EHL Retail Properties Market Report 2024/25

Market Report | Austria 2024/2025

We stand for real estate.

Retail Market Report

Introduction

General economic weakness and inflation have created a challenging environment for the Austrian retail trade since 2022, and the bankruptcy of SIGNA Holding brought a flood of negative headlines for the retail property market. However, the feeling is gloomier than real life. Strong population growth and the boom in city tourism have created major positive im- pulses for the metropolitan area. The sharp drop in the production of new space and the reduction of space at weaker locations are leading to a decline in the total selling space and low vacancy rates.

And good news can also be found in unexpected corners: After years of a steady reduction in selling space, an increasing number of companies in the fashion branch are again expanding. But numerous challenges remain: Rents are under pressure at many locations, while users expect more flexible lease terms and conditions as well as a positive shopping experience. These exciting and challenging times are full of risks and opportunities, and the experienced EHL retail team will be happy to stand by your side.

Michael Ehlmaier FRICS

Stefan Wernhart MRICS

Managing Partner EHL Immobilien GmbH

Managing Director EHL Gewerbeimmobilien GmbH

Mario Schwaiger

Alexandra Bauer MRICS

Head of Retail Properties EHL Gewerbeimmobilien GmbH

Head of Office Agency EHL Gewerbeimmobilien GmbH

Austria | 2024/25

Overview of the Austrian retail market

A challenging environment for retail

The recovery of the Austrian retail market is proceeding very slowly. Growth has been limited by economic weak- ness, rising unemployment and the long-drawn-out decline in inflation. In spite of the increase in purchasing power and positive development of the tourism sector, the market remains challenging.

A glimpse at the Austrian retail market can provide equally good reasons for seeing the glass as either half full or half empty. The optimistic viewpoint is supported by the consumer climate – the most important indicator for the retail trade which aggrega- tes the key influencing factors – which has

months in 2024 was roughly ten per cent above the previous year, and the forecasts for growth have already been revised downward several times.

and services like fitness are outperforming the retail trade. These trends led to an inflation-adjusted decline of 0.8 per cent in retail turnover during the first half of 2024. The traditionally very stable food trade delivered a negative surprise with a drop into the negative zone at minus 0.1 per cent, while the non-food segment was an even higher 2.2 per cent in minus. The difficulties throughout the branch are also reflected in bankruptcy statistics. The number of bankruptcy filings reached the highest level in 15 years during the first half of 2024. More than one-fourth of the cases were attributable to the retail trade, which captured the disappointing first place ahead of the construction sector. The Austrian Institute for Economic Research (WIFO) does not expect any improvement before spring 2025 at the least, also in this area. But there are several rays of hope: One clearly positive aspect for brick and mortar retail is, for example, that the trend towards the migration of turnover to online compe-

Economic researchers now expect zero growth in 2024 and a weak 1.5 per cent

recently risen signifi- cantly from its historic low more than two years ago. According to the media digest issued by the ACSP, the Austrian

Growth has been negatively in- fluenced by economic weakness, rising unemployment, the slow decline in inflationary pressure and a change in consumer behaviour.

Council of Shopping Places, the consumer climate index improved from a disastrous minus 34 percentage points in July 2022 to minus 13 percentage points and is now only slightly lower than the minus eight per cent before the sharp rise in prices. The “half empty“ viewpoint, in contrast, reflects the sluggish pace of the recovery and numerous economic developments that point towards a continuation of the tense situation. The unemployment rate for most

increase in 2025 as well as an average of only 1.25 per cent for the years from 2024 to 2028. Inflation has proven to be persistent, which raises fears that interest rates will only decline at a leisurely pace. Another important factor is the gradual shift in consumer behaviour. Vacation spending, in particular, is gaining at the expense of conventional retail turnover,

Retail Market Report

tition has slowed considerably. Apart from this, hybrid forms that link online and offline are becoming more and more important. One example is the use of branch outlets as attractive showrooms where merchan- dise is presented and advising if offered – including click & collect in various forms. A remarkable development is the current increase in purchasing power this year despite the many economic problems. The nominal increase of 6.7 per cent is also impressive from a real standpoint and is more than twice the level in the neighbou- ring Germany and Switzerland. Last but not least, the substantial increase in tourism – far beyond expectations – is another plus point. City tourism, which is

particularly important for the retail trade, is currently generating strong growth. Vienna, Austria’s capital city, recorded a plus of ten per cent in overnight stays during the first half year, with even higher numbers of guests from the USA and Asian countries.

