Retail Market Report | 2020

Retail Market Report Austria |2020 We stand for Retail

We stand for real estate.

Introduction

In this challenging time, experience, detailed know- ledge of the market and trustworthy contacts are more important than ever for international labels and trendsetters. On the basis of this, the experienced EHL retail team and the specialists from our global network partner BNP Paribas Real Estate continually analyse the latest market trends as well as the resulting opportunities and challenges and develop solutions that are optimised for our customers. Moreover, difficult times and upheaval always open up new opportunities from which you should bene- fit. We cordially invite you to a discussion with our experts on how EHL can provide you with efficient and competent support.

The exceptional situation caused by Covid-19 has not only made the year 2020 an extraordinarily challenging one for brick-and-mortar retail, but has also accelerated structural change in the direction of online retail. This has also decisively shaped the situation in the retail property market: a majority of companies in retail and gastronomy are coming up with new ideas and location strategies, while landlords are simultaneously developing new concepts for use. Rent levels in particular have begun to shift, and both sides are called upon to find a price level which is adequate for the changed environment.

Michael Ehlmaier FRICS Managing Partner EHL Immobilien GmbH

Stefan Wernhart MRICS Managing Director EHL Gewerbeimmobilien GmbH

Mario Schwaiger Retail Properties | Head EHL Gewerbeimmobilien GmbH

Alexandra Bauer MRICS Market Research | Head EHL Gewerbeimmobilien GmbH

Overview Retail Market Vienna

Executive Summary

Severe loss of revenue among the most important tenant groups

whose refurbishment is now finished, will also benefit from this in the long term.

Relatively stable demand for space in capital cities

The most important tenant groups for retail space, thus classic retailers, gastronomy and numerous service providers, are showing severe declines in revenue as a result of temporary closures, distancing rules and consumer restraint. This must often be met with a temporary waiver and then a potential reduction of rents.

Retail in Graz, Salzburg, Innsbruck and Linz is developing somewhat better than in the capital city of Vienna. Nevertheless, there are also isolated vacancies now in prime locations, offering potential clients opportunities that, absent the crisis, may not have arisen for years. Real estate with local supplier potential the focus of investors Well-established retail parks with local supplier potential are currently the most sought-after investment class within the retail segment. In order to be attractive for investors, there must be excellent transport connections, a good and varied tenant mix with an anchor tenant particularly from the food sector, and a catchment area with a high level of purchasing power.

Concentration on top locations continues

Retailers are increasingly focusing on the shopping streets with the heaviest frequency and on modern, large shopping centres. This long-observed development is further reinforced by the difficult situation of the market as a whole.

Development of major retail sectors varies widely

The crisis is affecting the retail sectors in a variety of ways. For fashion, shoes and electronics, the network of stores is being thinned, whereas food retail is continually expanding. Sporting goods, DIY markets, garden centres and furniture retail are also profiting and even searching for additional space.

Important market indicators

Economic Data Austria 2020 Unemployment rate (Eurostat)

5.5% 357.5 -7.0% 0.8% -10.3% -4.2 % -5.5 %

Nom. GDP EUR bn Economic growth

Shared zones vitalise shopping streets

Inflation

The refurbishment of Rotenturmstraße has been completed and been very well received. Higher frequencies are already being reported, and the requests for space are increasing. Neubaugasse,

State budget GDP per capita

Private consumer spending

Source: WIFO economic forecast | OeNB (inflation rate)

3

Retail Data Austria

Facts and Figures at a Glance

Development of sales space in Austria

2.0 % 1.5 % 1.0 % 0.5 % 0.0 % -0.5 % -1.0 % -1.5 % -2.0 %

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

Source: RegioPlan 2019

Share of online retail in Austria

21 %

18 %

15 %

12 %

9 %

6 %

3 %

0 %

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

Share of online retail in Austrian consumer retail spending (in %)

Source: RegioPlan 2019

Top 10 online shops in Austria

834.3

amazon.de

zalando.at

346.8

universal.at shop-apotheke.at 111.9

93.7

ottoversand.at

84.4

mediamarkt.at hm.com apple.com

71.9 70.5

62.3 57.7 55.9

cyberport.at e-tec.com

2019 revenue in millions of euro

Source: Statista

4

Development of tourism in Austria

Upper Austria 8.5 (+4.5 %)

Lower Austria 7.7 (+3.5 %)

Vienna 17.6 (+6.8 %)

Decline in overnight stays in the period from May to August comparing 2020 to 2019

2019 Styria 13.3 (+1.6 %)

Burgenland 3.1 (+3.1 %)

Tyrol 49.9 (+0.5 %)

Vienna

-82 %

Salzburg 30.0 (+1.5 %)

-40 %

Lower Austria

Vorarlberg 9.2 (+0.4 %)

Salzburg

-33 %

-32 %

Upper Austria

Carinthia 13.4 (+0.2 %)

Tyrol

-29 %

-25 %

Vorarlberg

Burgenland

-19 %

-18 %

Styria

Carinthia

-15 %

Overnight stays in millions in 2019, total: 152.64 m Source (bar graph, map): Statistics Austria 2020

