Developments on the Austrian retail market
Innovation & new structures: Pressure for change in the re- tail trade The decline in purchasing power, changing consumer habits, rising costs, the steady expansion of online retail and the generally difficult economic climate have crea- ted major challenges for the Austrian retail trade. The pressure to change has now also spread to good loca- tions in the city centres.
The retail trade has faced a particularly challenging environment this year which has been reflected in weaker earnings, in- solvencies and a decline in the demand for space. Particularly evident is the structural shift of consumer spending away from the purchase of goods and more to services and vacation/leisure. The location consul- tants at “RegioData“ note that the share of non-food in consumer spending has fallen from 16 to 12.5 per cent, or by more than 20 per cent, over the past ten years. In other words “the money is there but is not finding its way into the retail trade. And not by accident, but structurally”. In addition, this year could also bring a decline in the real income available for consumer spending. The expiration of subsidies like the climate bonus, pension increases that are likely to fall below the inflation rate, and rising unemployment make the ‘pot’ smaller, while the previous sharp rise in personnel expenses and the continuing increase in energy prices have had a particularly negative impact on brick
and mortar retail.
normally be found fairly quickly for vacant space. The turnover is high, but vacancy rates are acceptable. However, new rentals have become much more difficult at smaller locations that have lost their attractiveness for consumers.” Relief is provided, to a cer- tain extent, by the fact that the continuous decline in space has not been offset by any notable new production. “Practically no new locations are under development, the expansion of existing locations is rare, and investments are generally focused on quality improvements.” Innovation and sustainability are no longer an add-on but a strategic necessity today. Retailers and retail properties are coming under increasing pressure to develop new concepts with a greater focus on services, the leisure experience and emotional factors.
This challenging situation is also noticeable in the market for retail space and is sprea- ding to the good, central locations that generally develop better than the market as a whole. Standort+Markt Managing Direc- tor Hannes Lindner places the vacancy rate for inner city areas at 5.5 per cent in 2024, which represents a substantial increase over the previous year. This is, however, mainly attributable to smaller cities where vacancies are nearly three-times as high at 15.6 per cent. Space occupancy is also affected by massive structural changes: The discounters who have tripled their market share over the last ten years are increa- singly entering top locations and the luxury segment is continuing to expand – not the least impressed by the economic crisis. “These numbers illustrate what we see in our work every day”, explained EHL’s retail specialist Mario Schwaiger. “The pressure to change is high in all inner city areas but in major cities, especially in Vienna but also in Salzburg and Linz, new tenants can
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Retail Market Report
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