Retail Market Report Austria | 2023/24

Retail Market Report Austria | 2023/24 We stand for Retail

We stand for real estate.

Introduction

The economic environment for the Austrian retail market has been challenging since the start of the Ukraine war, and it became even more complex with the related sharp rise in inflation and growing economic weakness. This course of events has, naturally, also been reflected in the market for retail properties. However, what we are now seeing is more than just light on the retail property horizon. Energy prices, which had a particularly strong negative impact on households up through mid-2023, are trending downward towards normal levels, inflati- on is declining slowly but surely, the labour market remains robust, strong population growth in urban areas during 2022 has increased the number of consumers, and tourism is booming again. Added to all this are the additional opportunities for short-term expenditures caused by the previous reluctance to make long-term investments, a situ- ation with major benefits for the retail trade and gastronomy. Parallel to these developments, the

stock of retail space is declining – which can also be a positive factor for existing retailers becau- se a smaller supply will improve their current positions. In other words, there are grounds for optimism in spite of the negative news reports over recent major insolvencies and market exits. The retail property market has a solid foundation, several retail branches are witnessing a rising demand for space, and Austria remains an attractive expansi- on goal for international retailers – many of whom are EHL clients. The current transition phase will undoubtedly call for innovation on the part of property investors, but also holds many new opportunities. We invite you to meet with our excellent retail team and together develop a personalised future strategy for your retail space.

Michael Ehlmaier FRICS Managing Partner EHL Immobilien GmbH

Stefan Wernhart MRICS Managing Director EHL Gewerbeimmobilien GmbH

Alexandra Bauer MRICS Head of Office Agency EHL Gewerbeimmobilien GmbH

Mario Schwaiger Head of Retail EHL Gewerbeimmoblien GmbH

Content

Introduction............................... p.02 ExecutiveSummary............................ p.04 TheRetailMarketinAustria . . . . . . . . . . . . . . . . . . . . . . . . . p.06 TheRetailMarketinVienna.. . . . . . . . . . . . . . . . . . . . . . . . p.08 Vienna|InnerCity............................. p.10 Vienna|MariahilferStrasse. . . . . . . . . . . . . . . . . . . . . . . . . p.16 Retail Locations in Vienna and the Surrounding Areas . . . . . . . . . . . . . . . . . p. 18 TheAustrianProvincialCapitals. . . . . . . . . . . . . . . . . . . . . . . . p.20 FocusonOnline.............................. p.24 Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 25 Investment................................ p.26 ReferenceProjects.............................. p.28 Market Entries and Relocations of Selected Companies (2022|23). . . . . . . . . . . p. 30

Executive Summary

Retailers come under pressure from loss of real purchasing power

Investors‘ criteria include long remai- ning lease terms and top tenants

High inflation and rising interest rates combined with a related decline in real purchasing power and disposable income have increased consumers’ reluctance to spend and, in turn, weakened the outlook for Austria’s retail trade. Vacancies are on the decline due to the reduction in space, despite mar- ket exits and insolvencies The ongoing downward trend in the overall supply of retail space has led to a reduction in vacancies, despite the recent wave of insolvencies headed by the kika/Leiner Group and the exit of international retailers. Demand is unbroken for prime loca- tions The demand for absolute top locations remains strong in spite of the challenging market en- vironment. Vacant space almost always attracts numerous prospective tenants, and rents have risen to record levels.

Security is currently the magic word for real estate investors. The most important criteria, and often necessary conditions for a commitment, are long remaining lease terms and strong tenants. The popularity list is headed by retail parks and good standalone properties. Brick and mortar retail gains market shares over online for the first time The shift of revenue from brick and mortar to online retail has been halted, at least for the time- being. Online lost market shares in 2022 – a very positive signal also in view of the end of corona special effects. Graz confirms its position as No. 2 on the Austrian retail market Graz again strengthened its position as the most important retail market in the Austrian provincial capitals and offers good growth opportunities for the future. This shopping metropolis in the southeast is therefore a focal point for the new EHL market report.

Executive Summary

E-mobility providers are looking for more space in the urban centres

Luxury labels are on an expansion course

The providers of electric autos and sustainab- le mobility solutions are turning to new sales structures. Conventional auto showrooms in the periphery have given way, above all, to space in inner city locations – and Vienna is in line with the international trend. Vienna is on the upturn in European comparison For the leading global luxury brands, Vienna is one of the most important destinations in Europe. A branch in the capital city is a must for Chanel, Dior and Co – explains Jens Wehmhöner, Senior Di- rector of Pan-European Retail at BNP Real Estate in an EHL interview.

The luxury segment has, up to now, successfully disengaged from the weaker performance of the overall market. The lack of space at traditional top locations has become more dramatic, but this opens new opportunities for alternative locations like the future “Lamarr“ on the Mariahilfer Strasse.

Discounters continue to gain market shares

High inflation and the resulting greater awareness for price-conscious shopping have created added impulses for the discount segment. This has been reflected in a continuing interest in expansion, especially in the non-food area. Discounters are concentrating their searches primarily on proper- ties in the low-cost and medium price range.

