TOM 12 2024

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 2024
Munich‘s Kaufingerstraße is Germany‘s most-frequented shopping street.
Photo: AdobeStock
More business in German city centers
Retailers remain skeptical, however
By 2024, German city centers
will have become somewhat
more attractive again. According
to an analysis by the
data portal Hystreet, footfall
rose by an average of 1.5 percent
nationwide compared to
the previous year. During the
Advent season in particular,
cities recorded an increase of
four percent.
In 2024, Kaufinger Straße in
Munich was the most popular
shopping street in Germany,
with 30.5 million pedestrians
counted. Neuhauser Straße, also
in Munich, was a close second,
with 29 million visitors. The
Zeil in Frankfurt (23.7 million)
and Georgstraße in Hannover
(23.3 million) are also among
the most highly-frequented
shopping streets in the country.
European Football
Championship
provided impetus
The largest percentage increases
compared to the previous year
were achieved by Kaufinger
Straße in Munich (+5.8 percent),
Hauptstraße in Heidelberg (+5.7
percent) and Jungfernstieg in
Hamburg (+5.5 percent).
The European Football Championship
in Germany in the
summer of 2024 attracted exceptionally
high numbers of visitors
to the host cities. Particularly
on match days, city centers
were noticeably more crowded
than usual, which had a positive
impact on the overall balance.
Despite the increase in visitor
numbers, retailers remain cautiously
optimistic.
The German Retail Association
(HDE) downgraded its forecast
for 2024. Adjusted for inflation,
the association expects sales to
be no better than the previous
year. Concrete figures are not
yet available.
Hope for
improvement
Christmas sales, traditionally
an important sales driver, also
fell short of expectations. „The
increase in footfall is not reflected
in a significant increase
in sales,” said an HDE spokeswoman.
Many retailers are now
hoping for a better year in 2025.

Page 2 T O M
ANALYSES
December 2024
Local supply and logistics
remain extremely resilient
Garbe and Savills: Both segments are becoming more important for investors
GRR Garbe Retail has together
with Savills published
the fourth edition of its GRR
Basic Retail Report. The market
study highlights current
developments and challenges
in the asset classes of local
supply and logistics real estate.
In their expert contributions this
year, the authors explore how
sustainable supply chains, omnichannel
strategies and the growing
importance of ESG criteria
are developing into key growth
drivers in these segments. In
2023, neighborhood retail and
logistics real estate together accounted
for around 23 percent
of the total transaction volume
on the German investment market
– a record high that followed
years of ups and downs. The report
shows how the increased
importance of both asset classes
has not only been consolidated
on the investment market, but
has even expanded further.
New factors are
coming into play
While the systemic relevance
of supermarkets and logistics
space became apparent during
the coronavirus pandemic, geopolitical
tensions and changes in
consumer behavior are now influencing
developments. However,
both asset classes are proving
to be extremely resilient
in this context as well, and are
also benefiting from the necessary
symbiosis. Despite digital
trends such as quick commerce
services and smart stores, traditional
local brick-and-mortar
retail remains indispensable and
continues to depend on suitable
logistics space. In an urbanized
world, logistics properties serve
as hubs and guarantors of a
smoothly functioning supply
chain. In contrast, the immediate
availability and thus the
supply of everyday consumer
goods to end customers is ensured
by local supply properties
such as supermarkets and specialty
stores. The authors have
this prosperous interaction in
Local supply and logistics are the winners in the retail cosmos.
Symbolbild: Depositphotos / Igor Vetushko
mind. „From the perspective of
tenants, investors and our customers,
the individual types of use
for local supply and logistics
real estate have changed dramatically
in recent years. The GRR
Basic Retail Report sheds light
on these details from an expert
perspective, supplemented by
our customer survey, and highlights
the interrelations. Shaped
by the dynamics of e-commerce,
the increasing demand for
sustainable local supply chains
and changing consumer behavior,
these asset classes are now
central building blocks of the
modern real estate industry,”
says Andreas Freier, Managing
Director of GRR GARBE Retail.
Influencing factors
and challenges
The report addresses the macro-
and microeconomic requirements
for successful investment
management and analyzes
in detail the increasing demands
on real estate locations. For
example, regional differences in
the availability of skilled workers
and the need for efficient
transport routes and flexible real
estate solutions play a central
role. The labor market, particularly
in the area of warehouse
management, has grown strongly
in recent years – albeit with
regional fluctuations that require
targeted planning strategies.
These conditions should increasingly
be considered together
for both segments in order to
make well-founded investment
decisions. “Retail and logistics
real estate are part of the same
value chain and should therefore
be considered together from a
real estate perspective. It is still
relatively rare for both a warehouse
and a supermarket to be
in the portfolio of the same owner
or fund. But what belongs
together is gradually growing
together,” comments Matthias
Pink, Head of Research Germany
at Savills, on one of the
report‘s key recommendations.
