By André Zücker
Demand for specialist retail products is currently high. In Germany, they constituted the most sought-after retail-oriented real estate category during the first three quarters of 2018. The accumulated transaction volume in excess of €3 billion represents a proportion of around 38% of all sales in retail real estate. Specialist retail parks are set to remain the investors’ darling – not just in Germany, but for international investors as well. There are various reasons for this; one thing that is clear is that the widespread anxiety caused by the continual growth of e-commerce affects specialist retail parks less than other retail properties.
Specialist retail parks are almost irreplaceable in Austria, particularly in rural areas. The topographical landscape is characterized by many valleys with smaller towns and a few larger cities that accommodate some retail properties that are at a digital crossroads. In this context, specialist retail parks serve as regional meeting points where important purchasing and service destinations are clustered. When managed well, they are successfully positioned as local amenities with a feel-good atmosphere and experiential value.
Along with a strong anchor tenant to increase footfall – ideally one from the food sector – this strategy also necessitates a balanced sector mix and an attractive restaurant concept as well as, where possible, regular, professionally staged events boasting a high level of appeal. It is also crucial that specialist retail parks adapt and keep up with the times – commerce entails change, after all, and these days, Generation Y and millennial customers, in particular, are drawn to settings that offer quality of stay, enjoyment, and a real experience.
This millennial effect does not just apply to specialist retail parks in Austria. In Germany, too, we can see objects of local amenity real estate, where customers do not simply purchase supplies, but also experience a high degree of value, atmosphere, and high-quality restaurants, being assessed as new core investment products.
The future of specialist retail products in Germany stands and falls with professional, interdisciplinary center management. The architecture, infrastructure, product and tenant mix, technology, branding, and much more are crucial to determining the success or failure of the respective property.
Specialist retail centers have stronger-than-average resilience against online buying, meaning that – with modern management and a particular focus on local amenities – they are likely to remain highly significant, even in today’s internet age.