Share of online trade in retail-relevant consumer spending by residents in Austria (in %)

18 % 16 % 14 % 12 % 10 %

8 % 6 % 4 % 2 % 0 %

2008

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: RegioData Research GmbH 2023

The Retail Market in Austria

Loss of purchasing power and insol- vencies characterise a difficult year

The sharp rise in insolvencies is, first and foremost, an aftereffect from the expiration of COVID-19 sup- port measures, but also reflects a structural prob- lem: Rising inflation has eroded Austrian consumers’ real purchasing power, and the substantial increase in energy prices is driving retailers’ operating costs upward.

The Austrian retail sector was the source of all sorts of headlines in 2022 and especially in the first half of 2023 – unfortunately, with less favourable events like insolvencies and announcements of market exits. Examples included the sensational bankruptcy of the kika/Leiner empire and the Forstinger automotive chain as well as the insolven- cy of Delka/Salamander and their 37 branches in the generally very difficult textile segment. With a total of 473 bankruptcies, the retail trade ranked first in KSV1870 insolvency statistics for the first half of this year.

“Weaker properties are being withdrawn from the market, and this adds to the steady decline in selling space.“

The second half of this year has, conversely, brought signs that the retail trade has passed the most difficult phases – at least for the time-being: Energy prices are falling (in particular, the key wholesale price for gas is now substantially lower than at the beginning of the Ukraine conflict), inflation is declining, tourism has just closed the summer season with strong results, and private consumption has stayed robust in spite of rising prices. Positive developments are also visible on the rental side: There is a rising demand for space by discounters, and food retailers remain on an expansion course despite weaker growth. The

“Retail insolvencies have not had a serious impact on the supply of space or vacancies up to now.“

Together with several companies that have announ- ced their intent to leave Austria, these developments have triggered a certain commotion on the market for retail space. kika/Leiner alone had roughly 300,000 sqm of rented space. One very positive factor was that practically all of this space was taken over by a successor company or redirected to an alternative use.

Development of purchasing power per resident

2 % 1.5 % 1 % 0.5 % 0 % -0.5 % -1 % -1.5 % -2 % -2.5 % -3 % -3.5 % -4 %

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2020

2021 2022 2023p

Source: RegioData Research GmbH 2023

performance of the luxury segment has recently been outstanding, and the strong demand from this segment has led to record rents in the absolu- te top locations. On the Kohlmarkt in Vienna’s first district, rents have risen up to EUR 600/sqm for smaller spaces and up to EUR 250/sqm for areas over 400 sqm.

which continued during 2022 and 2023 and is again moving within a normal range of 1.5 to 2.0 percent per year. The mounting resistance against new retail areas – keyword: ground sealing – also leads to expectations that the very limited volume of new space entering the market will be unable to offset the annual reduction. Consequently, neither a substantial reduction in vacancies nor a decline in rents can be expected.

Another positive factor for the use of existing proper- ties is the steady decline in total selling space,

Retail sales in Austria

€ 110 B. € 100 B. € 90 B. € 80 B. € 70 B. € 60 B. € 50 B. € 40 B. € 30 B. € 20 B. € 10 B. € 0 B.

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023p 2024p 2025p

Source: RegioData Research GmbH 2023

Online turnover (gross)

Stationary turnover (gross)

The Retail Market in Vienna

Exceptional boom in the luxury segment

at least a very good opportunity to strengthen the tenant structure and, possibly, to improve rental income. The sound development of this top segment is supported by several factors. Global luxury brands have, to date, been largely untouched by the we- akening economy. Online competition is relatively unimportant for the traditionally stationary players in this segment and, not least, the rapid recovery of city tourism is extremely important for traditi- onal brick and mortar retail where international customers are responsible for substantially more than 50 percent of turnover. An added factor is the significant surplus of demand over the short supply, especially at top locations, that has characterised the market for many years. Numerous potential tenants have

The generally tense situation in the retail sector and, subsequently, on the market for retail space has in no way affected all submarkets. The luxury segment, in particular, has remarkably escaped the downward trend triggered by rising inflation and the weak economic climate. In Austria, Vienna has been the main beneficiary – and here, notably, the Inner City which is currently enjoying an exceptional boom. This boom has not only been felt in the “Golden H“, formerly the “Golden U“, which is formed by the Kärntner Strasse / Graben / Kohlmarkt, but also in the smaller alleys and less glamorous streets in the city centre where demand is also robust. In these areas, the loss of an existing tenant raises little concern over a longer term vacancy and is

Retail space (in sqm) and vacancy rates (in %) in Vienna`s high streets

250,000

18 % 16 % 14 % 12 % 10 %

200,000

150,000

10.4 %

7.2 %

8 % 6 % 4 % 2 % 0 %

100,000

4.2 %

4.1 %

50,000

Favoritenstrasse

Innenstadt

Landstrasser Hauptstrasse

Innere Mariahilfer Str.