ESG and sustainability as drivers
In particular, the consideration
of ESG criteria continues to
gain importance. The increasing
use of flat roofs for photovoltaic
systems or modular construction
methods underscores the
potential of these asset classes
for sustainable added value.
This allows property owners to
increase not only their rental income
but also their income from
energy generation. It is worth
taking a look at both segments.
The lever for more sustainability
can also be applied by means
of a suitably adept analysis of
trade flows, making both asset
classes attractive investments
from an ESG perspective as
well.
Stable demand
expected
For the coming years, the study
expects stable demand for neighborhood
retail and logistics
properties, driven by trends
such as the reshoring of production
and innovative forms
of distribution. Hybrid models
such as dark stores and clickand-collect
approaches are leading
to a further convergence of
the two asset classes. „The combination
of resilience and sustainable
potential makes neighborhood
shopping and logistics real
estate the winners in a volatile
investment market,” comments
Dr. Astrid Keller, ESG and Research
Manager at GRR GAR-
BE Retail. „This is also sparking
the interest of institutional
investors. This report highlights
the current trends, challenges
and opportunities with the aim
of providing a better understanding
of the strategic importance
of these two asset classes and
giving a well-founded insight
into current market developments.“

Page 3 T O M
TOP STATEMENT OF THE MONTH December 2024
TOP STATEMENT
December
„City centers are
under pressure. But
the situation is not
the same everywhere.
There are cities that
are developing splendidly.
This is partly
due to the history
of the places. There
must be an interplay
between retail, gastronomy
and culture
in the city centers.
In some places, it
also helps when there
is more residential
development in the
centers again. The
city centers need to
be revitalized“
Heinrich Deichmann, head of
the large German shoe chain
of the same name.

Page 5 T O M
RETAIL December 2024
Innovative retail clusters generate footfall
Aengevelt proposes solutions when department stores close
The research team of Aengevelt
Immobilien recommends
that cities, after the closure
of department stores, should
work with external experts
to enable new types of anchor
uses in order to maintain and,
where possible, increase visitor
numbers.
To this end, Aengevelt presents
a number of specific options
for creating such future-proof
visitor magnets, partly through
conventional uses such as transport
hubs and retail clusters, and
partly through innovative uses
such as market halls or contemporary
food retailing with lifestyle
elements. In addition to
new usage ideas, carefully networked
and attractively designed
routes from parking areas
and public transport stops to
the respective anchor use offer
high frequency potential. Finally,
Aengevelt also recommends
looking for opportunities for
cross-financing in order to bind
high-frequency visitors who
also benefit other businesses by
offering them reduced rents.
Countering the risk
of desolation
Shopping center planners usually
position at least two anchor
tenants at opposite ends of the
building or complex so that visitors
can stroll between them
and also register and visit smaller
shops in between. Naturally
evolved city quarters and high
streets have also attracted visitors
with various anchor uses
such as department stores or
large fashion stores. When department
stores, and sometimes
fashion stores, close, these visitor
magnets suddenly disappear,
reducing the number of passers-by.
In extreme cases, entire
street sections can become
deserted, which previously led
to the anchor. To maintain footfall,
Aengevelt Research recommends
locating new anchor uses
that attract large numbers of
visitors at strategic points in the
city and designing the development
in such a way that pedestrian
flows are directed through
or towards retail and restaurant
locations. Aengevelt has put together
a range of solutions for
creating such anchors.
With clever urban planning and placement of shopping places,
footfall can be generated. Symbolbild: AdobeStock / N7
To ensure that abandoned department
stores or warehouses
retain their anchor function,
the subsequent use concept
should focus less on low-frequency
office or residential use
and more on a mix of retail,
gastronomy, fitness and entertainment.
Large-scale food retailers
and drugstores are also
increasingly being considered
as new anchor uses. The trend
towards inner-city living and
towards broader product ranges
with high-quality lifestyle products
is making cities more interesting
for food and drugstore
items again. Visitor frequency
can also be increased and better
distributed over the course of
the day through multiple uses,
for example by combining food
and gastronomy.
A central parking garage or a
public transportation hub can
also ensure high customer frequency.
Through careful placement
of transportation facilities
and their access points, pedestrian
flows can be directed in
the desired directions. Visitor
flows are also generated by hotspots
of interest to tourists. That
is why monuments, architecture,
street furniture, works of
art and other visual stimuli are
becoming factors for success in
the real estate industry. Clusters
of smaller businesses can act as
anchor uses, attracting higher
visitor numbers overall. Food
clusters should be interwoven
with retail clusters wherever
possible to generate synergies.