Austrian retail trade: Branch development 2023 -2024

Bestseller

Action

sehen!wutscher 8 Hofer

Hansaton 7

-18

Salamander

-21

Delka

-23

Kika/Leiner

-25

Gerry Weber

-28

Reno

-40

-30

-20

-10

Source: RegioData Research GmbH | April 2024

Austria | 2024/25

The Retail Market in Vienna

Dynamic changes on Vienna’s high streets

After a period of relative inactivity, there is a clear, renewed demand for retail space that will benefit prime locations as well as less popular areas. Discounters and the luxury segment are again searching for space, while shorter leases and strategic adaptations are influencing the market.

After a weak 12 months in 2023 and a weak first quarter in 2014, the interest in retail space in Vienna gained substantial momentum starting in the second quarter of 2024. This demand was driven by the gradual decline in inflation and a related easing in the pace of index adjustments and operating costs. It is also interesting to note that this trend is not only visible at top locations in the city centre

This rising demand is, however, contrasted by an above-average supply of vacant retail space. It is partly the result of numerous bankruptcies and business closings – but also reflects the changing demands of tenants for their branch locations, e.g. for an increase or reduction in space. In most branches, especially fashion and shoes, the space requirements per outlet

course, whereby Woolworth is planning 30 new locations by the end of this year.

The new strategic focal points of major retailers are adding to the pressure for ch- ange: Their efforts to adapt to the current economic environment are reflected in the new, often also cost-intensive redesign of outlets and frequently connected with the optimisation of branch sizes and locations. The large number of expiring leases com- bined with rising demand by new tenants has resulted in a great deal of movement on Vienna’s high streets and – to a lesser extent – in the shopping centres. This will become an accepted fact over the longer term because of the clear trend towards shorter lease terms. New tenants are generally looking for commitments of three to five years, and the previously standard terms preferred by lessors – seven to ten years – have now become the exception. Safety is the key The differences in preferred contract periods are, however, only one aspect of the fundamental change in practices for

In addition to chains that are already established in Austria, new international concepts are in- creasingly looking for possibilities to enter this attractive European market.

or Mariahilfer Strasse. Less noticed areas like the Alserstrasse, Neubau- gasse, Währinger Strasse, Taborstrasse and Prater- strasse are also enjoying growing popularity.

Additional demand is coming, above all, from the

discount and luxury segments. In addition to chains that have already established a foothold in Austria, new international concepts are increasingly looking for pos- sibilities to enter this attractive European market.

are gradually declining. Discounters are fol- lowing a contrary trend and planning larger outlets than in previous years. One example is the rapidly expanding Action chain, which is urgently looking for locations with 700 to 1,000 sqm of pure selling space. TEDi and Woolworth are also on a major expansion

Retail Market Report

Retail sales in Austria

120 B. €

15.1

100 B. €

14.1

12.1

11.1

100.1

11.2

95.4

80 B. €

11.5

91.2

87.6

10.6

9.2

84.2

8.7

8.2

78.9

7.6

74.4

74.0

60 B. €

71.4

69.8

67.2

40 B. €

20 B. €

2016 2017

2018

2019

2020

2021

2022

2023

2024*

2025*

2026*

Stationary turnover (gross)

Online turnover (gross)

*Forecast, Source: RegioData Research GmbH 2024

retail leases. Both sides are attempting to avoid risks: the lessors through the longest possible protection of income flows, the tenants through short commitments, possibly connected with exit clauses, for example when turnover targets are not met. Other consequences of this security consciousness are higher deposits (in part up to six to 12 month’s rents) and the clearly declining readiness of owners to finance tenant-specific fittings. The tenant side has been increasingly successful in negotiating rental rates. On new rentals, the result almost always equals the previous rent as an upper limit plus indexing, but contract closings are often noticeably lower (apart from absolute top locations with high demand – above all in Vienna’s inner city.) High demand, low offering for gastro The demand for gastronomy space has been surprisingly strong, especially from in- ternational chains. It is contrasted, however,

by a rather limited offering because many owners are reluctant to make the substanti- al investments (environmental, hygiene and emission requirements). A further factor is that the assignment of existing gastronomy space to new tenants is often complicated by excess demands for transfer fees. Generally speaking, it has become virtually impossible to rent gastronomy space wi- thout outdoor “Schanigarten” facilities – a trend that has increased since corona. Demand from the service sector is also steady and sound: Fitness, health, beauty etc. are turning to vacant space at weaker locations that is no longer, or only to a very limited extent, attractive for conventional brick and mortar. Declining in retail space New retail space is currently under construction in only homeopathic quan- tities. The total volume of selling space is declining because of continuous market

exits (in part, as a result of bankruptcies). However, Vienna has developed somewhat better than the Austrian average as a retail location due to the important impulses created by booming city tourism and steady population growth.

Austria | 2024/25

Vienna Inner City

Vienna | Inner City: The secondary locations are catching up

Vienna‘s Inner City is experiencing remarka- ble growth due to the boom in city tourism and attractive new designs and is clearly catching up with the Mariahilfer Strasse. The growing popularity of secondary locations, in particular, has created positive impulses for the entire retail market.

