Growing Pains & Gains

Germany’s retail sector, like the national economy, is working through its jitters and attempting to build a brighter future

It was 15 years ago that Germany’s wall came down. Numerous world-changing events have since taken over news headlines. Yet soundbites coming from the country’s streets tell tales of people still grappling with their new-found socio-economic realities—a rapidly aging population, a weakened social safety net, as well as cultural integration and clashes resulting from rampant immigration. In many ways, Germany is a country waiting to exhale.
For the overall retail property market, the immediate future seems rather bleak, or uncertain at best. Still, life in retail development and management is anything but stagnant. Just look at what’s happening in the country’s capital city of Berlin.
More than any other place in the nation, Berlin bears all of the marks of the 1961 erection of the wall, its collapse in 1990 and the forced reunification that followed. But Berlin is resilient; some might even say audacious. Everywhere you turn, there’s a new development or a redevelopment in the works—most notably OpernCarrée, the €150-million mixed-use project from Hochtief Projektentwicklung GmbH that will transform one of the most famous squares in central Berlin. Meanwhile, retail landmarks and other mature properties are attempting to keep up with the times, retain their existing clients and attract new shoppers—among them, Kaufhaus des Westens (or KaDeWe), which is preparing to celebrate its centenary in 2007.
All of this activity has grown the supplier market beyond its corresponding demand. Developers are looking past today and building for the future. Until that future comes, vacancy rates are increasing, rents are either stagnant or dipping, and there is a sense of urgency for retailers to take their chances in revamped areas and for consumers to stop saving for rainy days and start spending money on the High Street and in centres.
Away from the capital, markets are attempting to breathe new life into their neighbourhoods, High Street stores and shopping centres. Some examples can be taken from the list of finalists of the 2006 ICSC European Shopping Centre Awards: Schlössle-Galerie (Pforzheim), Phoenix-Center Hamburg-Harburg (Hamburg) and Main-Taunus-Zentrum (Sulzbach).
Opened this past March, Schlössle-Galerie is an AM Development project that houses 43 shops over three levels and a signature public rooftop garden offering a children’s play area, walkways and a panoramic view over the hills of Pforzheim and into the Black Forest—features that are testimonies to the centre’s desire to be more than a hub of commerce and act as a gathering place for local residents as well as a draw for out-of-town visitors.
Phoenix-Center is part of a new generation of retail centres built around major public transportation facilities. Self-described as an inner-city shopping centre, the 29,900-square-metre project by ECE Projektmanagement (ECE) opened last autumn right next door to the Harburg suburban and long-distance railway station.
The third finalist, also an ECE development, offers shoppers 103 outlets and 4,000 free parking spaces on the outskirts of Frankfurt. This property first opened in 1964 and has undergone two refurbishments, in 2001 and then again last year, in efforts to maintain its market position.
Then there is CentrO, the Oberhausen shopping centre that has become somewhat of a de facto poster child for shopping centre marketing in that country, much like Bullring in the UK or Field’s in Denmark. With numerous industry awards to its credit, CentrO is a rigorous marketer that relies on in-depth research and hard numbers to make the most of whatever environment socio-economic trends create regionally and nationally (see below our interview with CentrO managing director of marketing, Frank Pöstges).
For the marketing managers of centres across Germany, be they in charge of small convenience centres or mega shoppertainment projects in the west or in the east, the real challenge lies in moving through the current malaise and focus on the many market opportunities that still exist, while keeping their feet firmly planted on the ground—growing economies in Eastern Europe will surely mean both access to new potential shoppers and retail competition coming from countries such as Poland, Hungary and Russia.
As Pöstges rightfully points out, there isn’t much room left for wishful thinkers and haphazard marketing management in Germany. Changing demographics, consumer’s altered spending patterns, the expanding gap between bustling retail markets and ghost towns plagued with youth exodus and retracting industries—everything has to be thrown into the strategic marketing planning process.
Germany is indeed enduring some growing pains and the country’s new coalition government, under the leadership of chancellor Angela Merkel, has its work cut out for the coming years. Likewise, shopping centre marketers have much to lose but even more to gain over the long term. That’s if they don’t dwell on a lost past and focus on the many opportunities that exist in a nation that will likely play a central and positive role in a new Europe in the making.

Market Links

Germany’s diverse retail real estate sector is embodied by the German Council of Shopping Centers (GCSC). The organisation represents the interests of member companies from the different areas of commercial property, entertainment, finance,  centre management, marketing, architecture, development and analysis, as well as retailers.
GCSC says it currently has 500 members, including well-known  companies operating these specific types of entities:
• Shopping centres, galleries and arcades
• Specialist shopping centres
• Railway stations
• Property developers and architecture firms
• Financial institutions and estate agencies
• Cinema and entertainment companies
• Management consultancies
• Advertising agencies
• Specialists from the furnishing and design sector
• Retail brands
Besides acting as a source of industry contacts, GCSC organises a number of activities, such as regional meetings, specialised forums, hands-on market reviews and continuing education programmes.
The council produces its own publication, German Council Report, to keep members abreast of the trends, news and developments occurring within the shopping centre industry at home and abroad. For more information, visit www.GCSC.de.

Source: www.gcsc.de

NOT TO BE MISSED

Here are some of the industry events coming up in early 2006:

JANUARY       
• Date TBA German Council Network, 2:. Moving Dinner

FEBRUARY
• 16th & 17th Feb.      German Council on Tour, Western Region Meeting
• Date TBA            German Council Network: Coaching for Young Professionals

MARCH
• 9th & 10th March   German Council Forum: Centre Management
• 23rd March            German Council Forum: Marketing
• 23rd to 24th March   German Council Members Meeting
• 28th March-1st April      ebs Intensive Studies in Retail Real Estate
• TBA    German Council Network, 2: Evening Social

MAY
• 10th to 12th May      German Council on Tour: Study Tour in Dubai, U.A.E.
• 17th to 24th May      Industry Study Tour in the USA (P. Fuhrmann Consulting)

JUNE   
• 21st to 24th June     ebs Intensive Studies in Retail Real Estate
• 22nd & 23rd June     German Council On Tour: South Region Meeting

SEPTEMBER  
• 21st & 22nd Sept.    German Council Congress, Berlin

OCTOBER       
• 23rd-25th Oct.            Expo Real
• 26th & 27th Oct.            German Council Forum: Centre Management

NOVEMBER    
• 9th November            German Council Forum: Law & Consultation
• 25th November            Real Estate Gala Ball  2006, Wiesbaden
• Date TBA            German Council On Tour: Study Tour in Shanghai, China

Source: www.gcsc.de