Entertainment, leisure and fitness
uses are also sustainable
visitor magnets, as are medical
and health-related uses, which
generate high visitor numbers
that can benefit retail located
along the routes to parking lots
and public transport stops.
Health-oriented uses in the
broadest sense – from medical
centers to medical supply stores
to physiotherapy practices – can
generate considerable footfall
on the access routes. An innovative
anchor use is represented
by market halls with a restaurant
section and all-day opening
hours, which are in line with the
“farm to table” trend and can
exert an important magnet function
throughout the day.
Rethink financing
According to Aengevelt, it is in
the interest of a city quarter to
bind anchor tenants that generate
footfall by offering them favorable
rents, as a study by BBE
Handelsberatung also recommends.
The shortfall in income
can then be (over)compensated
for by higher income in other
areas due to the higher frequency.
In a shopping center or a converted
department store property,
such cross-financing can be
more easily implemented, but in
a grown neighborhood with an
atomistic ownership structure, it
is more difficult. For this reason,
organizational forms that can
implement such balancing mechanisms
are increasingly being
discussed, such as the very successful
Business Improvement
Districts in North America – in
Germany, real estate and location
communities – or city cooperatives.
Alternatively, however,
the public sector can also
help to finance anchor uses. To
this end, the instrument of the
urban development funding‘s
disposal fund can be used.
Adjusting to
a new era
Dr. Wulff Aengevelt, managing
partner of Aengevelt Immobilien:
„Those responsible for
retail districts should quickly
adjust to a new era in which
the department OPS store F THE no longer ONTH
serves as a magnet for streams
of visitors. There is no shortage
of opportunities for anchor
uses that generate footfall, but
urban developers, planners and
property owners must work together
to develop significantly
more imagination and decisive
action in the realization of
the design of the city center, to
guide pedestrian flows through
carefully planned development
and to find practical cross-financing
for innovative visitor
magnets.
T
TOPS
O M
OF THE MONTH
TOM
TOPS
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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Address:
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45130 Essen
Germany
Tel. 0049-201-874 55 28
Web: www.hi-heute.de
Mail: tom@hi-heute.de
Frequency of publication:
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sent by e-mail
Editorial team: Susanne Müller,
Thorsten Müller
Responsible in terms of press
law: Thorsten Müller
Layout: K4-PR, Essen
THE HOT
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ANALYSE
presente
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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 T O M
GUEST CONTRIBUTION December 2024
When and where it makes economic sense
to repurpose department stores
Guest expert article by Benjamin Schrödl, Partner at PwC Germany
Department stores, once the
central attraction in German
city centers, have lost their
importance due to the rise of
specialty stores, shopping centers
and online retailing. In
cities of all sizes, the waves of
closures in recent years have
led to a large number of vacant
buildings with an uncertain
future.
In this context, the question of a
sensible reuse for the enormous
structures is coming back into
focus. The high level of public
interest due to the central locations
of the buildings within
many city centers is just one
reason for the high relevance of
a timely reuse. In smaller cities
in particular, department stores
have influenced the surrounding
retail trade in the long term, and
the closure of department stores
inevitably has a negative impact
on the attractiveness of city centers.
In principle, former department
stores could continue to be used
without structural changes. However,
in the past it has been
shown that, due to their focus
on a single operator and high
operating costs, direct re-letting
without conversion is not economically
attractive. Therefore,
structural changes are necessary
in the vast majority of cases in
order to divide the space and
use it in an economically viable
way. The most successful solution
is to convert the property
into mixed-use real estate. This
involves combining various
uses in a single property, such
as offices, retail, residential,
gastronomy, hotels, senior citizens‘
homes and public uses
(e.g. courts, schools, libraries,
associations). In addition to the
economic arguments for mixeduse
properties, the increased attractiveness
for citizens and the
higher resilience (through reduced
risk of rent default) are good
arguments.
In addition to architectural and
legal feasibility, the economic
viability of a conversion is particularly
relevant. Is the project
economically viable with a future
tenant mix? How high are
the required investment costs?
Benjamin Schrödel
The economic conditions of a
city in category A are significantly
different from those of a
city in category D. So how big
are regional differences in terms
of achievable rents?
With the aim of answering these
questions, a PwC study looked
at all 37 department stores affected
by the closure wave in
June 2023 and January 2024
using the residual value method.
The aim was to derive average
investment costs, which show
the maximum amount of capital
that could be spent on acquiring
the former department stores so
that the project is still profitable,
taking into account the respective
rent levels for each city size.
The initial focus was on determining
the potential market
value based on market rents,
multipliers for the converted
property and the required investment
costs, as well as the
maximum acquisition costs that
can be borne.