The Inner City in Vienna with its roughly 210,000 sqm of selling space (plus 2.7 per cent in ten-year comparison) spread over 1,428 retail outlets on more than 10 km of street length has moved substantially

have an even lower vacancy rate at 1.7 per cent, but are still slightly above the long- term average. This improvement is attributa- ble, above all, to the positive development of marginally weaker secondary locations.

larger outlets in top locations, which cause even many financially strong luxury brands to hesitate on contract conclusions. On the other hand, various secondary locations have become more attractive due to the reduction of traffic, greening and appealing designs. Examples are the Rotenturmstras- se, Neuer Markt, Petersplatz and Schwe- denplatz are scheduled to follow. Vienna’s only submarket with slightly rising rents The success of the Inner City is also evident in the development of rents. It is currently the only submarket in Vienna that can demonstrate a modest upward trend. Prime rents are not involved here, as they have apparently reached their upper limits for the time being, but the rents for good secondary locations have a certain upward potential.

closer to the Mariahilfer Strasse. It can be expected to overtake this leading player in the foreseeable future, also because the city centre is continuing to outperform the entire Vienna market. The main driver for this development is the remarkable comeback of city tourism, which generates strong impulses for luxury labels and gastronomy. This has also been connected

The main driver for this de- velopment is the remarkable comeback of city tourism with its strong impulses for luxury label and gastronomy, which has also led to a substantial decline in the vacancy rate.

with a substantial decline of 0.7 percentage points in the vacancy rate to 3.4 per cent in 2023. The top locations in the “Golden U“ (Kärntner Strasse, Graben and Kohlmarkt)

The background for this is twofold: very ambitious rental expectations by the property owners of up to 800 Euros for smaller spaces and 200-300 Euros for

Retail Market Report

Goldenes Quartier

Armani

New lettings Inner City 2023/24 (excerpt)

Dior

WRST- BHVR

Meeting zone Pedestrian zone

Saint Laurent

Stephans- platz

Fashion

Haas Haus

Fashion

Souvenir Store

OMEGA Boutique

Fashion

Souvenir shop

Watches

Gastronomy

Swatch Store

Steffl

Nevertheless, the overall turnover rate is unusually high at 12.4 per cent – and only minimally lower in the traditionally very stable prime locations at 11.2 per cent. It is also important to note that an impressive 61 shops were redesigned in 2023, whereby the luxury labels in top locations are working intensively on a new appearance. A few top labels have terminated their activities in the Inner City, among others Gerry Weber, Salamander, MANZ and Versace. The new starts include Emporio Armani, Swatch Store, VitaVien and several others.

Hofburg

VitaVien

Ø Pedestrian frequency Kärntner Strasse

Staatsoper

1,908,035 1,975,734

Ø Q2 2023 Ø Q2 2024

+3.5 %

Source: hystreet.com

Austria | 2024/25

Interview: International trends in Vienna’s Inner City

Ms. Dubreu, the difficult situation for the retail trade has apparently not touched the luxury segment. Given the global economic uncertainty, do you see any potential effects on the European luxury market? The luxury market has been very stable until recently, and this stability is reflec- ted in constant or even slightly higher rents. However, the global economic uncertainty, especially the weakness currently visible in China, leads us to the question if and how this development will influence the European luxury market. We continue to see strong demand for luxury space in top European locations, especially from the established internati- onal luxury brands. How would you rank Vienna as a retail destination for the top segment in global and, above all, in European comparison? What are the city’s strengths and weak- nesses? Which other metropolises are Vienna’s competitors, for example in the same league? Vienna has always been on the “wish list“ of many international brands. Especi- ally on my visits in the Inner City, I am impressed by the high visitor frequency. Here, Vienna plays in the same league with other leading cities like Rome, Milan, Barcelona and Munich. Vienna has a great selection of hotels in every segment as well as a rich cultural offering. Howe- ver, the high visitor frequency is heavily influenced by tourists, and this can be seen as both a strength and potential weakness. In spite of this touristic focus,

Vienna continues to attract new inter- national investors and brands due to its economic vitality – and the urban revitalisation plan will strengthen the retail market. Another strong indicator for Vienna‘s at- tractiveness is its purchasing power: Aus- tria ranks fourth in the EU-27 comparison of purchasing power, which additionally underscores the city’s strong position as a retail destination in Europe. You regularly analyse the global trends that influence the world’s leading retail locations. Do you see any international developments that could significantly change Vienna’s standing as a destinati- on in the coming years? One important international development is the growing physical presence of lea- ding e-commerce brands. We see these companies opening more and more brick and mortar outlets as a way to test new markets, and this could possibly lead to more flexible models for rental contracts. A further trend that could also become important for Vienna is the appearance of new concepts like second hand and sustainable consumption. How do you see the development of retail space for top and luxury brands in the coming years: Will flagship stores still be attractive? Will the growing demand for space come primarily from establis- hed labels or will new brands enter the market? Here I see parallel developments in all

