Retail Real Estate Outlook 2021

  • Conversion and re-use central topics for larger inner-city properties
  • REWE Group continues to expand in many sizes of space
  • Demand for local suppliers and mixed-use will continue to increase
  • Open-ended special AIF from Warburg-HIH in investment phase
  • Overall decline in investor interest and hardly any retail transactions
  • Retail A locations remain an attractive investment

Berlin, December 3, 2020 – The transformation and modernization pressure on retail real estate in Germany is increasing. For the next few years, experts expect a wave of transformations, restructurings and conversions, especially for larger inner-city retail properties such as shopping centers and department stores. Demand for local grocery stores as well as mixed-use properties with a grocery focus will continue to increase. These are the findings from the online press conference with Martin Mörl, Managing Director Girlan Immobilien, Stefan Koof, Head of Expansion and Real Estate at REWE Handel Deutschland, Jens Nagelsmeier, Head of Transaction Management Retail at Warburg-HIH Invest, and Karsten Jungk, Managing Director and Partner at Wüest Partner Deutschland.

Declining interest from investors

Karsten Jungk, Managing Director and Partner of Wüest Partner Germany, summarizes the retail market: “No other asset class has had to be viewed in such a differentiated manner since the start of the Corona pandemic as the retail sector. On the one hand, retail sales rose by 8.2 percent in October compared to the same month last year, according to destatis, giving retailers of furnishings, household appliances and building supplies a 14.2 percent increase in sales. On the other hand, the apparel sector reported a 29 percent drop in sales in the first half of 2020 alone compared to the second half of 2019.” Jungk continues: “There is a very declining interest from investors. Therefore, there are hardly any transactions and market evidence. What we see as valuers is that operators and investors are now taking prepared concepts for conversion or restructuring out of the drawer. B-locations tend to be at a disadvantage. In contrast, properties in functioning locations with functioning concepts will survive the corona crisis and structural change. Retail A locations remain an attractive investment.”

Space potential for small-scale and new uses that are in demand

Martin Mörl, Managing Director of Girlan Immobilien, expects increasing pressure to act: “We assume that there is considerable pressure to transform and convert a large number of larger inner-city retail properties in Germany. In the coming years, we will therefore see numerous conversions and reuses of retail space that is no longer in demand – which also brings enormous opportunities. This is because the potential space that becomes available, for example in department stores and commercial buildings or shopping centers, can bring new, smaller-scale uses and product ranges that are in demand back into the city centers. These can be residential, micro-logistics, health, service, office and public uses, but also innovative retail and gastronomy concepts. Retail will remain a fundamental component of downtowns.” Mörl continues, “Overall, retail as an asset class is becoming more sophisticated and complex, which is reflected in the significantly increased demands placed on real estate and utilization concepts by investors, owners, tenants and municipalities.”

Significant increase in sales in the food retail sector

In contrast, retail parks and food retailers are benefiting from the new market situation. Total grocery retail sales increased 12 percent between January and September 2020 compared to the same period last year. Stephan Koof, Head of Expansion and Real Estate at REWE Handel Deutschland, comments: “We were able to increase the turnover of our REWE and Penny stores at an above-average rate in the first three quarters of the current year. Therefore, in contrast to others, we will continue our expansion strategy unchanged. In doing so, we have a high degree of flexibility with regard to architectural and usage-related special features and are also very open-minded about mixed-use properties. The same applies to the space required: From the urban REWE convenience store with 500 square meters to Penny, the larger REWE supermarket and the REWE centers with over 5,000 square meters, we can fluently meet all space requirements at one location.”

Increased focus on local supply and mixed-use properties
Jens Nagelsmeier, Head of Transaction Management Retail at Warburg-HIH Invest, adds: “Demand for local shopping centers will continue to increase, as they offer high tenant creditworthiness and stable long-term cash flows. Likewise, purchase prices will continue to rise, but without reaching the dynamics of other asset classes. However, as the supply of available properties remains limited, mixed-use properties are also increasingly coming into focus. All types of use that extend local supply are well suited as complements, for example medical practices or apartments. In addition, the issue of sustainability will become even more important next year. Here, operators are also often already well positioned with e-charging columns, photovoltaics, etc. In the medium term, CO2-neutral green buildings will be the standard.”

Warburg-HIH Invest is currently in the investment phase for the open-ended special AIF “Warburg-HIH Perspektive Einzelhandel: Fokus Nahversorgung”. The fund has 17 properties in its portfolio. The focus is on retail parks and local shopping centers with anchor tenants from the food retail sector in economically stable German locations with an investment volume of ten to 40 million euros. The minimum subscription amount is five million euros. The distribution yield is between 4.5 and 5.5 percent p.a.

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Press contact REWE
Raimund Esser
Head of Corporate Communications
Fax: +49 (0)221-149-97 16 10

About REWE
With a turnover of 24.5 billion euros (2019), more than 148,000 employees and over 3,600 REWE stores, REWE Markt GmbH is one of the leading companies in German food retailing. REWE stores are operated as branches or by independent REWE merchants. The cooperative REWE Group is one of the leading retail and travel groups in Germany and Europe. In 2019, the company generated total external sales of over 62 billion euros. Founded in 1927, REWE Group is present in 24 European countries with more than 363,000 employees.

Girlan Real Estate Ltd.
Girlan Immobilien (formerly Prelios Immobilien Management), headquartered in Hamburg, Germany, is a leading independent retail and commercial real estate specialist. Girlan Immobilien develops, manages and repositions shopping centers, office, hotel, commercial, parking and department stores as well as mixed-use properties, retail parks and urban districts. Girlan Immobilien is active throughout Germany and offers owners and investors integrated services from a single source, location-specific solutions and customized concepts. Girlan Immobilien manages more than 1 million square meters of rental space and manages around 2 billion euros in real estate assets.

About Warburg-HIH Invest
Warburg-HIH Invest Real Estate (Warburg-HIH Invest) is one of the leading investment managers for real estate in Germany and in Europe. We find, develop and manage real estate and

Investments with a forward-looking view in the interests of our customers. Decades of experience, proximity to real estate markets and close networking enable us to uncover real estate opportunities and implement them quickly in the right market phase. Around 150 institutional clients entrust their investments to Warburg-HIH Invest. Our specialists in the areas of structuring, product development, real estate management and market development are at their disposal to develop the right investment solutions for them. Warburg-HIH Invest is represented at ten locations throughout Europe. As part of the HIH Group, we fully cover the value chain of a real estate investment with our own capacities. Early recognition of market changes, implementation of regulatory requirements and forward-looking digital management are part of our corporate philosophy. Currently, assets with a volume of 12.1 billion euros are managed in 74 funds. For more information, please visit:

Wüest Partner Germany
Wüest Partner Germany was founded as a subsidiary of the Swiss Wüest Partner AG in 2007 and has offices in Frankfurt am Main, Berlin, Hamburg, Munich and Düsseldorf. Wüest Partner’s business activities in Germany focus on the valuation of real estate portfolios and individual properties. This includes acquisition and ongoing valuation through market value, mortgage lending value and fair value determinations according to German and international methods. In addition, Wüest Partner focuses on independent investor consulting on a wide range of issues, including sustainability and strategy, real estate market analysis and the development of innovative applications for market, location and portfolio analysis and valuation. Wüest Partner employs a total of over 200 people in Germany and Switzerland and has stood for the highest quality since its foundation in 1985, not least thanks to its independence. The focus on consulting services ensures professional and neutral results. For more information, visit:

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