The space was divided into
different mixed-use types: retail
(34.7%), office/public use
(22.2%), residential (17.4%),
gastronomy (11.8%), hotel
(9.7%) and senior citizens
(4.2%).
Photo: PwC
The findings of the analysis
can be summarized as follows:
structural conversion measures
are necessary to realize the various
new uses, such as residential
and office/public use, in order
to ensure, among other things,
natural lighting and ventilation
of the rooms in accordance with
labor law. Furthermore, requirements
for fire protection, accessibility
and energy efficiency
must be taken into account.
Due to the structural complexity
of the conversion, significant investment
volumes are required.
In addition to the pure construction
costs, the costs include the
costs of financing the purchase
and the conversion, transaction
costs and the developer‘s profit.
According to a detailed analysis,
the construction costs including
ancillary costs amount to
2,400 to 3,700 euros/sqm gross
floor area (GFA).
After determining the residuals
of the locations under consideration,
the results show a wide
range from -€1,980 to €3,530/
sqm GFA. Negative residuals
result from a higher sum of
the required construction costs
compared to the achievable income.
The calculations show
that, despite the high construction
costs, the conversion of
department stores in good locations
in German metropolitan
areas and regional centers
(mostly A and B locations) is
generally economically viable
due to the comparatively high
market rents that can be achieved.
The derived residual is at
a comparable level to previous
department store transactions
and can therefore be considered
plausible. In the economically
strong metropolitan regions, the
residuals are higher than in the
other locations. The purchase
price of department store real
estate in the years 2022 to 2024
ranges from 560 to 1,950 euros/
sqm and averages 1,240 euros/
sqm.
The analyses have also shown
that in the smaller cities (C and
D locations), the economic profitability
(from rental estimates
for mixed use) of the converted
buildings is not sufficient to cover
the high construction costs
for the conversion. Thus, the
assumed utilization concept is
not economically attractive in
all locations. Therefore, a detailed
examination is essential
for undemanding locations, for
example by adapting the mix of
uses to local conditions.
In smaller towns, department
stores play a particularly important
role at the urban planning
and social level. Here, too,
the mixed-use solution is an enriching
reuse, although in most
cases it is not economically
self-sustaining. The consequence
is that primarily commercially
oriented investors are unable
to invest in these locations.
This results in the necessity of
financial support for the communities,
such as the purchase
of property or construction cost
subsidies. However, this must
be weighed politically, since
public funds must be used. Depending
on the size of the property
and regional differences
in construction costs, the range
of construction costs at C and D
locations is at least €32 million
to €125 million. It is essential to
start discussions with all parties
involved at an early stage.

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Page 9 T O M
GUEST CONTRIBUTION December 2024
Sustainable utilization concepts for
upper floors in large retail properties
Guest article by Mario Schüttauf, Managing Director of Commerz Real Investmentgesellschaft
Department stores attract
large numbers of customers
with their unique world of experiences.
However, the rise of
online retailing has undermined
the appeal of these innercity
magnets. With the shift in
the sales channel away from
brick-and-mortar retail and
towards consumerism at the
click of a mouse, more and
more customers are staying
away.
The upper floors of large, centrally
located retail properties
are often particularly affected
by this, with the respective sales
areas recording fewer and fewer
visitors for years and an increasing
number of vacancies. This
in turn leads to an even lower
customer frequency and even
more empty retail space. The
result: a cascade effect in which
formerly highly frequented department
stores gradually become
deserted, which ultimately
also affects the attractiveness
of the city center locations and
also impacts other surrounding
stores.
The example of the fashion trade
is a good illustration of some
of the stages in this development:
according to studies, by
2030 sales in this sector will be
split equally between online and
in-store business, whereas the
current ratio is still around three
quarters to one quarter in favor
of local retail.
Trade experts expect the amount
of space used for fashion retail
to be reduced by around 50 percent
by 2030, with this downsizing
affecting department
stores and multi-storey formats
the most .
Mario Schüttauf
Identify potential, support
innovative business models,
create new prospects
To counteract the trend towards
an increasing number of vacancies,
especially on upper
floors, shopping must be seen
even more as an experience and
concepts must be implemented
accordingly, from the first to
the last floor. The competition
with online shops must be actively
accepted – with the added
possibilities that brick-and-mortar
retail offers in contrast to e-
commerce:
• Multifunctionality and multipurpose
use create added value:
Many large retail properties
have considerable potential for
transformation, which can lead
away from the classic shopping
center and towards a service
and entertainment center. Retail
parks could serve as a kind
of blueprint for this. In addition
to a discount store/supermarket,
these also offer supplementary
services such as drugstores,
hairdressers or even post offices
and packing stations. Transferring
this form of multi-functional
use to a retail property in a
city center location can create
new perspectives and leverage
potential.