three areas. On the one hand, well-known luxury brands are using their flagship sto- res to strengthen their market positions. On the other hand, we also see new brands using flagship stores to increase their recognition. One good example is Tesla, which has substantially expanded its brand recognition through its stores. Brands like Zara and Uniqlo also see their outlets as important advertising vehicles, whereby the shop windows serve as the central means of communication with their target groups. One more trend is perfect multi-channel- ling as practiced by brands like Polène, which rely on both an online presence and flagship stores at top locations. These flagship stores must not necessa- rily be large – the more important factor is that they create an experience which emotionally connects the brand and the customer. Flagship stores will remain an integral part of the retail trade as long as they offer consumers added value and support the authenticity of the brand. I see an exciting development in the increasing integration of community and experien- ce concepts. For example: Brands like Coach New York have introduced “play shophouses“ or café concepts, and others like NIO and Lynk&Co are integ- rating co-working spaces in their stores that create meeting points and social spaces for their communities.

Nathalie Dubreu

European Retail Leasing Coordination Senior Director BNP Paribas Real Estate

Retail Market Report

SIGNA bankruptcy: lots of headlines, limited effects The bankruptcy of the SIGNA real estate and retail group was, without a doubt, the most spectacular collapse in Austria’s economic history. However, its impact on the market for retail properties in Austria remains relatively limited – in contrast to Germany – and is focused mainly on the immediate environment of the SIGNA properties.

The bankruptcy of the Kika/Leiner Group directly after its sale by SIGNA in the first half of 2023 had only minimal consequen-

could possibly be impaired by unattractive site fences for a longer period of time.

location alongside the Golden U are still uncertain after the recent acquisition by Stumpf Development GmbH – in any event, the future of the project is the subject of endless speculation. In contrast, there have been no effects on the Golden Quartier. It is optimally rented and still one of the top addresses for luxury labels searching for a foothold in Austria. A change in owners over the short or long term will also not alter this standing. The rental situation for the most import- ant property in SIGNA’s home market of Tyrol, the Kaufhaus Tyrol, is not without challenges. The upcoming exit of the consumer magnet Media Markt in 2025 is in no way connected with the SIGNA bankruptcy, but will make the future use of this well functioning shopping mall much more difficult.

ces because the branch locations continued to operate or were quickly transferred to a new use. The SIGNA Group had only three major retail investments in Austria when the first insolvencies occurred, including the Lamarr development project on the Mariahilfer Strasse. The problems connected with this shopping mall project, where construc-

The problems connected with the Lamarr shopping mall project, where construction was halted at the begin- ning of 2024, create a negative clima- te for the entire high street because the shopping experience could pos- sibly be impaired by unattractive site fences for a longer period of time.

tion was halted at the beginning of 2024, create a negative climate for the entire high street because the shopping experience

The prospects that this ambitious prestige project could transform the Mariahilfer Strasse into a type of second luxury

Austria | 2024/25

Vianna Mariahilfer Strasse

Vienna | Mariahilfer Strasse: Decline in space and trend to more gastro

The inner Mariahilfer Strasse, Austria’s lar- gest shopping street, reflects the shifts in the shopping landscape. Despite numerous challenges like construction sites and a diffi- cult retail environment, it has demonstrated an amazing ability to adapt with the increa- sing importance of gastronomy and services.

The inner Mariahilfer Strasse is the best known and, with slightly over 210,000 sqm of selling space (including neighbouring areas on the side streets), the largest high street in this country. The general transfor- mation of the local shopping landscape can

page 11) but is now a clearly negative fac- tor, also because the disruptive construc- tion site will likely be present for a longer time. The climate in the neighbouring streets has also been adversely affected by construction works for the Neubaugasse

hilfer Strasse exceeds the overall average, primarily because the interest of potential tenants is massively concentrated on the ground floor. Space on the first and second upper floors is increasingly disappearing from the market and re-emerging in a new form as offices, hotels or apartments. The underlying reasons here include the high costs of multi-storey business premises (stairs, escalators, additional personnel, increased risk of theft due to less efficient monitoring/visibility), which are often impossible to finance with current earnings. The steadily growing importance of the gastronomy and service offering is also striking. The retail share still amounts to 67 per cent (this value was artificially reduced by the Leiner closing and the postpone- ment of the Lamarr project), whereby the greatest decline by far was registered in the

be clearly seen here – and covers the branch mix as well as the trend away from larger shopping malls to the increasing use of retail areas for gastronomy and services. In 2023 and 2024, this traditional shopping mile was confronted not only with a generally difficult retail environment but also with the stop of construction on SIGNA’s major “Lamarr“ project. This project was