Development of tourism in Vienna

2010

10.9

2015

14.3

2016

15.0

2017

15.5

2018

16.5

2019

17.6

2020*

4.75 - 5.25

Overnight stays in millions

* WIFO forecast

Source: WIFO | Vienna Tourist Board | Statistics Austria 2020

Sector mix of city-centre shopping zones

Market share of retail zones (AT)

100 %

100 %

3 % 3 %

8 % 5 %

10 %

20 %

20 %

12 %

24 %

13 %

12 %

80 %

80 %

11 %

15 %

12 %

14 %

4 %

40 %

60 %

60 %

30 %

20 %

9 %

20 %

31 %

40 %

40 %

25 %

24 %

20 %

25 %

27 %

20 %

20 %

15 %

30 %

28 %

13 %

25 %

9 %

10 %

7 %

6 %

0 %

0 %

2010

2020p

2030p

2005

2010

2015 2020p 2025p

n Gastronomy n Services n Food n Fashion n Miscellaneous retail n Other n Vacancy rate

n Shopping malls n Retail parks n Online n City-centre shopping zones n Other (incl. food retail)

Source: Regioplan 2019

Source: Regioplan 2019

5

© Radu Bercan / Shutterstock.com

© Robert Deopito

The Austrian Retail Market

Crisis yes, the end of the world no

by RegioPlan, 480 business locations in Austria are currently affected by ongoing or impending insolvencies. In the short and medium term, these developments will be reflected in all major sub-markets (shopping streets, shopping centres and retail parks) in the form of substantially higher vacancy rates. This will temporarily become a source of tenant bargaining power when renewing contracts and with new rentals and will exert pressure on rent levels. In the longer term, it will accelerate an adjustment of the market: space will be more quickly removed from the market in weaker locations and conversions will be carried out more consistently, even if they entail costs and permit only limited earnings potential. The increased surplus of space is therefore expected to remain a temporary phenomenon. Despite the problems, the mood need not be apocalyptic: domestic demand is proving to be the most stable economic factor by far, and the path returning to “normal shopping” has been embarked upon fairly quickly. State support measures (short- time work, hardship fund, increase in unemployment benefits, etc.) ensure a stabilisation of income, while a lower level of recreational spending due to cancelled vacations, cancelled events and fewer visits to restaurants are resulting in a greater proportion of household income dedicated to retail spending. In subsectors such as fitness centres, corona-related distancing rules even tend to result in additional space requirements.

After several years of a declining supply of space in Vienna and the provincial capitals, the corona crisis and lockdown hit the market in a phase which was pointing again to stabilisation and a slight recovery. The declining demand for space on the part of sectors with an above-average online share of total revenue was at least offset in 2019 and the first quarter of 2020 by increasing space requirements in other retail sectors, gastronomy and various service sectors (e.g. health and fitness). The crisis has caused a sharp reversal. A large number of landlords had to forego a portion of rents for economic reasons, regardless of legal obligations, and long-term consequences are now starting to emerge: plans for expansion have been put on hold everywhere, and there is an acceleration in the streamlining of branch networks and in branch downsizing. In addition, several insolvencies such as Dressmann, Stefanel and Runners Point are resulting in additional vacancies, and more will certainly follow in autumn and in 2021. According to a survey

Rents shopping centres and retail parks | Q1 2020 net rent EUR / sqm / m

Price trend

Prime location

40 - 120

stable

SCS, Donauzentrum, Auhof Center, etc. Secondary location Q19, Lugner City, BahnhofCity Wien West District centres

15 - 40

stable

8 - 14 slightly increasing

Retail parks Vienna

8 - 15 6 - 13

stable stable

Federal provinces

Source: EHL Market Research | Q3 2020

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Conclusion: the crisis will be painfully felt in real estate revenue for 2020, it will require considerable effort on the part of management, but for most of the industry it will be possible to handle it.

And “apart from corona” there are positive trends as well: pedestrian and shared zones are developing positively, demand for space from the healthcare sector – also in shopping centres – has considerable potential, and structurally there is still a significant level of surplus demand in top locations.