• Create feel-good spaces:
The top floor, in particular,
with its short distances to roof
terraces and roof areas, can be
the “gateway” to an exclusive
gastronomic offering, to indoor
playgrounds and fitness centers
with skyline and other attractive
views. Especially in businessoriented
locations, this new quality
of stay leads to an upgrading
of the upper floors. In addition,
modern utilization concepts
also allow for the installation of
photovoltaic modules on roof
surfaces – an important contribution
to the sustainability of
these buildings. This also applies
to gardens, which, as green
recreational oases on roof terraces,
simultaneously contribute
to improving the urban climate.
• Healing architecture and
health centers form a symbiotic
relationship: When architecture
and atmosphere on all
floors have a positive effect on
mental and physical well-being
and reduce stress factors (not
only those related to shopping),
a visit to a shopping center will
be both more pleasant and likely
to last longer. Health centers
with (specialist) medical practices,
therapy rooms and medical
supply stores located there form
an almost symbiotic relationship
with “healing architecture”
and shorten the distances for
patients. If the retail property is
also conveniently located and/or
in a city center, it attracts people
from the surrounding area
as well as patients and visitors
from other cities. This in turn
opens up a much larger patient
base for healthcare providers.
Forward-looking realignments
are in demand: mixed use creates
space for innovation
At „Forum City Mülheim,” a
shopping center in the immediate
vicinity of Mülheim‘s main
train station, we at Commerz
Real are unlocking precisely
this exciting potential for transformation.
The “Forum Medikum”
is being built on the first
floor there. This modern and
spacious health centre will be
Photo: Commerz Real
the new location for (specialist)
medical practices, health insurance
companies and a fitness
studio, among other things.
Retail space will continue to
be located on the ground floor
and basement level. This means
that visitors can conveniently
combine shopping and health,
within walking distance of Mülheim
city centre.
We are pursuing a similar concept
with the Regensburg Arcaden.
Here, too, the upper floor is
to be “revitalized” to realize its
considerable potential. In addition
to apartments, a health cluster
is also to be created there.
Overall, the absence of retail tenants
offers the opportunity for
a sustainable repositioning. This
applies to upper floors in particular,
as well as to shopping
centers in general. With flexible
rental structures and conditions,
and not least with investments
in the latest technical standards,
reliable, future-proof tenants
can be acquired. Whether these
are health centers, pop-up
stores or the rapidly growing
segment of urban city logistics
always depends on the location
and building. Above all, however,
it is crucial to be close to
the market and to tenants and to
have the determination to create
future-proof usage concepts
through alternative and flexible
use of space.

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Page 11 T O M
INTERVIEW December 2024
„Overregulation prevents retailers
from being customer-friendly”
Interview with Professor Gerrit Heinemann (Mönchengladbach University of Applied Sciences)
He is known for speaking his
mind when it comes to the situation
of the German retail
industry. Professor Gerrit
Heinemann (Mönchengladbach
University of Applied
Sciences) is one of the bestknown
retail experts in the
German-speaking world,
with over 20 years of retail
experience, including in the
management of Douglas and
Kaufhof. In an interview with
TOM editor-in-chief Thorsten
Müller, he talks about the
many challenges and new developments
and reveals how
he sees the further development
of the stationary market.
TOM: The brick-and-mortar
retail sector has been through
some very challenging times,
but it still faces just as many.
Or have we already weathered
the worst?
Prof. Gerrit Heinemann: No,
we haven‘t weathered the worst
yet. If you look at the consumer
climate, which is deteriorating
again, it‘s far from over, especially
in light of the political impasse
and the protectionist measures
that are to be expected.
TOM: People are always
saying that it‘s important to
adapt to customer needs. But
these needs change faster than
you would like. What really
matters today for a retailer to
achieve long-term success?
Prof. Gerrit Heinemann:
When talking about customer
friendliness, it is crucial to really
understand what today‘s
customers want. This is, on a
digital basis, to be able to prepare
the purchase, perhaps also to
be able to pay at the self-checkout
– without having to speak
to anyone. And above all, due
to the deteriorating consumer
situation, it is important to be
affordable – that doesn‘t mean
cheap at any price, but affordable.
The motto still applies: the
range is the heart of retail. And
anyone who has a poor range of
products, perhaps even at inflated
prices, has no chance of a
future.
Professor Gerrit Heinemann is one of the most prominent retail experts
in Germany.
TOM: When it comes to new
developments or the revitalization
of large multi-use
properties, there are almost
always delays or complications
with regard to approvals
or administrative procedures.
Do you see this as an ongoing
issue in the coming years or
will the new government ensure
relatively prompt improvements?