Vacancies

Retail

Retail-related

Vacancy rate (in %)

Source:

2022/23

been waiting, in part for some time, for a location that meets corporate requirements, which means vacant space sometimes becomes the object of a real bidding war. Characteristic of the market situation at prime locations is, for example, the new rental to Van Cleef & Arpels at Kohlmarkt 1. Louis Vuitton recently moved out to take over the vacant space at Graben 20 (formerly part of Meinl am Graben), and Dior became the next French luxury brand to use this opportunity and relocate to an absolute top location at Tuchlauben 3. The demand overhang has been responsible for ri- sing rents at prime locations, while rents are stable in neighbouring areas. Square metre rents for very good space on the Kohlmarkt and Graben range up to EUR 450/sqm depending on size and are even somewhat higher for smaller units. The future outlook for the luxury segment is very positive: Europe is becoming a new hotspot for the expansion of global luxury brands, and Vienna has joined this trend with its excellent development. The number of shop openings in North America and China declined significantly in 2022, while Europe posted a nearly one-fourth increase in year-on-year comparison.

good locations. In contrast, discounters tend to be the “crisis winners” as they benefit from consumers’ rising price consciousness and have set out on an expansion course. The defensive branch strategy currently followed by conventional retail chains is also providing excellent opportunities for discoun- ters to expand and improve the quality of their branch networks. For renters, the additional demand for space from the discount segment and the ongoing demand from the food trade represent a positive factor in today’s environment. This factor is, however, frequently linked to rent discounts and, above all, to short lease terms. One consequence is the continuing withdrawal of less attractive space from the market. In the top shopping streets, this transformation is concentrated on the conversion of first or second floor space into offices, while at secondary locations discounters often take over previously occupied retail space.

Facts and Figures Vienna city center

Accelerated restructuring in a broad market

Retail space city

116,100 sqm

Ø Shop size Vacancy rate

162 sqm

Apart from the luxury locations, the market for retail space is clearly challenging. The streamlining of branch networks together with insolvencies has accelerated the structural transformation, also in established and high frequency shopping streets and shopping centres. The outcome has been a shift in branch occupancy (especially a decline in the share of textiles and shoes as well as furniture) and an even stronger pull from the medium towards the lower price segment. This development reflects the economic weak- ness, decline in real purchasing power and online competition that has had a substantial impact on the medium price retail segment that dominates

3.0 %

Fluctuation rate

10.8 %

Rents in Vienna‘s top high streets

Location

Net rent EUR/sqm/month

Kohlmarkt

300 - 600

Graben

180 - 400

Kärntner Strasse

150 - 350

Rotenturmstrasse

50 - 100 45 - 160 50 - 120

Innere Mariahilfer Strasse

Neubaugasse

Sources: Standort + Markt 2022/23, EHL Market Research | Q3 2023

Vienna | Inner City Refurbishment, location changes, market entry – (almost) everything is new in the City 2023 has definitely brought a revolution to Austria’s most important retail location, the Vienna Inner City. The 1,408 shops with their 207,200 sqm of selling space have not seen this scope of transfor- mation or redesign in decades, and the changes in the absolute prime locations are proceeding at a particularly rapid pace. The makeovers are, however, largely positive: Investments in attractive facades and shop designs have increased, and a growing number of global top brands are entering the market at the City’s most attractive addresses. The hotspots for these changes include the Kohl- markt, Graben and Kärntner Strasse as well as the Golden Quartier along the Tuchlauben. An inte- resting fact is the near complete lack of available space and longer waiting lists. The “showroom character” is becoming even more important here and actual sales – for example at the Mooncity Vienna (Audi House of Progress Wien) have largely faded into the background. The situation on the Graben is similar: Nearly all vacant space has been rented, also because a number of luxury brands that initially preferred the neighbouring Kohlmarkt have come to see the Graben as an acceptable address – but the closer to the Kohlmarkt, the better. The situation on the Kohlmarkt itself is more complicated: Austria’s

best shopping address is currently the site of numerous refurbishments as well as vacant space.

Sustained momentum for prime locations

“The trend towards the absolute top loca- tions is unstoppable, all strong tenants want to locate in the Inner City or on the Mariahil- fer Strasse. The Kohlmarkt and similar areas will become even more important, and space will be more expensive because the top labels are prepa- red to accept high rents for optimal quality. In contrast, the weaker locations – even the slightly weaker ones – will be the losers.“

Jamal Al-Wazzan Managing Director Al-Wazzan GmbH

Here there are apparently differences between the price expectations of owners and potential tenants, which explains why some space has remained vacant for several months. Rents now range up to EUR 600/sqm for smaller spaces and up to EUR 450/sqm for larger units – which is quite ambitious, even for Austria’s most expensive address by far. The strong demand for prime space has influenced the Inner City’s other shopping streets in different ways: Streets that have become more attractive

due to local measures (above all, traffic calming) are benefitting from the overflow from top locations – positive examples include the Herrengasse and Rotenturmstrasse – while rents on other streets have come under pressure. The outlook is good for locations with prospects of new near-term impulses, for example the revitalised Petersplatz and the Habsburgergasse with its planned meeting zone.