Space on the first and second upper floors is increasingly disappearing from the market and re-emerging in a new form as offices, hotels or apartments.

expected to set the stage for a substantial upgrade of the entire surrounding area (see the article on the “SIGNA-bankruptcy“,

underground station, which have been underway for several years. The reduction of selling space on the Maria-

Retail Market Report

MUMOK

MuseumsQuartier

Leopold Museum

Excerpt from new rentals and concept adjustments* Mariahilfer Strasse 2023/24

BIPA

Gerngross

IKONO

Rituals

Carhartt

Dr. Martens

MTEL

West- bahnhof

SPAR

Fritz Eyewear

IKEA

fashion branch. Gastronomy, in contrast, increased by two percentage points and the Mariahilfer Strasse is turning more and more into an entertainment zone. Above-average vacancy rate The challenging environment is also reflected, as is hardly surprising, in the vacancy rate which last equalled 6.2 per cent and an even higher 7.7 per cent in prime locations (central areas of the inner Mariahilfer Strasse, excluding side streets). Compared to other leading shopping loca- tions in Vienna and the provincial capitals, these statistics rank at the very top. The most notable exits included Esprit, RAG, Delka, Salamander, Asics, Desigual, Geox and MisterSpex. Welcome additions included, among others, IKONO, Rituals, Dr. Martens, Carhartt, Fritz Eyewear and many

more.

Meeting zone Pedestrian zone

Drugstore*

Cosmetics

Museum

Shoe shop

Fashion

Telecommunication

Glasses shop

Supermarket

Ø Pedestrian frequency Mariahilfer Strasse Ø Q2 2024 1,376,353

Source: hystreet.com

Austria | 2024/25

Retail Locations in Vienna and the Surrounding Areas

Wien Mitte The Mall

Goldenes Quartier

Top Shopping Locations

District

1030

District

1010

Total space

30,300 sqm

Total space

11,500 sqm

Gewerbepark Stadlau

Center Alterlaa

Westfield SCS

G3 Shopping Resort Gerasdorf

District

1220

District

1230

District

2334

District

2201

Total space

66,000 sqm

Total space

20,000 sqm

Total space

192,500 sqm

Total space

70,000 sqm

Landstrasser Hauptstrasse

Kärntner Strasse

Graben

Kohlmarkt

District

1010

District

1010

District

1010

District

1030

Total space

35,000 sqm

Total space

18,000 sqm

Total space

7,500 sqm

Total space

82,300 sqm

Favoritenstrasse

Innere Mariahilfer Strasse

More Shopping Streets

Meidlinger Hauptstrasse

1010 1010 1010 1020 1020 1070

Kohlmarkt

Rotenturmstrasse

Wollzeile

Taborstrasse Praterstrasse Neubaugasse

1080 Alserstrasse 1150 Äussere Mariahilfer Strasse 1160 Thaliastrasse

District

1060/1070 127,400 sqm

District

1100

District

1120

Total space

72,400 sqm

Total space

40,700 sqm

Retail Market Report

BahnhofCity Wien Hbf

Auhof Center

BahnhofCity Wien West

Westfield Donau Zentrum

District

1220

District

1100

District

1140

District

1150

Total space

23,000 sqm

Total space

51,000 sqm

Total space

22,000 sqm

Total space

120,000 sqm

More Shopping Locations

1150 1190 1200 1210

Lugner City

1010 STEFFL 1010 Ringstraßen Galerien 1020 Stadion Center 1030 GALLERIA 1070 Gerngross 1100 1100 Columbus 1110 Gasometer Shopping 1110 Huma Eleven 1110 ZS Zentum Simmering 1120 VIO Plaza

Q19

Milennium City

Citygate 1210 Shopping Center Nord 1230 Riverside

A22

02 03

A23

A21 A2 S1

Austria | 2024/25

Success strategies for Austria’s retail trade

Growth strategies to counter the downward trend

In spite of the challenging economic conditions, there are a number of promising growth strategies for the retail trade. Branches like the book trade and fashion show that solid earnings are possible with the selection of the right location and innovative concepts.