Prof. Gerrit Heinemann: Multi-use
sounds good and seems
to be the trend, but for landlords,
multi-use still means a
significant reduction in rents,
and not all landlords are likely
to like that. Which is why they
are unlikely to be too open to
the multi-use issue. And on the
subject of politics, I would like
to ask why there should be any
improvements. Politicians have
been talking about it for years,
but almost nothing has been implemented.
On the contrary: the
situation is getting worse. For
example, the dramatic increase
in over-bureaucratization in
Germany, especially in the last
two years under the coalition
government. This is likely to be
an almost unsolvable problem
for us in Germany.
TOM: In many cases, there
are also problems in the relationship
between owners or
investors and the operators
of retail real estate, especially
with regard to modernization
measures, which cost a lot of
money. This can have quite
an impact on the cityscape,
especially in shopping streets,
as attractiveness increasingly
fades. Do cities have to take
more initiative here, and are
they able to do so at all?
Prof. Gerrit Heinemann: Yes
and no. When I look at the unfinished
buildings of the Signa
Group, it is not possible for cities
to intervene in ongoing insolvency
proceedings. That is
why this twilight state can last
for years. However, when I look
at normally operated properties
and vacancies in cities, then the
vacancy is often the result of
a prescribed commercial use,
which cities can immediately
change.
On the other hand, if I look at
functioning city centers in the
Netherlands, then there is a
much stronger enforcement of
cities with rent controls up to
expropriation. Which, as I was
told by the Ministry of Construction,
is also possible in Germany,
but which municipal politicians
– for whatever reasons
– shy away from.
TOM: The list of requirements
for retailers and managers of
retail real estate has changed
dramatically. Digitalization,
the use of AI, ESG and decarbonization
are becoming more
important. This also has consequences
for the older “homework”,
which is then often
neglected. Customer service
and entertainment offerings
are mentioned as indispensable,
but are they always implemented
well? What do you
think should have priority?
Prof. Gerrit Heinemann: What
you have just described once
again touches on the truly awful
issue of overregulation, which
starts with data protection and
ends with a multitude of prohibitions.
Above all, however, and
this is the real issue – and it is
also presented in a recently published
article in the Neue Zürcher
Zeitung – overregulation
now ties up a large proportion
of work resources – over 20
percent is the figure being talked
about – and it does indeed
prevent companies from being
customer-friendly and doing the
things that need to be done.
On the other hand, there is a
real technology explosion that
retailers and mobile operators
are exposed to. In many cases,
we are dealing with a real digital
overload, where there is basically
no solution.
TOM: Insolvencies and the
associated vacancies are weighing
on the attractiveness of
stationary retail in city centers
more than ever. In addition,
many older owners of
retail companies are having
great difficulty in arranging
succession. This, too, can ultimately
lead to the closure of
the store or store chain. What
is your forecast for the next
three years, what percentage
of stores will fall by the wayside
and what percentage will
remain?
Prof. Gerrit Heinemann: I‘ll
go back a little further than
three years, because it‘s not possible
to determine that exactly.
Online retailing is picking up
again and growing significantly
faster than stationary retailing.
That‘s why I assume that my
thesis that all non-food product
groups, which also shape city
centers, will eventually settle at
50 percent online share. If you
extrapolate that, it could mean
another 30 percent of sales for
the city centers in terms of space
and also lead to corresponding
vacancies.

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Page 13 T O M
INTERVIEW December 2024
„The important thing is
to make lemonade out of lemons”
Interview with Christoph Werner, Chairman of the Management Board of dm
Christoph Werner is the oldest
son of dm founder Götz
W. Werner. Since September
2019, he has been Chairman
of the Management Board of
Germany‘s largest drugstore
chain. He is one of Germany‘s
most successful entrepreneurs.
Before joining the
company, he gained valuable
experience in the branded
goods industry in both the
USA and France for 15 years.
In an interview with TOM
editor-in-chief Thorsten Müller,
he talks about his thoughts
on the latest developments in
his company, but also in the
entire stationary retail sector.
TOM: Mr. Werner, your
company enjoys a very special
status in the German retail
landscape in the perception
of customers. Especially
among young women. Insiders
even claim that young
women no longer need to
visit an inner-city shopping
center if they can visit a dm
in a retail park on the greenfield.
The experience factor is
then already fulfilled. Some
also say, in a flippant way,
that what the hardware store
is for men, dm is for women.
Shouldn‘t you be very happy
about that?
Christoph Werner: We are
indeed very pleased! All of our
efforts would be in vain if we
didn‘t receive positive customer
feedback.
TOM: Let‘s stay with customer
popularity for a moment.