Winners and losers of the crisis Even in the crisis, not everyone is the same: in addition to the losers, who are affected to varying degrees, there are market segments that are largely resistant and even a number of winners of the crisis. The winners: local suppliers, DIY markets, sporting goods, home furnishings, food and newcomers Retail parks with a focus on local suppliers are especially benefiting from the trend of shopping close to home. There are to some extent significant gains in revenue in the sporting goods trade (booming bicycle business), in DIY markets and in home furnishings, especially furniture retail. Garden centres are the frontrunners on the positive list, however. Food retail has also picked up somewhat, on the one hand because at least part of the time people are cooking more rather than going to restaurants. On the other hand, a growing awareness of health means consumers are increasingly reaching for (more expensive) organic products. The current upheaval also represents an opportunity for new retail concepts: innovative companies now have favourable chances at first-rate locations that would have scarcely been vacant in “normal times”. In this respect, a window of opportunity is currently opening up for newcomers with a coherent business model and solid financing, also because landlords are now even more willing to consider alternatives to the conventional branch mix. The losers: fashion, shoes, electronics and tourism hotspots The sectors with significant demand for space, textiles and shoes, report the most painful losses. Working from home and the cancellation of events do not motivate people to purchase fashion items, and the electronics industry is more sensitive than any other to the migration of revenue to online retail. In these segments, it is expected that the crisis will have longer-term effects and that less space will be required in the long term. In the short term, retail companies in the tourist hotspots such as the city centre of Vienna and Salzburg will be impacted even more. The lack of international customers is particularly noticeable in the top locations, but it can be assumed with great certainty that, first, city tourism will become significantly stronger again at the latest once a vaccine for corona is developed and, second, areas in prime locations can be quickly rented again should a tenant withdraw. Differentiated development in gastronomy and services Restaurants with a high proportion of tourists and business people, bars and clubs are among the biggest losers as a result of corona. Whereas restaurants with outdoor seating are increasingly being sought, and restaurants with a predominantly private, local audience are again reporting largely normal revenue. Among service providers, cinemas and other cultural institutions are in a highly precarious situation. On the other hand, there is positive development in health services, for which space is being sought to an increasing extent.

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Facts and Figures Vienna city centre

Sales space city

207,300 sqm

Sales space per resident

0.11 sqm 145 sqm

Ø Shop size

Stage of expansion

37.8 %

Vacancy rate

3.3 %

Fluctuation rate

11.8 %

Source: Standort + Markt 2019/20

© SIGNA | Gregor Titze

The Vienna Retail Market As everywhere, the market for retail property in Vienna is currently characterised by the after- effects of the acute phase of the corona crisis and ongoing, generally limited restrictions. However, development particularly of the prime locations remains basically stable due mainly to the continuous growth in population and related uptick in consumer spending.

on the quality of the location. This reinforces a trend that already led to fewer market entries in 2019 compared to previous years, as international retailers, in particular, prefer to wait to find a space in their desired location rather than move to a secondary location. In 2019, only nine new bigger retailers came to Austria, including top labels such as Chanel Beauty, Ray-Ban and JD Sports. Space that becomes vacant in prime locations could offer attractive opportunities for strong global brands again once the corona crisis is over. The ongoing structural change in the retail sector can be clearly felt in secondary and tertiary locations. For example, the total vacancy rate in Vienna has increased by 20 percent in the past 15 years. Away from the top locations, alternative uses are increasingly being implemented, e.g. pop-up

The focus of retailers on prime city-centre locations and the largest shopping centres remains unchanged. They therefore continue to report favourable demand, rents are more stable than in the overall market, and vacancies have remained moderate despite several insolvencies and closures. The situation is more difficult in the secondary locations, however, as those seeking space are now even less willing to compromise

Pedestrian frequency in Vienna’s most important shopping streets

77,515 (+11 %)

59,998 (+12 %)

Graben Kärntner Straße

56,592 (+4 %)

74,169 (+6 %)

50,826 (-7 %)

74,172 (+5 %)

Mariahilfer Straße

31,883 (+26 %) 33,112 (-13 %)

33,457 (+24 %) 31,687 (-23 %) 37,584 (+12 %)

Rotenturmstraße Favoritenstraße Kohlmarkt

26,295 (+16 %)

18,693 (-7 %)

17,311 (-9 %)

Meidlinger Hauptstraße

Neubaugasse 14,782 (-9 %) 16,204 (-16 %) Landstraßer Hauptstraße 19,680 (+6 %) 14,018 (-4 %)

Thursday

Saturday

Pedestrian count in 2018 compared to 2016 | Source: Austrian Federal Economic Chamber

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Sales space (in sqm) and share of retail (in %) in Vienna’s shopping streets

250,000

17.0 %

18 % 16 % 14 % 12 % 10 %

200,000

150,000

8 % 6 % 4 % 2 % 0 %

100,000

4.6 %

3.3 %

4.5 %

3.7 %

50,000

Innere Mariahilfer Str.

City

Landstraßer Hauptstraße

Favoritenstraße

Meidlinger Hauptstr.

Vacancy rate

Retail

Retail-supporting supply

Vacancy rate (in %)

Source :

2019/2020

stores and storage concepts. What remains to be seen is the actual realisation of initiatives to stimulate retail, such as the million-euro funding scheme that the Vienna Economic Chamber’s counsel for location issues recently proposed in an effort to upgrade ground floor zones.