New lettings Inner City 2022/23 (excerpt)

Goldenes Quartier

Dior

Louis Vuitton

Van Cleef & Arpels

Saint Laurent

Stephans- platz

Moncler

Longines Boutique L’Occitane L’Occitane

3SI Luxury Real Estate- Showroom

Haas Haus

Thomas Sabo

Tommy Hilfiger

Fashion

Jewellery

Fashion

Real Estate

Steffl

Fashion

Watches

Cosmetics

Boggi Milano

Fashion

Jewellery

Hofburg

Meeting zone Pedestrian zone

Staatsoper

NEU

Vienna | Inner City

Flexibility counters recession – ways to trigger a revival

can’t ignore a downturn, you need to look for new perspectives. Flexibility is the magic word here. The real problem is not older spaces but older and outdated concepts. Innovation must definitely come from investors who, for example, use some of the upper floors for housing, offices or hotels, or maybe even sport concepts or production facilities. Another important point is that the responsible authorities and legal regulations shouldn’t hinder, but facilitate these changes – a shift to another branch or use is a perfectly normal development. The worst possible strategy from an economic and ecological perspective is to risk vacancies and produce the space required for other uses through new construction with high resource consumption and ground sealing.

Mr. Lindner: As a location expert, aren’t you mainly involved with grief counselling right now? Hannes Lindner: No, of course not. Obviously, these are challenging times but there is really no need for doomsday prophesies. Vacan- cies are not going to explode, rent levels will decline slightly in many cases but certainly not crash, and alternative uses can almost always be found for properties that are no longer fit for retail. And we still have a large group of international concepts looking to set up a base in Austria. I don’t expect 2024 will be easy, but also don’t see any unsolvable problems from a structural standpoint. Only a few months after the kika/Leiner ban- kruptcy which involved hundreds of thousands of square metres of space, that almost sounds relaxed. I don’t want to downplay the situation, but kika/Leiner shows that we are facing prob- lems and not a complete disaster. The pro- perties were sold quickly, and I am convinced that most of them will soon find very attracti- ve uses. This situation also shows that you

Hannes Lindner Managing Partner Standort + Markt Beratungsges.m.b.H.

Develop quarters, not houses – Stra- tegies that turn good locations into real top locations The project name for the “Golden Quartier“ expresses our philosophy: We don’t develop properties but urban quarters in the sense of places where people want to be. But to do this, you need to include the entire environ- ment – in other words, innovative traffic solutions with a focus on pedestrian safety and the transformation of the street from a traffic route into an attractive open, common area. This process takes a great deal of time and requires a substantial budget, but our goals are set high. And urban quarter development will only be successful when all sides are working towards the same goal. The city, district, tenants and neighbours must benefit – we need to develop an inclusive win-win situation to make our vision reality.

appear to be uncertain, it could be tempting to cancel measures that are not expected to become income generators. But a reduction to functionality and cutbacks in comfort factors just won’t work. Regardless of whether we have developed an urban quarter in Vienna, Hamburg or Munich, one thing was always clear: We do it right or not at all – half- way is always a total flop. And seen this way, it’s almost reassuring that an urban quarter development lasts longer than a short-term trend or temporary weakness.

Jens Wemhöner MRICS Senior Director Pan-European Retail BNP Paribas Real Estate GmbH, Hamburg Thomas Hahn Head of Retail Leasing Austria SIGNA Real Estate Management GmbH

When you change the macroeconomic parame- ters and the perspectives and options for use

Footfall on Kärntner Strasse 2022 – 2023

3.0 M.

2.5 M.

2.0 M.

1.5 M.

1.0 M.

0 M.

Jan Feb Mar

Apr

May Jun Jul

Aug Sep Oct

Nov Dec

Source: hystreet.com

2023

2022

NEU

Vienna | Inner City

E-mobility in the City

very good central locations. One notable example is the Lynk & Co. brand, which is part of the Chine- se Geely Group: The international EHL partner BNP Paribas Real Estate brokered prime city locations for this company in major European metropolises like Amsterdam, Berlin, Hamburg, Munich, Madrid and Barcelona. These flagship stores serve as sales hubs for the suppliers and are also a key element of marketing and brand development. Sales are not only direc- ted to e-autos and e-bikes, but also cover mobility solutions for a predominately urbane and (at the present time, still) wealthy target group. The inner city locations are part of this brand profile and expansive and innovative showrooms for elec- tro-mobility will become a permanent part of the urban landscape – also soon in Vienna.

E-auto suppliers are taking a new approach to sales and marketing that has generated new im- pulses for inner city retail sites. Tesla, NIO, CUPRA and the like have replaced their conventional auto showrooms with outlets in prominent inner city locations. In Vienna, two flagship stores have opened in the city centre: Polestar (a joint venture between Volvo and Geely) in the Herrengasse and the E-Di- vision of Porsche Holding in der Kärntner Strasse (“MOONCITY VIENNA“). The extensive possibilities created by this trend are underscored by a look at other major Euro- pean cities, where e-mobility suppliers have been responsible for significant shares of new rentals in

E-car share of new registrations - annual comparison 2021 - 2023 (1st half of each year)

20 %

15 %

10 %

5 %

0 %

Jan

Feb

Mar

Apr

May

Jun

2023

2022

Source: Austrian Energy Agency 2023

2021

A top European leader for retail

What makes Vienna so attractive?