Is it true that Japanese
tourists, for example,
primarily female, travel to
Germany to experience one
of your stores? If so, how do
you explain this?
Christoph Werner: I have
not heard of long-haul flights
just to shop at dm. However,
we do notice that many people
from Asia also shop at dm
when they are in Germany. It
is probably the good quality
and affordable prices that convince
them.
TOM: Your product range
has changed a bit in recent
Christoph Werner Photo: dm
years. In the future, medications
and medical items will
also be added. Will dm then
actually become a pharmacy?
Christoph Werner: You are
referring to items that are regulated
by law. These laws
also apply to dm. It is therefore
not foreseeable at present that
dm will become a pharmacy.
However, we will start selling
non-prescription medications
by mail order in 2025.
TOM: Since the coronavirus
pandemic, a lot has been said
about brick-and-mortar retail.
The number of challenges
has grown enormously.
How do you feel about this?
What do you consider the
biggest drawbacks compared
to the time before the pandemic?
Christoph Werner: You are
right. The key is to make lemonade
out of lemons. We can
do that by changing. At dm,
we have been quite successful
at this, as the current shopping
frequency and average
receipts show. In other words,
if the attractiveness of existing
locations suffers, it is important
to move the dm store. If
more and more people want
to shop online, then we need
to offer the appropriate online
services. If customers prefer to
ring up small purchases themselves,
then we need to install
self-checkout systems in the
checkout areas.
TOM: The cityscape has also
changed a lot in many places.
How can dm contribute
to making city centers more
attractive and what tips do
you have for other retailers?
Christoph Werner: As a general
rule, we want to be in
places that customers visit.
When we are there, we invest
in the shop in such a way that
we can achieve the highest
possible turnover.
My advice to other retailers is
to focus on these two success
factors. Because then a successful
retail concept can ensure
economic sustainability
and additionally increase the
attractiveness of the location.
TOM: On the other hand,
many retail chains in the
local supply sector are also
combining their locations
outside of shopping centers,
for example with residential
properties. Is this also of
interest to you, or does the
future perhaps even lie in a
mix of asset classes (apartments,
offices, hotels plus
retail)?
Christoph Werner: It always
depends on the specific local
situation. That‘s why it‘s advisable
to take a close look at the
local conditions and planned
developments before signing
a lease.
TOM: What role does sustainability
or ESG play for
you?
Christoph Werner: We are
experiencing that it is becoming
increasingly relevant for
our customers. What is relevant
for our customers is also
relevant for us.
TOM: How should dm‘s
journey continue? Your personal
entry into management
is accompanied by strong
growth. How do you intend
to expand? In Switzerland,
for example, there is still
plenty of potential ...
Christoph Werner: Our conclusion
is that we should not
confuse size and strength and
should always put them in the
right order. Because size does
not necessarily lead to strength.
But if you are strong, you can
hardly prevent growth. What is
important is that we constantly
renew ourselves by improving
our performance. If we have
additional resources and there
are people in the company
who would like to expand into
other countries and are committed,
then there is nothing to
stop them doing so at dm.

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Page 15 T O M
INTERVIEW December 2024
„Protection of existing rights is increasingly
a key issue when it comes to conversions”
Interview with Iris Schöberl, President of the German Property Federation (ZIA)
She has been the new president
of the German Property
Federation (Zentraler Immobilien
Ausschuss, ZIA) since
summer 2024: Iris Schöberl.
She succeeded Dr. Andreas
Mattner, who had been at the
helm for 15 years. For over 35
years, the Bavarian has been
active in the industry, mainly
as Managing Director Germany
at Columbia Threadneedle
Investments in Munich. In
2023, Iris Schöberl received
the ULI Leadership Award
in the “Real Estate Industry”
category. In an interview with
TOM editor-in-chief Thorsten
Müller, she talks about what
she thinks of multi-use real estate
and land rezoning.
TOM: In many locations in
Germany, large multi-use
properties and districts with
different types of use are
currently being planned. However,
developers and implementers
are criticizing the difficult
framework conditions
quite loudly. They often talk
about increased construction
costs, but also about legal and
bureaucratic hurdles. How do
you, as the new ZIA president,
assess the current situation?
Iris Schöberl: The bad thing
is that this criticism has been
around for a long time – because
nothing has been done for far
too long. It doesn‘t help if large
mixed-use properties or districts
with a wide range of uses take
shape in the minds of developers,
but in practice political decision-makers
continue to work
as before, micromanaging and
taking the „we‘ve-always-doneit-this-way”
approach.
Incidentally, this way of thinking
is particularly widespread
in local government. We need
to accelerate the construction
and renovation of residential
and commercial properties and
urgently simplify the building
regulations – not just a little, but
fundamentally. The application
of the countless DIN standards
and VDI guidelines on the “generally
recognized rules of technology”
has not proven itself in
recent years.