The disappointing indicators for brick and mortar retail frequently disguise the fact that growth and solid earnings are also possible in a generally difficult economic environment. This applies to individual companies as well as entire retail branches which are increasingly looking for locations in contrast to the overall trend and see the supply of vacant space as a great opportunity. One impressive example of this trend is the book retail trade, the branch that started its global success story

a demand, above all, for smaller locations that focus on everyday consumer products, where we can serve as a visitor magnet with outlets of 300 to 400 sqm and create an inviting atmosphere.“

has a more reserved opinion. Managing Director Klaus Magele does not expect conventional bookshops will be able to re-claim market shares from online. “With a good offering focused on regional demand, the business can, however, succeed. A bookseller who knows the customers in the region always has an advantage over international chains that are supplied centrally. We leave the decisions on the product range up to the regions and, in connection with good gift articles, this creates supporting, regional added value.“ A decisive success factor for Magele is the branch environment. “For example: A fashion discounter is definitely not a good neighbour for a bookshop, and when the space strategy in a shopping centre does not realise what we need, that is a great disadvantage. We not only need high frequency, but the quality of this frequency is also decisive.“

Remarkable success is also possible – even in difficult environment – with quality, innovation and efficient location management.

with online sales. The longer period of shop closings and market exits has now been followed by a steady demand for space. “The book retail trade has remained on a growth course after the corona pandemic. People were, in fact, longing for a shopping experience and wanted to again enjoy the atmosphere in a bookshop “, explained Andrea Heumann, Managing Director of the branch leader Thalia. “We currently see

However, the continuous development of the branch concept is unavoidable: “This includes the regionalisation of the offering, add-on services like collection points and self-service cash points as well as gastro zones in the larger branches. We basically create relaxation areas in all our bookshops to encourage browsing and provide inspiration.“ Austria’s traditional bookseller Morawa

There are also a number of success stories

Retail Market Report

in the fashion branch, which has led the space reduction ranking for years but is now expanding against the trend. This is currently true especially for the Bestseller Group, which is on a growth course in Austria with its brand portfolio (among others ONLY, Jack&Jones, Vero Moda, Name It) and has already opened 16 shops this year, including two flagship stores in the Seiersberg Shopping City and Plus City, and completed nine combined relocations and extensions. “Our focus in on the individual locations’ ratings because this helps us to optimally utilise the available opportunities“, exp- lained Montana Seidler. “On the one hand, that means continuous optimisation and, frequently, the expansion of the branches. On the other hand, we are also prepared to close less profitable locations.“ Seidler expects a further increase in the on- line share for the fashion branch and does not see this as a threat but as an opportuni-

ty. “We are convinced that the future lies in the clever combination of brick and mortar retail and online. A company that counts on omni-channel-strategies and effectively links all channels will be successful over the long term. For Bestseller, this symbiosis is the driving force behind our growth.“ In the branch business, Besteller relies on an all-inclusive shopping experience and, consequently, is looking for locations with other attractive retailers, gastronomy and recreational offerings: “A lively environment with an attractive atmosphere draws more customers, who then spend more time in the area. But customers must also find our branches attractive“, added Seidler. “This means our offering must be large and attractively presented and that, in turn, frequently requires more space, where possible on a single level.“

Roundtable talks

Andrea Heumann

Managing director Thalia

Klaus Magele

Managing director Morawa

Montana Seidler

Expansion Manager Bestseller

Austria | 2024/25

Further gains for discounters

More momentum for discounters

Discounters remain on an expansion cour- se in 2024 and are increasingly taking over expensive top locations. Driven by rising cost consciousness and good rental opportuni- ties, they are snapping up attractive space at popular locations.

The discount segment is also focused on expansion in 2024, in contrast to the general trend, and is continuing to increase space. The most important growth from a quantitative standpoint can be found at the traditional discount locations, e.g. retail parks, but ventures at expensive top locations are becoming more frequent. The discounters’ success story is underscored

ced expansion of the network with roughly 30 locations is proceeding as planned. In September, an outlet with 1,837 sqm opened on the Favoritenstrasse, 2,044 sqm were rented in the Stadlau commercial park (opening Q1/2025), and nearly 1,000 sqm are scheduled to open this year in the StopShop Oberwart.

expansion course of established leading chains like Action, TEDi and NKD, which are steadily growing their branch networks. For example: TEDi opened a branch in Spittal an der Drau during autumn 2024. The opening of discount branches at prestigious locations in 2024 is anything but unusual. Action is scheduled to open on the Mariahilfer Strasse this year, and Hofer has operated two markets for some time. Several discounters are also looking for locations in the Inner City, whereby good secondary locations are generally preferred over absolute top sites. Discounters will often not accept the same high rents as traditional retailers for first-rate locations, but the “discounter discount” is now rather low, and credit ratings normally above the retail average make very these firms attractive tenants.

by the uncertainty of many consumers over economic developments and the resul- ting, foreseeable increase in cost consciousness. The large supply of vacant space at promising locations has also made expansion substantially easier for the low-cost segment.

The discounters’ success story is underscored by the uncertainty of many consumers over economic developments and the resulting, foreseeable increase in cost cons- ciousness.