Vienna is a big step ahead in the competiti- on for investments by global retail groups. Only a few cities in Europe are ranked ahead of the Austrian capital by the major labels, explained Jens Wehmhöner, Senior Director Pan-European Retail at BNP Paribas Real Estate* in our interview. Mr. Wehmhöner: In Austria, it is sometimes hard to believe that rents in the absolute top locations are substantially higher than 300 Euros per square metre. Is this level sustainab- le over the long-term? Jens Wehmhöner: I haven’t the slightest doubt. First, because Vienna is not particu- larly expensive compared with other major European cities, and second because the city is high on the “must have list“ of major international labels. The LVHMs, Kerings and Chanels of this world must simply be represented here, and they will only accept absolute top locations. And these locations, of course, have their price.

First of all, I would say the booming tourism and its key importance for revenue in the high-quality retail segment. Vienna has recovered extremely well from COVID-19 and can easily compensate for the temporary loss of Russian guests. And with a population of two million, Vienna is one of the largest cities – and a market where global players really don’t want to miss out. * BNP Paribas Real Estate is the global partner of the EHL Immobilien Group and one of the world’s leading real estate service providers. The company is part of the BNP Group and is represented in 23 countries with business activities in transaction, consulting, valuation, property management, investment management and property development.

Where would you place Vienna in European comparison?

Paris and London clearly head the ranking and, without a doubt, are in a league of their own: But then you have Vienna together with other metropolises like the Scandinavian capitals, Barcelona, Brussels and Madrid. When you look at rents, only Milan and Zu- rich are clearly more expensive than Vienna. One good example is the Dior luxury group, which recently opened a global flagship store on the Champs-Élysées and has now leased substantial space in the Golden Quartier. These location decisions are an excellent testimonial for Vienna.

Jens Wehmhöner MRICS Senior Director Pan-European Retail BNP Paribas Real Estate GmbH, Hamburg

NEU

Vienna | Mariahilfer Strasse Department store 2.0: A classic con- cept in a new design – The “Lamarr“ One big construction site

The Mariahilfer Strasse inside the beltway, with a length of roughly 1.8 km and nearly 125,000 sqm of retail space (approximately 212,000 sqm together with the side streets), is by far the country’s most important shopping street and is currently – and has been for some time – one big construction site. In addition to the many normal refurbishment projects, there is the new cons- truction of the Lamarr at the site of the former Leiner furniture store and, above all, the lengthy preparations for the future U2/U3 underground hub in the Neubaugasse. These construction projects create important perspectives for the Mariahilfer Strasse but are currently a major obstacle for local retailers and especially for new rentals. For this and other reasons, the vacancy rate on the Mariahilfer-Stras- se has risen to a record 4.1 per cent. Even very interested retailers and gastronomy concepts are postponing their decisions until the end of const- ruction in order to start under optimal conditions. This long wait should end soon as surface const- ruction is expected to be completed this year. Most of the vacant space has, fortunately, been directed to other uses. For example: In 2023/24 mömax will move into the former location of Benetton’s flagship store, CINNAMOOD into the

The future “Lamarr“ department store at Maria- hilfer Strasse 10-18, the location of the former Leiner furniture store, is currently a source of considerable construction noise and clusters of curious pedestrians, but has already come to play a key (positive) role in planning by expansion managers: “Close to the Lamarr“ has become an important decision criterion and will soon be the new top address on the Mariahilfer Strasse. These high expectations are based on the depart- ment store‘s clear positioning in the high price to luxury segment which, combined with an eye- catching roof landscape, superior gastronomy and an integrated hotel, will again attract a particularly affluent public to the Mariahilfer Strasse. This pro- vides a real opportunity to establish a second top location in addition to the prime addresses in the Inner City that could be interesting for top labels (e.g. for secondary brands) when they are looking for lower cost alternatives to the Golden U. Numerous retailers from the upper price segment have already shown an interest in the surroun- ding areas. For example: EHL, among others, is brokering roughly 1,000 sqm of space suitable for a flagship store in the same building complex as the Lamarr.

former O bag store and Biogena into the former Asics shop. Other interesting relocations include the MEI SHI Shop& East food store and the Ber- liner Babo streetfood chain. Another positive factor is the generally good per- formance of the rapidly expanding gastronomy and service sector. However, this growth has been unable to completely offset the weakness in key retail sectors, in particular fashion and shoes (minus 17 per cent of space in ten years). In contrast, upper storey space that has often become difficult to rent is gaining a new life as hotels (recently two floors in the former Peek & Cloppenburg, now Motel One) or offices. The

demand by potential tenants is good, and the square metre prices for upper storey space are moving towards the levels for retail rentals. Given the low vacancy rates, longer lease terms and lower default risks, this conversion is a reasonab- le and attractive alternative.

New lettings and concept adaptions* Mariahilfer Strasse 2022/23 (excerpt)

MUMOK

MuseumsQuartier

Meeting zone Pedestrian zone

Leopold Museum

LAMARR

Department store - opening 2025

Micronutrient products Supermarket Gastronomy Consumer electronics

Tech Village Media Markt

Berliner Babo

Gerngross

Billa Pflanzilla

Gastronomy

Biogena

Gastronomy

Book store

Furniture discounter Gastronomy

Cinna- mood

McDonald’s

Thalia

Mömax

Westbahnhof

MeiShi Shop&Eat

IKEA

Retail Locations in Vienna and the Surrounding Areas

Goldenes Quartier Tuchlauben | 1010 Vienna 11,500 sqm

NEW FROM 2025: Lamarr Mariahilfer Str. 10-18 | 1070 Vienna 20,000 sqm

Auhof Center Albert-Schweitzer-G. 6 | 1140 Vienna 51,000 sqm

Kärntner Str.