TOM: Another big topic at
the moment is the rezoning of
ZIA President Iris Schöberl.
the former large department
stores – especially after the
closure of numerous Galeria
branches. What do you expect
to happen in terms of focus?
Which conversion options will
prevail and why?
Iris Schöberl: We definitely
need real momentum here. However,
all too often we still see
“creativity meets old thinking”.
This is because the conversion
of these properties is becoming
a very expensive undertaking
due to long re-planning and
approval times plus excessive
regulation density – because the
protection of existing buildings
expires with the conversion to a
different use and, for example,
many properties are subject to
the requirements of monument
protection.
So the most important question
now is: “How can more be made
possible?” This is a key point
for traditional new construction
as well as for questions regarding
the repurposing and reuse
of department stores or office
buildings. The core question
will determine which options
prevail.
TOM: In the past, brick-andmortar
retail and gastronomy
have had to overcome many
similar challenges. Will they
now be able to work together
to find ways to strengthen
each other and thus make city
centers more attractive again?
Iris Schöberl: It‘s clear that it‘s
a very important task to bring
Photo: Laurence Chaperon
together even more closely what
already fits well together today.
It‘s not just about two sectors of
the economy, but also about the
attractiveness of city centers as
places for fun, social contact,
and enjoyment. Retail is the heart
of the city. And to avoid unfair
disadvantages that make the
situation unnecessarily difficult,
the opening hours must be further
relaxed.
Otherwise, brick-and-mortar
retail will continue to be chronically
disadvantaged compared
to online retail. In some regions
of Germany, things are already
starting to improve. But I am
sure that more can be done.
Much more.
TOM: Energy-related topics
have increasingly come to the
fore recently. They influence
not only new developments of
large properties, but also existing
ones. Possible new legal
regulations are currently the
subject of heated discussion.
What do you think will happen
and what do you expect
or demand from politicians in
this regard?
Iris Schöberl: The prognosis
depends, of course, to a large
extent on how political majorities
are formed in Germany in
the future. There is currently far
too much focus on the building
envelope in new construction.
Exaggerated, unrealistic ambition
won‘t get us anywhere!
One thing is certain: reducing
CO2 by insulating more and
more will not get us anywhere.
This is more than doubtful not
only from an ecological, but
also from an economic point of
view. In this case, it is not “the
more the better”, but rather “the
better targeted the better”. It is
clear that climate protection in
Germany and in Europe as a
whole must move forward. It is
therefore all the more surprising
that the potential is not being
fully exploited.
So far, the taxonomy has been
directing capital flows into buildings
that are already particularly
energy-efficient and lowemission
due to the construction
requirements. However, improving
a building from energy
class G to C helps the climate up
to ten times more than from B to
A. With comparatively little effort,
inefficient buildings can be
significantly upgraded in terms
of energy efficiency – for example,
to a C. Here, incentives are
needed to encourage private capital
to invest in the renovation
of existing buildings.
TOM: Neighborhood developments
offer tremendous
opportunities to rethink the
way we live in urban districts.
What do you consider to be
the most important elements
here, and is there much that
can be adopted for the centers?
Iris Schöberl: The most important
thing is a mix of uses
that is geared to the local situation,
the location. The interests
of all stakeholders, such as residents,
companies, authorities
and neighbors, must be taken
into account individually. So
there is no universal answer that
fits all. Opportunities to implement
a “city of short distances”
or “15-minute city” must be seized.
The range of services within the
neighborhood, including residential,
office, sports and leisure,
revitalizes the ground floor
zones and ensures a wide range
of services that are close to the
people: grocery stores, pharmacies,
doctors, general health
care – the variety proves to be
a magnet for everyone within
the neighborhood. One thing is
absolutely clear: mobility concepts
must always be considered.

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Page 17 T O M
MAP OF THE MONTH December 2024
GfK Purchasing Power for Sweets, Germany 2024
Our Geomarketing Map of the Month for December
shows the regional distribution of purchasing power
for sweets in Germany in 2024. In 2024, every German
spends an average of 245 euros on sweets, and
with that more than on any other food group. However,
the spending potential varies considerably depending
on the region. With a per capita purchasing
power of 301 euros, the Starnberg district takes first
place, putting the Starnbergers almost 23 percent above
the national average. In second and third place
are the urban district of Neustadt an der Weinstrasse
and the Rhein-Kreis Neuss district, each with 294
euros per capita and 20 percent more available spending
potential than the average German. Bringing up
the rear is the urban district of Gelsenkirchen, where
residents only have 203 euros per person available
for sweets. This corresponds to 83 percent of the German
average.