Rents top shopping streets | Q1 2020

Net rent EUR/sqm/m

Kohlmarkt

250 - 450 190 - 350 120 - 330 35 - 150 30 - 130 15 - 55 15 - 55 10 - 50

Graben

Kärntner Straße

Innere Mariahilfer Straße

Rotenturmstraße Favoritenstraße

Neubaugasse

Landstraßer Hauptstraße Meidlinger Hauptstraße

Shopping centres succeed with new services

10 - 30 Source: EHL Market Research | Q3 2020

“Refurbishment rather than expansion” is still the trend with Vienna’s shopping centres. What was pioneered by the leading centres SCS and Donauzentrum is being implemented now in others. Shopping centres are being upgraded into a place for the entire family to spend time, apart from a mere shopping experience. For example, Millennium City on the Handelskai is currently being redesigned. A new cinema complex, a trampoline park, a food court with 1,400 seats and an e-sports arena are to bring about a sizeable increase in frequency. Thus the steady decline of traditional retail services in favour of gastronomy and recreational offers continues. For example, sports services including the increasingly important area of e-sports, games and recreational opportunities for children, such as the “Alice in Wonderland” multimedia service in

“The Mall” at Wien-Mitte, are being used to develop new customer groups and therefore to provide support to traditional retailers. Tenants from the healthcare sector (doctors, massage therapists, physiotherapists, etc.) can also bring additional target groups to shopping centres. A new development has nevertheless launched in 2020: following a long delay due to various citizens’ initiatives, at the beginning of the year the multifunctional project “Vio Plaza” on the Komet site near the U4 station at Meidlinger Hauptstraße was begun. In addition to apartments and offices, a 12,000 sqm shopping centre will also be built. The locally significant Meidlinger Hauptstraße could come under pressure as a result of this competition.

9

Shopping Streets Vienna

Vienna | City

For years, the city centre was the big winner of the outstanding development in tourism, which is why it is currently hardest hit by the dramatic decline in city tourism. Significant successes bear no relevance at present, like the fact that prior to corona the Graben reached higher pedestrian frequencies than Mariahilfer Straße for the first time. For most of the city centre, particularly the “Golden U” comprising Kärntner Straße, Graben and Kohlmarkt as well as the “Goldenes Quartier”, the recovery of city tourism is crucial for getting back on the path to success. With some limitations, this also applies to Rotenturmstraße, which was able to make significant gains prior to corona owing to its redesign into a shared zone and new, attractive gastronomy concepts such as Le Burger and Max & Benito. Thus at EUR 130/sqm, rents have already approached the more affordable sections of the “Golden U”. Despite the current downturn in tourism, neither investors nor future tenants should underestimate the city centre’s mid- and long-term potential. The historic centre is one of the world’s prime locations, and iconic shoe brand Christian Louboutin’s plan for a flagship store on Tuchlauben (which was postponed at short notice) underscores the long- term attractiveness of Vienna for international luxury retailers.

Alexander McQueen

Saint Laurent

Emporio Armani

Prada

MiuMiu

Valentino

Louis Vuitton

Chanel

Meinl am Graben

Jimmy Choo

Napapijri

Cartier

Hermès

TOD's

Dior

Giorgio Armani

Breitling

Escada

Dolce & Gabbana

Tiffany & Co

Fendi

Michael Kors

Gucci

Zegna

Swatch

Cafe Demel

Salvatore Ferragamo

Triumph

Hilfiger

Moncler

Massimo Dutti

IWC Schaffhausen

Zara

Loro Piana

Furla Karl Lagerfeld

Paul & Shark

Nespresso

Läderach (EÖ 2021)

H&M

WMF

Bipa

& Other Stories

Foot Locker

Apple Store

Cheese & More

Ray Ban

50 D mand groups Short-term Apparel Bedarfsgruppen

Kaufhaus Steffl

±

100 Kurzfristbedarf Bekleidung m

Hugo Boss

0

Hausrat, Elektrowaren Sonstiges Wohnungseinrichtung H me furnishi gs Household, elec. appliances Miscellaneous Retail-supporting supply Vacancies S i g mall Shopping Mall Leerstand EH-begl. Angebot

Mango

Peek & Cloppenburg

Swarovski

Rituals

Calzedonia

L'Occitane

Lage

ocation

Guess

Benetton

Chanel Beauty Boutique

Fußgängerzone Begegnungszone Pedestrian zone Shar d zo e

Sacher Eck

As of Q4 2020

Zara Home

INTERNATIONAL PROPERTY CONSULTANTS

Meter

“Car-free city” and the consequences

CHARTERED SURVEYORS

0

100

200

the city centre remains accessible by car. In any case, the retail sector has had consistently good experiences with traffic restrictions. The recent criticism by the district about the loss of parking spaces in the scope of Rotenturmstraße’s redesign not likely to have any negative effects either, as only a minority of customers drive into the first district.

The announcement of further restrictions for automotive traffic also deserves attention. As the slogan “car-free city” is likely to be greatly exaggerated, there is no need for major concern.

A few additional pedestrian and shared zones should have positive consequences as long as

10

Shopping Streets Vienna

Vienna | Mariahilfer Straße

Museumsquartier

Bedarfsgruppen D mand groups Short-term Apparel

Kurzfristbedarf Bekleidung

Hausrat, Elektrowaren Sonstiges Wohnungseinrichtung H me furnishi gs o ehold, lec. applia ces Miscellaneous Retail-supporting supply Vacancies S i g mall Shopping Mall Leerstand EH-begl. Angebot

Leiner

McDonald's

Starbucks

Vapiano

Hervis

XXL Sports

Urban Outfitters

Gerngross

Intersport

H&M (Flagship)

Lage Location

(EÖ 2021-03)

