The new study “The Tenant in Focus – Rethinking Commercial Real Estate”

New commercial real estate tenant survey:

Retailers are focusing on smaller but more locations

• Fifth edition of the study by ILG and HBB “The Tenant in Focus” with a focus on mixed-use
• Food and non-food tenants value retailers, especially food and drugstores, far ahead of restaurants and service providers as partners in mixed-use properties
• Retail tenants prefer managed agglomerations to solitary locations

ILG and HBB have published the fifth edition of the successful study “Focus on tenants – rethinking retail properties” in collaboration with BBE Handelsberatung and the German Council of Shopping Places. The current edition focuses on the topic of mixed use.

One important finding concerns the trend towards smaller sales areas. 23,7% of respondents expect an increase in sales area (2018: 27,1%), while 41,9% expect the area to remain the same (2018: 42,6%). The number of tenants who are planning a decrease in sales area rose to 32,3% (2018: 29,5%). The difference between food and non-food retailers is enormous here - while only 4,3% of food tenants expect less sales area, this figure is 47,5% in the non-food sector.

At the same time, the majority of retailers are also focusing on more individual locations. 62,0% of respondents would like to maintain more locations (2018: 58,1%), while 18,5% want to reduce the number (2018: 14,0%). Divided into food and non-food companies, there are also major differences here. 87,0% of food tenants are planning to have more locations, while 8,7% are planning to have fewer locations. Among non-food retailers, 54,2% of respondents expect an increasing number of locations, while 22,0% expect fewer locations.

"These results underline the polarization in German retail. It is a good example of the purpose of the fifth edition of our study: to create the urgently needed clarity for our own business decisions, as well as for the successful design of the city of tomorrow," says Florian Lauerbach, Managing Director of ILG.

"Mixed-use properties are becoming increasingly important because consumers want to get everything in one place as conveniently as possible. We have therefore set the focus of the tenant survey here," adds Harald Ortner, Managing Director of HBB, and continues: "When it comes to sensible combinations of use under one roof, there is no way around the opinion of the tenants concerned and people as the drivers of all changes."

As an anchor tenant, retailers continue to value the food industry the most with 76,0% *, even if the dominance has decreased somewhat compared to previous years (2018: 82,8%). The next ranks are followed by textiles (33,3% after 38,5% in 2018), drugstores (32,3% after 48,4% in 2018) and restaurants (28,1% after 30% in 2018).

Both food and non-food tenants expect the greatest positive synergy effects from other retailers (food: 69,6%, non-food: 84,7%). Among food retailers, service providers follow with 56,5%, followed by restaurants and residential properties, each with 43,5%. Non-food retailers, on the other hand, prefer restaurants (50,8%) and services (25,4%).

"There is a clear trend among food and non-food tenants - stand-alone locations are less popular than last year, while managed locations such as retail parks and shopping centers are becoming more popular. Retailers particularly value the optimization of ancillary costs, the effective management of the advertising budget and the manager's ability to respond to individual needs," explains Joachim Stumpf, Managing Director of BBE.

Specifically, 36,0% of food retailers and 40,0% of non-food retailers prefer agglomerations managed in this way. Compared to previous years, this represents an increase for both tenant groups (from 16,0% in the food sector and from 29,0% in the non-food sector).

* Throughout the entire tenant survey, up to three multiple answers were possible for percentages.

 

HBB:

The HBB Group, based in Hamburg, has been active in the real estate industry as an investor and project developer for almost 50 years. Retail, office, hotel, senior citizen and residential properties have been built nationwide. HBB sees itself as a specialized investor with the aim of creating long-term, successful values. Instead of short-term profit maximization, the focus is on sustainability and compatibility of the properties. HBB is an owner-managed company and has a well-trained team of around 80 employees. HBB Centermanagement GmbH & Co. KG manages several shopping centers, including those in Langenhagen, Gummersbach, Nidderau, Hamburg-Krohnstieg, Ingelheim and Munich.

ILG:

The owner-managed ILG Group is a leading investor and manager of retail properties with 40 years of experience. With its business areas of capital management, asset, property and center management, ILG offers its investors and customers a fully integrated management concept for retail properties across all phases of their life cycle. The ILG Group currently manages properties worth over €1,4 billion or around 880.000 m² of retail space. The occupancy rate is 98%.