BahnhofCity Wien West Europaplatz 2-3 | 1150 Vienna 22,000 sqm

10 13

18 17

Center Alterlaa Anton-Baumgartner-Str. 40 | 1230 Vienna 20,000 sqm

BahnhofCity Wien Hauptbahnhof Am Hauptbahnhof 1 | 1100 Vienna 23,000 sqm

Westfield Shopping City Süd Vösendorf Süd | 2334 Vösendorf 192,500 sqm

Westfield Donau Zentrum Wagramer Str. 81 | 1220 Vienna 120,000 sqm

Top Shopping Locations:

No. Name

1 2 3 4 5 6 7 8 9

Shopping Resort G3 Gerasdorf SCN – Shopping Center Nord

Q19

Citygate

Westfield Donau Zentrum Gewerbeparkt Stadlau

Goldenes Quartier

Gewerbepark Stadlau Gewerbeparkstrasse | 1220 Vienna 66,000 sqm

Auhof Center Stadion Center

17 18 19 20 21 22 23 10 11 12 13 14 15 16

STEFFL + Ringstrassen Galerien

Lugner City Gerngross

Lamarr The Mall

BahnhofCity Wien West

VIO Plaza

The Mall Landstrasser Hauptstr. | 1030 Vienna 30,200 sqm

1100 Columbus

BahnhofCity Wien Hauptbahnhof

ZS Zentrum Simmering

Huma Eleven Center Alterlaa

Riverside

Westfield Shopping City Süd

Top Shopping Streets:

ZS Zentrum Simmering Simmeringer Hptstr. 96A | 1110 Vienna 21,000 sqm

District

Street

1010 Vienna

Kärntner Strasse Graben Kohlmarkt

1030 Vienna 1060 Vienna 1070 Vienna 1100 Vienna 1120 Vienna 1160 Vienna

Landstrasser Hauptstrasse Innere Mariahilfer Strasse

Neubaugasse

Favoritenstrasse

Meidlinger Hauptstrasse

Thaliastrasse

The Austrian Provincial Capitals

Attractive opportunities in the “pro- vincial league“

Graz – the southeast shopping metro- polis

The markets for retail properties in the Austrian provincial capitals are clearly smaller than Vienna, but they still offer very attractive opportunities for real estate investors and tenants from the retail trade, gastronomy and service sectors. A typical characteristic of the situation in these regional capitals, which are classified as primary cities but overshadowed by Vienna, is the com- paratively stronger standing of local players. This reflects the initial concentration of international chains on the larger market in Vienna. Of the eight provincial capitals, the four largest – Graz, Linz, Innsbruck and Salzburg – have attracted attention beyond their regional borders. The most important advantage from the vie- wpoint of the retail trade is the rent level, which is moderate in comparison with the top locations in Vienna. The plus points for investors include somewhat lower vacancy and turnover rates. Over the coming years, these inner city locations should also benefit from increasingly restrictive zoning policies in the surrounding areas (ground sealing by shopping centres, retail parks and parking areas).

Graz has established a firm position as the second most important retail location in Austria after Vienna and occupies a prominent standing among the provincial capitals. This status is supported by the city’s strong growth, which has reached an astonishing 25 per cent since the beginning of this century. In relation to the number of inhabitants, Graz currently has the highest population growth among the major cities in this country. This position is also supported by the city‘s key cen- tral function for the southeastern region of Austria, in other words large parts of Styria, parts of Carin- thia and southern Burgenland. The Styrian capital and surrounding areas are by far the most import- ant retail location for this large catchment area. The Graz shopping centres can also be reached from parts of neighbouring Slovenia in much less than an hour, in other words much more quickly than the capital city in Laibach. This strong base benefits the inner city shopping zones as well as the shopping centres and retail parks on the periphery and in the surrounding areas. The Seiersberg shopping city with its 85,000 square metres of selling space plays a dominant

role but large retail parks and clusters – for ex- ample in Webling, Puntigam and Andritz or directly adjoining the shopping centre in Seiersberg – also hold strong market positions. From a transregional perspective, the strength of the inner city retail cluster is remarkable. The Graz City with its 167,000 square metres is the number two in Austria after Vienna’s Inner City. Other indi- cators – like the number of shops (925) and street length (7.5 kilometres) – also rank Graz second with a clear lead over the other provincial capitals. The prime locations extend along the foot of the Schlossberg around the main plaza, Herrengasse and the well-known Kastner & Öhler department store in the Sackstrasse. The border to the south is formed by Jakomini Square (a secondary location), and the commercial area continues with Südtiroler Square (a secondary location) and the Annenstrasse (a tertiary location) to the west of the Mur River. The Annenstrasse, in particular, is undergoing a structural transformation and has lost some of its attractiveness as a shopping destination. Vacancies are considerably higher than on the other side of the Mur River, and new impulses will be required to trigger a trend rever- sal and close the gaps in shop occupancy. Rents in Graz are constant at a solid level. Prices at the best locations range from EUR 45 to 80/ sqm, but there are individual cases up to EUR 90. The vacancy rate equals roughly 4% and has remained at this good level for many years. Turnover is also low at only seven per cent for prime locations, and the rate for the city as a whole (10.5 per cent) is also below the average for Austria’s lar- gest cities. The most notable changes in the recent past included the takeover of Modehaus Brühl by Aiola Living and the opening of a hotel (Motel One) in the historical Dorotheum building am Jakomini- platz after extensive refurbishment. In contrast,

Bipa, Nespresso, Burgerista and Orsay have closed their branches in the Graz City.