JD Sports

Fußgängerzone Begegnungszone Pedestrian zone Shar d zo e

Scotch & Soda

Desigual

As of Q4 2020

Starbucks

Nike Store

Hema

TK Maxx

McDonald's

C&A

Swing Kitchen

Apotheke zur Kaiserkrone

Foot Locker

Le Burger

±

Westbahnhof

Kentucky Fried Chicken

m

0

100

200

INTERNATIONAL PROPERTY CONSULTANTS

Meter

0

100

200

Quelle:

CHARTERED SURVEYORS

terrace. Toward the city centre, SIGNA’s plans for the former Leiner location will have a lasting impact on the retail landscape. A high-quality department store featuring shopping, gastronomy, hotel and consumption-free zones is to be built there by 2024. Neubaugasse has been outstanding in establishing itself as a new shopping area with innovative brands. Among others, Portuguese ceramics manufacturer Motel a Miio and German lifestyle label Kapten & Son have opened in the last several months. The decline in the most recent frequency count is due to the work on the Neubaugasse underground hub. The extensive works have now been completed: new pavers, more trees, seating options and mist cooling systems will significantly enhance Neubaugasse and make it even more attractive for retailers.

1.8 kilometres long, Mariahilfer Straße is still undisputedly the most important shopping street in Austria. JD Sports, Hervis and XXL Sports moved there recently, and H&M has also opened a flagship store. Development is especially good, particularly in the core areas between Neubaugasse and Schottenfeldgasse, where rents of up to EUR 150/sqm are currently being obtained. The consequences of corona are much less noticeable than in the city centre, even if the numerous fashion stores are suffering from significant losses in sales and there is a risk of isolated closures (e.g. the Dressmann insolvency). Two outstanding projects will be decisive for the long-term development of Innere Mariahilfer Straße: by 2021 at Westbahnhof, IKEA will build its first city-centre location, which will also feature a hotel with a restaurant and a freely accessible rooftop

11

SCN – Shopping Center Nord Ignaz-Köck-Straße 1 | 1210 Vienna 32,000 sqm

Retail Locations Vienna and the Surrounding Area

© SCN

STEFFL Department Store Kärntner Straße 19 | 1010 Vienna 12,500 sqm

Goldenes Quartier Tuchlauben | 1010 Vienna 11,500 sqm

Q19 Grinzinger Straße 112 | 1190 Vienna 15,000 sqm

© Goldenes Quartier_Gregor Titze

© Q19

© STEFFL Department Store

Ringstraßen Galerien Kärntner Ring 5 - 7 | 1010 Vienna 30,000 sqm

© EHL

Lugner City Gablenzgasse 5-13 | 1150 Vienna 38,200 sqm

BahnhofCity Wien West Europaplatz 2-3 | 1150 Vienna 20,500 sqm

© Lugner City

© ECE

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

Gerngross Mariahilfer Straße 42-48 | 1070 Vienna 30,000 sqm

© Deka Immobilien Management GmbH

© Auhof Center

Riverside Breitenfurter Straße | 1230 Vienna 22,000 sqm

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

SCS Shopping Mall Vösendorf Süd | 2334 Vösendorf 192,500 sqm

© Riverside

© SCS

© LLB Immo KAG | Architekten KBIA Kulmus Bügelmayer

12

Shopping Resort G3 Gerasdorf G3 Platz 1 | 2201 Gerasdorf 70,000 sqm

Donau Zentrum | Donau Plex Wagramer Straße 81 | 1220 Vienna 120,000 sqm

Citygate Wagramer Straße 195 | 1210 Vienna 17,800 sqm

© Donau Zentrum | Faruk Pinjo

© G3 | Nagl

Millennium City Handelskai 94-96 | 1200 Vienna 51,800 sqm

© Citygate Shopping

© Millennium City

Gewerbepark Stadlau Gewerbeparkstraße | 1220 Vienna 66,000 sqm

© Wikipedia

Kärntner Str.

Stadion Center Olympiaplatz 2 | 1020 Vienna 26,700 sqm

© Stadion Center

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

The Mall Landstraßer Hauptstraße | 1030 Vienna 26,800 sqm

© ZS Betriebs GmbH

© CCreal

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

1100 Columbus Columbusplatz 7-8 | 1100 Vienna 18,000 sqm

huma eleven Landwehrstraße 6 | 1110 Vienna 50,000 sqm

© ECE

© EHL

© huma eleven | Robert Fritz

13

Facts and Figures The Graz retail market

Sales space city

175,400 sqm

Sales space per resident

0.61 sqm 190 sqm

Ø Shop size

Stage of expansion

36.7 %

Vacancy rate

4.1 %

Fluctuation rate

12.9 %

Source: Standort + Markt 2019/20

© Arsenie Krasnevsky / Shutterstock.com

The Graz Retail Market

On the other bank of the Mur beginning at Südtiroler Platz and along Annenstraße the retail locations are perceived as much less attractive, which is reflected in lower rents and a higher vacancy rate.

The economic strength of Graz is also reflected in the retail landscape. The city centre has 175,000 sqm of retail space, the second largest city-centre shopping zone after Vienna City. There are also good locations around the Jakominiplatz traffic hub and toward Kaiser-Josef- Platz. The most important frequency generator in the city centre is the long-established department store Kastner & Öhler, also the spacious underground car park built several years ago, which significantly eased the lack of parking spaces in the city centre and vitalised retailers to a considerable degree.