One particularly remarkable development is the growth course of Woolworth, which has returned to Austria after a longer intermis- sion. This “discount department store” has a widely diverse line of products and is focused more on significantly larger outlets than most other discounters. The announ-

These three locations with nearly 5,000 sqm were brokered by EHL Gewerbeimmo- bilien. With its large branches, Woolworth is an attractive follow-up tenant for space previously occupied by retailers in higher price segments. A further success story is the non-stop

Retail Market Report

Structural transformation for retail parks

Retail parks and retail park clusters (space at a single location without common management), which can be seen as the discounters among retail space providers due to their comparatively low square metre prices, are currently undergoing an accele- rated structural transformation: Providers from the furniture and home furnishings segment are losing market shares just the same as fashion and shoe businesses. In contrast, everyday consumer products like food and drugstore products have increa- sed their market shares. This structural transformation has also been accompanied by an increase in the vacancy rate. The latest data published by the market research company Standort+Markt show a vacancy rate of 7.7 per cent. That is nearly double the level from 2018 and 2022, but still lower than the 8.8 per cent vacancy rate in city locations.

The rents in retail parks are, on average, considerably more stable than in the higher priced segments, and a general decline is not in sight. Discounts are necessary, especially when the visitor frequency in the property is trending downward. The completion of additional space has declined significantly. This development is also a result of the growing resistance to ground sealing, which makes new permits very difficult to obtain. Investments are therefore focusing on quality improvements, with sustainability measures (e-charging stations, shading, solar equipment, the par- tial unsealing of parking areas, etc.) playing a particularly important role.

Austria | 2024/25

Traffic calming & more

New retail opportunities through street redesign

The redesign of street areas has a significant impact on the retail trade. From an increase in pedestrian traffic to the creation of new green areas and cycle paths – these measu- res play a decisive role in the development of inner city retail opportunities.

What started a decade ago with the transformation of the Mariahilfer Strasse was the introduction of a hybrid form previously unknown in Austria: the meeting zone. This concept has gained substantial ground since that time. The objective is to reduce auto traffic in the interest of better usage possibilities for pedestrians

protection, whereby the actual implementa- tion is very different. Some projects involve the planting of additional trees, while others include seating furniture in public spaces, replacement of the ground cover or the creation of new cycle lanes.

the redesign are very different and tied to positive developments in the surrounding areas – like the creation of new residential quarters or successful office clusters. Several examples show the opportunities for retail space created by the redesign of public areas. Michaelerplatz One special situation is the greening of the touristic hot spot on Michaelerplatz, which requires the harmonisation of climate goals and historical preservation requirements. The proposed tree planting was rejected, and parts of the square will now be unsea- led for use as green areas and flowerbeds. Attractive pavement is also planned. The daily frequency on Michaelerplatz is already very high, and it remains to be seen whether this new concept will actually encourage visitors to remain longer.

and cyclists. It is also regularly connected with greening and measures to make the area more attractive.

These new designs have had a very positive influence on the retail areas.

This development has had an impressive influence on the

development of the retail trade. Developers, investors and tenants are connecting their hopes for rising visitor frequency, higher turnover and an improvement in the image of this micro-location to the “out of the asphalt” programme that is currently in progress in Vienna. Joint efforts cover several dozen projects to support climate

The new strategies implemented to date have had a very positive influence on the retail areas. The negative consequences, e.g. through more difficult automobile access, were limited primarily to individual branches but did not lead to a general increase in vacancies. The benefits for the retail trade, gastronomy and services from

Retail Market Report

Praterstrasse The Praterstrasse is one of the most im- portant inner city traffic axes and connects the centre with the 22nd district via the Praterstern and Reichsbrücke (bridge). The massive widening of the much-used cycle lanes has been accompanied by more rest areas and green islands. A supporting factor for the upturn are the high-quality office projects in the area and on the Lassallestrasse. The gastronomy sector, in particular, with its hip restaurants like the Balthasar and Mochi, has witnessed an impressive revival despite the ongoing construction activities – also due to the attractive nightspots at the other end of the Praterstrasse near the Danube Canal.

joining the road on the Linke Wienzeile. The greening and greater appeal of the adjacent open area (up to now a large parking lot) and a further increase in the gastronomy offering should create new perspectives for retail concepts along the Linke and Rechte Wienzeile. Favoritenstrasse The Favoritenstrasse has been a pedestrian zone for many years, but was in urgent need of renovation to become more attractive through additional greening, water elements and rest areas. The success of the measures started this year is, of course, still impossible to determine. However, there is reasonable hope that the Favoritenstrasse – at least in the northern section – will be able to connect with the success of the neighbouring Sonnwendvier- tel (quarter) and become more attractive for gastronomy, services and retail.

Naschmarkt The situation surrounding Vienna’s

Naschmarkt is somewhat different. Only minimal changes were made following the creation of a broad cycle lane directly ad-

Austria | 2024/25

Focus on the provincial capitals

Provincial capitals: Moderate development with no consistent trends



Bregenz

The retail landscape in Austria’s provincial capi- tals is characterised by different developments without any clear trends. The spectrum currently ranges from stable markets with low vacancy rates to challenges caused by declining visitor frequency and high vacancies.



