Office and retail yields 2014 – 2023
Source: EHL Market Research | Q3 2023
There are signs of rising investor interest in several subsegments of the retail sector, but the increase in insolvencies and series of retailer exits from the Aust-
rian market have led to a greater focus on sustainabi- lity in tenants’ business models.
Not only “bad news“ for investors
The market for retail properties is currently undergoing a strong transformation. It begins with ESG requirements, which are also be- coming more important for retailers, and ex- tends to the stronger integration of entertain- ment offerings to the (partial) conversion of locations. There is still substantial interest on the part of investors in attractive products/ properties that meet tenant requirements and, in the end, also satisfy consumer demands.
The Austrian retail market was recently confronted with a number of insolvencies and market exits. Investors as well as the financing banks are, consequently, evalua- ting new commitments very carefully. The current pressure on prices and sharp dop in transaction activity hardly come as a surprise. But the news is not only bad – retail is a very attractive asset class when the viewpoint is longer term. The overall supply of space is declining, and zoning approvals for new space are rare. At the same time, the pace of growth in online sales is weakening – or even negative – in nearly all branches. Not least, there is a greater interest in (former) retail locations from the office, service and logistics sectors.
Franz Pöltl FRICS Managing Partner EHL Investment Consulting GmbH
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