“Opportunities for locations in the core zone of Herrengasse, Hauptplatz, Sackstraße, Sportgasse”

Rents of up to EUR 100/sqm in top locations

Rents in top locations reach up to EUR 100/sqm, in secondary locations up to EUR 40/sqm. The vacancy rate in the city centre had risen slightly even before corona and was 4.1 percent in Q1 2020. Since then, a few more vacancies have been added. This development will bring movement into the market, and the otherwise minimal fluctuation rate is expected to increase significantly. Thus in 2021 new opportunities to open a new branch will arise in absolute prime locations such as Herrengasse, Hauptplatz, Sackstraße and Sporgasse. New additions of the last few months include the Scandinavian interior designer Bolia on Murgasse as well as Rituals and Dunkin’ Donuts, each on Herrengasse.

Graz Demography & Economy

With around 290,000 inhabitants, Graz is Austria’s second largest city. Purchasing power in Styria is EUR 23,623 per inhabitant. The favourable economic development and strong influx mean the percentage of population growth in Graz is even higher than in Vienna. By 2030 the population is forecast to increase to around 325,000. The extensive catchment area from southern Upper Styria via southern Burgenland to Eastern and Western Styria as well as the shopping tourism from northern Slovenia and Croatia are relevant for the retail market.

14

Numerous new openings in Seiersberg

innovative “Running Zushi”, in which a robot serves the beverages.

One of the few expansions of floor area among shopping centres in Austria was recently at Center West, which with 60,000 sqm of shopping and entertainment services is the biggest shopping centre in the metropolitan area of Graz. At the end of 2019 the biggest Intersport branch in Europe opened there with 7,500 sqm of sales space as well as the trampoline park Flip Lab.

A few kilometres south of Graz, Shopping City Seiersberg stands out among shopping centres with its floor area of approximately 85,000 sqm.

“Seiersberg is the most popular expansion target in Styria”.

Graz rents

The biggest shopping centre in Styria and Austria’s third largest is one of the most popular expansion targets among international retailers. XXL Sports, Nespresso and Footlocker have opened here recently. The gastronomy supply has also been considerably upgraded with Waffle Planet, Burgerista and the

Location

Net rent EUR/sqm/m

Shopping streets prime location Shopping streets secondary location

100

40 55

Shopping centres

Source: Standort + Markt 2019/20

Graz retail locations

± 0

Shopping Malls 1

Fläche 2 sqm

m

1 000

2 000

1 Shopp ingcity Seie rsbe rg

85.000 m²

2 Center West

55.000 m² 43.000 m²

4

3 Murpark

23

11

16

4 Shopp ing Nord inkl. FMZ

41.000 m²

9

5 Citypa rk

40.000 m²

17

6 Kastner & Öhle r

40.000 m²

Retail Parks

7 FMZ Graz Webling

23.700 m²

8 Shopp ing West

9.000 m² 5.200 m²

9 Arland Center

10 Center Ost

4.400 m²

Graz City

6

11 AFZ Andritzer FMZ

3.900 m²

19

Fachmarktagglomerationen (FMA) 3 12 Graz - Webling Retail Park Ag l s (FMA) 3

22

47.250 m²

13 Graz - Seiersberg

38.700 m²

5

14 Graz - Puntigam

19.400 m²

15 Graz - Lauzilgasse

18.900 m² 17.300 m²

16 Graz - Andritz

17 Graz Nord

12.900 m²

15

18 Graz - Center Ost 19 Graz - Eggenberg

8.400 m² 8.100 m²

3

21

20 Graz - Straßgang

7.800 m²

2

10

21 Graz - Messendorf

7.000 m²

18

12

7

8

22 Graz - Plüddemannga sse

6.500 m²

14

23 Graz Nordwest

250 m²

20

City Shopping Mall !( Retail Park (FMZ) ") FMA $+

1

13

Projekt #*

1) inkl. Department Stores & Town Center. 2) Flächen Shopping Malls, Retail Parks & Projekte: GLA, Flächen Fachmarktagglomerationen: VKFL. 3) Flächen exkl. etwaige integrierte Shopping Malls & Retail Parks.

15

Facts and Figures The Salzburg retail market

Sales space city

72,800 sqm

Sales space per resident

0.47 sqm 114 sqm

Ø Shop size

Stage of expansion

30.3 %

Vacancy rate

1.5 %

Fluctuation rate

11.9 %

Source: Standort + Markt 2019/20

© Kiev.Victor / Shutterstock.com

The Salzburg Retail Market

highly regarded and successful implementation of the Salzburg Festival provides hope that Salzburg will soon be able to return to old times.

At 73,000 sqm, Salzburg has relatively little city- centre retail space, even significantly less than smaller cities such as Innsbruck and Klagenfurt. Retail is oriented less toward locals, but primarily toward wealthy international tourists. This is shown, for example, in the disproportionately high share of space for retail-supporting use, particularly gastronomy (Salzburg 29 percent, all of Austria 23 percent).