The further development of the inner city area will be dependent on the success of the planned bou- levard expansion and new traffic concepts with a better focus on pedestrians, cyclists and public transportation users. The design of the western section of the inner city (between the Herrengas- se and Mur River), in particular, will be re-evalua- ted. The far-reaching plans to expand the public transport network to include a first underground line have been discarded, but the Jakominiplatz will be connected with the Annenstrasse via a new tram line, together with sidewalks and bicycle paths, by 2025. These measures, when completed, could provide new impulses for the retail trade and (possibly even stronger) for gastronomy in the city centre.

Data and facts on the retail market in Graz

Retail space city

167,300 sqm

Ø Shop size Vacancy rate

181 sqm

4.0 %

Fluctuation rate

10.5 %

Rents in Graz

Location

Net rent EUR/sqm/month

Shopping streets prime locations Shopping streets sec. locations

93 36 52

Shopping malls

Source: Standort + Markt 2022/23

The Austrian Provincial Capitals

Linz – low vacancies, high share of shopping centres

Data and facts on the retail market in Linz

The Upper Austrian capital also successfully held vacancies at a traditionally low rate in 2022/23. This positive development was supported, among others, by the four strong inner city shopping centres (which are responsible for nearly 40 per cent of the inner city retail space). Another shopping centre at Schillerpark is currently in the design phase, and its realisation would sustain- ably improve the commercial area along the southern part of the Landstrasse. The important peripheral shopping locations, Plus City and the large retail park cluster in Leonding, have done reasonably well with low vacancy rates and good visitor frequency from consumers throughout the province. The vacancy rate in the inner city is very low at 3.7 per cent, while turnover remains high at 12 per cent but has stabilised after a longer upward trend. The most notable changes inclu- de branch closings by dm, Subway und North- land. Nespresso has relocated to a new location and Hansaton opened a new branch. Part of the space occupied by the former textile discounter Texhages is undergoing conversion into apart- ments and offices.

Retail space city

144,300 sqm

Ø Shop size Vacancy rate

182 sqm

3.7 %

Fluctuation rate

12.0 %

Rents in Linz

Location

Net rent EUR/sqm/month

Shopping streets prime locations Shopping streets sec. locations

95 22 57

Shopping malls

Source: Standort + Markt 2022/23

Salzburg – difficult location in the city centre

The retail market in this city centre is influenced by the still incomplete recovery of tourism (especi- ally the sharp drop in bus tourists compared with pre-COVID years) to a significantly greater extent than any other provincial capital. Combined with very ambitious rents in and around the central shop- ping axis on the Getreidegasse, this has caused

numerous problems and a rising vacancy rate that is only disguised by refurbishments. Larger branch closings by Interio, Depot, Nespresso and Zara in 2022 must, in any event, be seen as an urgent warning signal and the pressure on rents is rising. The peripheral locations have been much more successful, above all the Europapark, which has been trying for years to obtain a permit to expand the current 50,700 square metres of rental space, and the Designer Outlet Salzburg.

Plans include projects to make the inner city more attractive for pedestrians and cyclists, and the concepts for a meeting zone on Bozner Platz are fairly concrete. The peripheral shopping centre destinations like the dez or the retail park cluster in the east and Cyta shopping world play a dominant role in the entire catchment area of norther Tyrol.

Data and facts on the retail market in Innsbruck

Data and facts on the retail market in Salzburg

Retail space city

116,100 sqm

Ø Shop size Vacancy rate

162 sqm

Retail space city

71,000 sqm

3.0 %

Ø Shop size Vacancy rate

113 sqm

Fluctuation rate

10.8 %

4.9 %

Fluctuation rate

10.9 %

Rents in Innsbruck

Rents in Salzburg

Location

Net rent EUR/sqm/month

Shopping streets prime locations Shopping streets sec. locations

95 30 95

Location

Net rent EUR/sqm/month

Shopping malls

Shopping streets prime locations Shopping streets sec. locations

110

Source: Standort + Markt 2022/23

Shopping malls

100

Source: Standort + Markt 2022/23

Innsbruck - solid basis and new per- spectives

Innsbruck has 116,000 sqm of selling space, including 66,400 sqm in prime locations, which re- present an unusually large retail stock in relation to the city’s size. A very positive factor is the low and generally stable vacancy rate of only three per cent. The latest shop closings (e.g. Timberland, Rossignol and Peak Performance) have been cont- rasted by sufficient new openings (e.g. Starbucks, sehen!wutscher, Dunkin‘ Donuts and L’Occitane).

Focus on Online

Competition is gradually becoming symbiotic

personal advising. The “Ropo Effect“ (research online, purchase offline) is becoming more and more important as a buying impulse.

