the risks that such
a location entails and wait patiently
until the municipality has
finished its discussions. At the
same time, business taxes from
city center retail are generally
a significant proportion of municipal
revenues. If a solution is
not found quickly for the derelict
site, the remaining inner-city
retail trade could be damaged
along with the department store
and, in the worst case, become
deserted.
Unlike 15 years ago, the local
authorities do not have time
to wait until, after several attempts,
an investor comes up
with an idea that suits all political
groups. If the local authorities
want to design their city
centers effectively in the current
situation and preserve city center
retail, they will have to become
active in planning. And they
will have to do this themselves,
as they are legally obliged to do
so anyway.
You almost want to shout to the
local authorities concerned: Do
your job!

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Page 15 INTERVIEW December 2023
„We have a tailor-made concept
for every location challenge“
Interview with Susanne Gehle (Kaufland Real Estate Germany)
Supermarkets and hypermarkets
have undergone a major
process of change in real estate
development in recent
years and have also broken
new ground in many cases.
Kaufland is one of the pioneers
here. HI TOM editor-inchief
Thorsten Müller spoke
to Susanne Gehle, who is also
responsible for real estate development
at Kaufland.
we have been working intensively
there to modernize the
building, which was constructed
in the early 1970s, with conversions
and extensions.
With the revitalization in Bad
Tölz, we have shown that it
does not always have to be demolition
and new construction
and how a sustainable future
concept can still be created.
TOM: The year 2023 is drawing
to a close. What were the
focal points for you in 2023?
Susanne Gehle: The main focal
points in 2023, as in the year
before, were the growth of our
store network and the revitalization
of our existing properties.
TOM: Kaufland has broken
many new ground with its
properties in recent years.
Which ideas have been particularly
successful?
Susanne Gehle: In the space of
less than two years, for example,
we recently created attractive
Kaufland stores from over
90 former Real stores. One of
our highlight projects in 2023
was our revitalization of RemsPark
in Waiblingen. We developed
the new letting concept,
including the Kaufland store,
in-house on over 22,000 square
meters. After twelve months of
construction, we celebrated the
reopening of the Kaufland store
in the center and the reopening
of the center on December 7,
2023. We are proud of the result.
In addition to our new Kaufland,
customers will find specialist
stores such as Decathlon, Smyth
Toys and dm Drogeriemarkt.
The specialist store concept is
complemented by many other
stores and services. The culinary
highlight is the newly created
FoodCourt, which invites customers
to enjoy and linger.
We now operate over 770 stores
in Germany and will continue to
focus on growth in the future.
In doing so, we are focusing
on the new development and
revitalization of existing retail
locations.
Susanne Gehle
TOM: What else will change
or develop in the near future?
Susanne Gehle: The focus will
shift even more from new construction
to the restructuring of
existing retail properties, if only
because of the large number
of legal regulations that exist
or are under discussion at both
national and European level.
Although many shopping centers
or inner-city properties are
in great need of revitalization,
the locations themselves are established.
There are enormous
development opportunities here.
TOM: ESG is playing an increasingly
important role in
new realizations as well as in
the operation of existing properties,
but it still feels like it
is in its infancy. What is your
current experience? What is
Kaufland doing in this area?
Photo: Kaufland
Susanne Gehle: There is a
great need for ESG measures
in existing properties in particular.
In our opinion, there is
great awareness of the topic in
the sector. However, committed
action in the implementation of
ESG-compliant measures must
be or become the declared requirement,
especially for property
owners. As an owner and
as a tenant, ESG plays a central
role in the further expansion
and management of our existing
portfolio. As a local supplier of
the future, we face economic,
social and geopolitical challenges
with innovative approaches,
focusing on revitalization and
a contemporary mix of uses.
As a modern local supplier, we
actively address sustainability,
ESG and CSR issues across the
company.
The Kaufland store in Bad Tölz,
for example, is currently a pioneering
project. Since last year,
TOM: Maintaining a vibrant
city center is of existential importance
for brick-and-mortar
retail. What can a company
like yours do to achieve
this, or is it already doing so?
Susanne Gehle: As a frequency
generator, we occupy all retail
locations, from stand-alone supermarkets,
specialist stores and
shopping centers to inner-city
locations. Local service providers,
retailers and restaurants
also benefit from this. Kaufland
acts as a strong local partner that
finds an individual solution and
a tailor-made concept for every
challenge at the location. Innercity
locations in particular offer
us optimal revitalization opportunities,
especially in shopping
centers.
TOM: Online and offline are
no longer enemies. Would you
agree with this and can you
give an example from your
company?
Susanne Gehle: In our Düsseldorf
store on Hilde-und-Joseph-
Neyses-Platz, we have been
testing an open showroom in
the entrance area with exclusive
products from our marketplace
Kaufland.de since June, offering
a piece of the online world you
can touch. This gives the marketplace
even more visibility
on the sales floor and our customers
can conveniently discover
selected marketplace products
directly on site during their
weekly shop instead of only seeing
them online. It is another
example of how stores and the
online platform are increasingly
merging into one Kaufland
world.

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Page 17 MAP OF THE MONTH December 2023
GfK Purchasing Power for Toys & Hobbies, Germany 2023
GfK’s Map of the Month for December shows the 2023
regional distribution of purchasing power for toys
and hobbies via online and brick-and-mortar retail
in Germany. The holidays are just around the corner,
and children in particular can hardly wait to unpack
their presents. But where in Germany do people buy
the most toys? GfK’s study on purchasing power for
retail product lines shows that there are significant
regional differences in terms of spending potential
for toys and hobbies – both in online and brick-andmortar
retail. The inhabitants of the rural district of
Munich spend €86 per capita online, which is more
than 29% above the German average, on toys and
hobbies – putting them in first place among all 400
urban and rural districts in the online retail channel.
In contrast, the urban district of Gelsenkirchen is in
last place with a per capita purchasing power of €48.
Residents of the urban district of Wolfsburg have the
highest spending potential in brick-and-mortar retail.
At €81 per person, this is almost 35 percent above
the national average. In the last-placed urban district
of Hamm, on the other hand, residents only have
€44 available for their toys and hobbies spending in
brick-and-mortar retail.