“The Salzburg Festival provides hope for a speedy return to high-quality tourism”.

The city’s extraordinarily high level of dependence on tourism is heavily strained at the moment. The

The most popular locations are Getreidegasse, Kranzlmarkt and Judengasse as well as Sigmund- Haffner-Gasse. Primarily international and Austrian luxury brands have opened locations in these streets, recently for example, Louis Vuitton, Meindl Fashion and Falconeri. The appeal of these tenants is reflected in prime rents of up to EUR 140/sqm. Rising rents, however, have resulted in established retailers being displaced to secondary locations. What is striking is that because of the historical range of existing buildings, the average shop space of 114 sqm is quite small. In the corona crisis, the vacancy rate is also not much higher than the excellent 1.5 percent (much less than in the city centre of Vienna) dating from the start of 2020.

Salzburg Demography & Economy

With around 155,000 inhabitants, Salzburg is the fourth largest city in Austria and shows continuous, moderate population growth. At EUR 24,444, purchasing power per capita in the federal province of Salzburg is the third highest in Austria. In no other federal province is the development of the retail property market as dependent on tourism as it is in Salzburg. Nearly two million overnight guests visited the city of Salzburg last year. The number of day visitors is likely around nine million annually. Measured by population, Salzburg is one of the cities in Europe with the most visitors.

16

practically nonexistent. Europark’s operators have been trying for years to obtain approval to expand the shopping centre, but this was rejected recently.

In contrast to provincial capitals of comparable size, Salzburg has no shopping centre directly in the old town and few in the city-centre area (e.g. ZiB / Zentrum im Berg).

Growing demand for space in Europark

“There is very strong demand for space for an expansion of Europark”.

The largest shopping centre is Europark, which is located on the periphery. It is visited much more often by the population of the federal province of Salzburg than the city centre. It also benefits from a large catchment area that, beyond its borders, encompasses primarily the Upper Austrian lake region and parts of Bavaria adjacent to it.

Salzburg rents

Location

Net rent EUR/sqm/m

Shopping streets prime location Shopping streets secondary location

140

The demand of international retailers for space is correspondingly strong, and vacancies are

50

Shopping centres

115

Source: Standort + Markt 2019/20

Salzburg retail locations

± 0

Shopping Malls 1

Fläche 2 sqm

m

500

1 000

1 Europark

50.700 m²

13

2 Designe r Out let Cente r

28.000 m²

3 Shopp ing Arena

21.500 m² 15.500 m²

4 ZiB Shoppingcenter

5 FORUM 1

15.000 m²

6 Kiesel

7.000 m²

7 Zentrum Herrnau

5.500 m²

Retail Parks 8 Shopp ing City Wals

15

1

5

10.500 m² Fachmarktagglomerationen (FMA) 3 9 Salzbu rg - Alpenstraße 45.500 m² 10 Wals - Siezenheim 39.200 m² 11 Salzbu rg - Maxglan 20.600 m² 12 Salzbu rg - Sterneckstraße 16.700 m² 13 Salzbu rg - Liefering 9.800 m² 14 Salzbu rg - Lehen 6.600 m² Retail P r A s (FMA) 3

16

14

6

12

4

Salzburg City

Projekte c

11

15 Europark (Erwei terung)

11.300 m²

8

16 FORUM 1 (Erweite rung)

-

2

10

7

City Shopping Mall !( Retail Park (FMZ) ") FMA $+

9

3

Projekt #*

1) inkl. Department Stores & Town Center. 2) Flächen Shopping Malls, Retail Parks & Projekte: GLA, Flächen Fachmarktagglomerationen: VKFL. 3) Flächen exkl. etwaige integrierte Shopping Malls & Retail Parks.

17

Facts and Figures The Linz retail market

Sales space city

144,600 sqm

Sales space per resident

0.70 sqm 175 sqm

Ø Shop size

Stage of expansion

39.7 %

Vacancy rate

3.6 %

Fluctuation rate

16.7 %

Source: Standort + Markt 2019/20

© rabantos / Shutterstock.com

The Linz Retail Market

mall, for which the approval process has yet to occur, however.

Among the provincial capitals Linz, at 82,000 sqm, has the second highest stock of city-centre retail space in prime locations, after Graz. It is interesting that three shopping centres (Arkade Taubenmarkt, Atrium City Center and Passage Linz) can be found along Landstraße, the city’s main shopping street. Counting Lentia City, which lies across the Danube in the Urfahr district, a good third of the retail in the city centre is accounted for by shopping centres. A fourth property may be added in the coming years at Schillerpark. There are plans there for a 100 metre-high mixed-use tower with a hotel, offices, apartments and a 6,000 sqm shopping

Arkade Taubenmarkt is undergoing extensive refurbishment at present, and the shopping centre is just partially open. The sales space will increase from 5,500 sqm to 7,100 sqm by 2021, the appearance of the façade will be changed and there are plans to provide a roof over the “Taubenmarkt” tram station, directly in front of the entrance. In addition to the new anchor tenant Hofer, the gastronomy supply is to also be significantly expanded. This will enhance the surrounding locations along Landstraße, Spittelwiese and Herrenstraße.