Innsbruck

Developments on the retail markets in the larger Austrian provincial capitals were unspectacular in 2023 and the first half of 2024. In comparison with Vienna as a much larger destination, international players are less important and the stronger local or regionally oriented

Miio, Douglas Sehen Wutscher, Falconeri, Juliana Nails and Arthur Gelato. Another positive factor is the stabilisation of the fashion branch after the dramatic space reduction in 2023 with the first plus (1.3 per cent) in many years.

outlook. Previous efforts to revive the inner city have not brought any successful results to date, and visitor frequency is weakening. Only when the turnaround is successful can this retail location expect to see an upturn. In Linz, the city centre does not have the same dominant influence on the retail trade as in other provincial capitals. Large shopping centres and retail park clusters in the surrounding area or on the periphery have an above-average market share. The vacancy rate in the inner city is satisfac- tory at 4.1 per cent, but only the central shopping axis on the Landstrasse between the Main Square and Goethekreuzung can demonstrate sound momentum. Hopes of a recovery in the southern section between the Goethekreuzung and Music Theatre/ Railway Station are dependent on a multi-million Euro urban development programme to increase the attractiveness of the area.

tenants traditionally serve as a stabilising element in a difficult market environment. There are hardly any uniform trends, and local factors dominate the market activity.

Graz has seen above-average development. The Styrian capital has a very low vacan- cy rate and below-average turnover.

Graz has seen above-average development. The Styrian capital

has the largest inner city retail cluster after Vienna and can demonstrate a very low vacancy rate and below-average turnover. Demand is particularly strong for top locations like the Herrengasse, Sporstrasse and Jakomini Square. Recent new entries include, among others, Mei Shi, Motel a

The situation in the second provincial capital in the south, the much smaller Kla- genfurt, is much more difficult. The vacancy rate is more than twice as high, the rent level in secondary locations is continuing to decline, and more closings, especially in the fashion branch, are straining the overall

Retail Market Report



Linz

St. Pölten

Vienna

Eisenstadt



Salzburg



Graz



Klagenfurt

The small, but highly attractive retail market in Salzburg’s Old City has not yet fully overcome the aftereffects of the corona years and is still confronted with increased vacancies. The strong tourism component is reflected in a high share of gastronomy and accompanying retail uses. These segments have developed better than the traditional retail trade, which witnessed major closings like Damn Plastic, Steiff, Northland, Alpha

Innsbruck is currently characterised by remarkable momentum, with an unusually high turnover rate of 16 per cent in the inner city. The vacancy rate has risen from an extre- mely low level to a still satisfactory four per cent, and well-known new openings like Max & Co., Peak Performance, Colmar and Montblanc show that the Tyrolean capital

pedestrian and cycle traffic and to enliven inner city areas could provide added impulses in the coming years.

Tauri and Schneiders in 2023. The re-rental of vacant space is difficult because the rents are, in part, higher than

The markets are influenced by a strong tourism component, which is reflected in a high share of gas- tronomy and accompanying retail uses in the historical Old City.

retailers are prepared to pay based on visitor frequency. The recent approval of the Euro- park shopping centre expansion will further intensify competition for the inner city.

remains a very attractive destination. A range of planned measures to improve

Source: Location + market

Austria | 2024/25

Investment

Reserved interest in retail properties

Franz Pöltl FRICS

Managing Partner EHL Investment Consulting GmbH

Buyers‘ interest in large-scale Austrian retail properties was low before the pandemic and has still not recovered. There are currently no significant transactions for shopping centres or retail parks, and the same is true for larger properties on the major shopping streets in Vienna or the provincial capitals. One exception, however, is the ground floor space in mixed use properties when it is rented over the long term, for example, to strong food retailers.

A clear downward trend in the transaction volume is also evident in other market segments, but the investment market for large-scale retail properties is a very special situation: Investors have followed a generally cautious approach for more than four years, and confidence is still negatively influenced by the numerous bankruptcies of international chains. Another factor is the steady rise in interest rates and the related upward push on yields.

Prime yields currently equal roughly 5.75 per cent for retail parks and nearly 5.5 per cent for shopping centres. These values are, however, not really verified by actual transactions and reflect, at least in part, the price expectations of sellers more than the expectations of potential buyers. Other negative factors for investments include the generally difficult climate for the retail trade, which

Office and retail yields 2015 - 2024

7 %

6 %

5 %

4 %

3 %

2 %

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024*

Retail (Retail park)

Retail (Shopping mall)

Retail (High street)

Office

*Forecast, Source: EHL Market Research | Q3 2024

Retail Market Report

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