In the midst of the hype over digitalisation and artificial intelligence, a study by the retail research institute RegioData caused quite a stir at mid-year: For the first time since the appearance of online retail, the online share of retail-relevant turnover in Austria declined – by a full 1.5 percentage points to 15 per cent. This remarkable trend is primarily attributable to the end of the corona pandemic, but there are other underlying reasons: the strong performance of numerous branches like discounters, the luxury segment and food retailing where the online share is very low. All in all, online is no longer a fear factor for brick and mortar retail. Internet shopping has become an everyday occurrence, but now complements and in no way replaces the branch-based retail trade. More than by analytical market data, this develop- ment is illustrated by qualitative trends and a growing number of successful examples that show the transition from competition for customers towards synergetic cooperation where online and offline elements together create benefits for consumers and added value for retailers. Click and Collect improves outlet efficiency, and the growing number of branches with showroom character provide haptic and visual impressions for online purchases as well as opportunities for

“Stationary brick and mortar retail is developing more and more effective concepts to deal with online competition.“

Online as a threat scenario has become a marketing and sales tool that many retailers are successfully using to expand their market shares. Another exciting facet from the viewpoint of the real estate branch is the trend by previously pure online providers to establish showrooms (with and without purchasing opportunities), for example the pioneering home24 which has operated a branch in Vienna’s Inner City for several years.

Outlook

Weak demand for space

More conversions The limited production of space in other real estate markets, for example office and residential, will have an indirect impact on the market for retail space. The conversion of retail space into offices or apartments will often be economically more feasible than in the past. The increased restrictions for AirBnB apart- ments announced in Vienna could, over the long-term, increase the demand for space in lower cost hotels and hostels and create an additional option for hard-to-rent shop areas. Steady and strong demand for top locations The exceptional boom for top locations, above all the addresses popular with international luxury labels, will also serve as a source of rising rents in the Golden U during 2024. Numerous global top brands are looking to settle in Vienna and sear- ching, with a definitely aggressive pricing approach, for the infrequently vacated space. Sustainability – challenge and opportunity The political and social pressure towards greater sus- tainability is, from a pure economic standpoint, both a challenge and an opportunity for the retail property market. On the one hand, energetic improvements and the changeover to sustainable heating systems are connected with significant costs but, on the other hand, the mounting resistance against ground sealing is making the production of new space more difficult. In the end, this will benefit the existing supply (especially retail parks and shopping centres in secondary and tertiary cities).

The starting position for the Austrian retail pro- perty market in 2023 and 2024 remains difficult: Disposable income is rising as a result of wage and pension increases combined with government transfer payments (key word: climate bonus), but the weak economy, high interest rates and inflation are fuelling uncertainty and consumers’ reluctance to spend. In combination with the higher wage and purchasing costs faced by the retail trade, this has led to substantial reservation in the demand for space on many submarkets. One positive aspect is the apparent calm that has followed the year’s prominent insolvencies through mid-2023. Little potential for rent increases The weak demand for space has been responsible for greater pressure on rents. Adjustments equal to the inflation rate are often difficult to achieve on new rentals and contract extensions. That means a decline in real rental income, also when nominal rents are stable, even at good locations. However, the normalisation of energy prices – which triggered a massive surge in operating costs during 2022 and at the beginning of 2023 - should slightly improve landlords’ negotiating position. The trend towards shorter lease terms is continuing. Leases of more than five years will no longer be the rule, and the previously rare, very short two- or three-year commitment periods will become more popular.

Investment: price pressure in varying intensity

Retail properties, just like all other usage ca- tegories, have come under price pressure. The main underlying causes are high inflation and the related reactions by central banks in the form of interest rate hikes, which have fundamentally ch- anged the capital market environment and the in- vestment market. These developments have been compounded by a substantially weaker economic outlook. The consequences include rising yields and a sharp drop in transactions – and here, the Austrian market is in line with the European trend. There are, nevertheless, differences among the subsegments of the retail market that are reflected in varying yields and diverging investor interests. Investments in shopping centres came to an almost complete standstill at the beginning of the pandemic. This market is traditionally characterised by a large share of major institu- tional investors, who are showing little interest in new commitments due to the still incomplete repositioning of trans-regional shopping centres and the related risks. The lack of transactions makes it impossible to provide a yield range for this submarket.

see little volatility, also in times of high inflation and strong online competition. New developments are rare due to the rigid zoning situation, and the demand for existing properties is good. Prime yields in this submarket range from 5.25 to 5.5 per cent. The interest in supermarkets is relatively strong and good prices can still be realised for properties in suitable locations with long, fully indexed leases and prime yields of roughly five per cent. Pro- perties with these specifications are particularly interesting for investors, but are seldom found on the market. For retail and mixed use properties on established shopping streets, the yield is heavily dependent on the lease term, indexing and tenant credit ratings as well as the development of rents (increases or decreases) for retail space. Investors are interes- ted in high street properties and/or locations that allow for flexible use (e.g. partial conversion from retail to office or hotel use). Properties in absolute top locations (Golden U, Golden Quartier) form a separate segment that disengages in part from yield-based price determination because investors are prepared to pay prices for these unique locations that are only economically understandable over the very long term.

Retail parks that are focused primarily on every- day necessities have rebounded. Here investors

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