Linz Demography & Economy

“The revitalisation of Arkade Taubenmarkt will invigorate retail in the city centre”.

The central area of Upper Austria with the provincial capital Linz is Austria’s strongest region economically, after Vienna. Purchasing power in Upper Austria is EUR 24,257 per inhabitant. With around 207,000 inhabitants, Linz is Austria’s third largest city. By 2027 the population is to grow to around 220,000. Places that are directly adjacent, such as Leonding, Pasching and Traun, also exhibit strong growth in population. The city also benefits from a catchment area with a large population and strong purchasing power that extends to Wels and Steyr.

“As there are hardly any notable losses in revenue, the limited role of city tourism in Linz is proving to be a stabilising factor for the retail industry at present. Thus till now the consequences of corona have remained manageable. On the other hand, the question of how well the industrial province of Upper Austria with its dominant group Voest and numerous automotive companies will make it through the crisis will be enormously important for retail’s prospects in the medium term.

18

Rents of up to EUR 100/sqm in top locations

PlusCity sought-after expansion target

About ten kilometres from the city centre and with 92,000 sqm of sales space and 25,000 visitors per day, PlusCity in Pasching is the largest shopping centre in Upper Austria and is one of the most sought-after destination targets for international retailers, after the major locations in greater Vienna. The most recent new openings include Dogzoo, Barbershop Budapest and others.

The vacancy rate in Linz has dropped slightly in the last few years and is currently around 3.6 percent. The rents on Landstraße, the most prominent retail location, can reach up to EUR 100/sqm, putting Linz at about the level of Graz.

“Recent major increase in the fluctuation rate in the city centre”

Linz rents

Location

Net rent EUR/sqm/m

The fluctuation rate is unusually high at around 16 percent annually. Gerry Weber and Libro recently closed, for example. Prominent newcomers included Intersport Winninger and dean & david.

Shopping streets prime location Shopping streets secondary location

100

25 60

Shopping centres

Source: Standort + Markt 2019/20

Linz retail locations

± 0

Shopping Malls 1

Fläche 2 sqm

m

1 000

2 000

1 PlusCity

92.000 m²

2 Passage Linz

25.000 m²

17

Interspar EKZ Linz-Indust riezeile

3

17.000 m²

15

7

25

4 Lentia City

16.000 m²

5 Infra Cente r

13.400 m²

Interspar EKZ Linz-Wegscheid

4

6

10.500 m²

7 Pro-Kaufland

9.500 m²

Linz City

8 Atrium City Center

8.000 m²

2

9

9 Arkade Taubenmarkt

im Umbau

22-23

8

Eurospar EKZ Kleinmünchen

3

10

4.600 m²

24

20

Retail Parks 11 Lenaupark City

14

11

9.700 m²

12 FMZ Trauner Kreuzung

4.300 m²

19

Fachmarktagglomerationen 3 13 Linz - Leonding

Retail Park A glomerations (FMA) 3

38.300 m²

14 Linz - Lenaupark

25.400 m²

15 Linz - Urfahr

25.000 m²

16 Pasching

23.900 m²

17 Linz - Dornach

22.300 m²

21

Traun - Trauner Kreuzung

18

3.600 m²

Projekte 19 EKZ am Postareal c

13

6

10.000 m²

5

10

20 Franck Kontor

7.300 m²

26

21 Forum Oed

3.000 m²

Arkade Taubenmarkt (Relaunch)

22

1.600 m²

16

City Shopping Mall !( Retail Park (FMZ) ") FMA $+

1

Passage Linz (Relaunch)

23

-

24 EKZ am Schillerpark

-

12

Uno Shopping (Relaunch) Pro Kaufland (Relaunch)

18

25

-

26

-

Projekt #*

1) inkl. Department Stores & Town Center. 2) Flächen Shopping Malls, Retail Parks & Projekte: GLA, Flächen Fachmarktagglomerationen: VKFL. 3) Flächen exkl. etwaige integrierte Shopping Malls & Retail Parks.

19

Facts and Figures The Innsbruck retail market

Sales space city

115,600 sqm

Sales space per resident

0,88 sqm 158 sqm

Ø Shop size

Stage of expansion

37.9 %

Vacancy rate

2.8 %

Fluctuation rate

12.8 %

Source: Standort + Markt 2019/20

© KlavdiyaV / Shutterstock.com

The Innsbruck Retail Market With around 116,000 sqm of retail space, Innsbruck’s retail supply is highly broad-based compared to other provincial capitals. By comparison, the more populous Salzburg has only around 73,000 sqm in total. The core zones are located on Maria-Theresien-Straße, Herzog-Friedrich-Straße, Marktgraben and Burggraben as well as on Pfarrgasse.

“Goldene Dachl”. The most relevant shopping location for classic retailers is Maria-Theresien- Straße with prime rents of approximately EUR 105/sqm. The fluctuation rate is 12.8 percent on average. The corona crisis has already left its mark, resulting in rising vacancies in the main shopping streets and shopping centres. The shortage of guests from Italy has led to a particular drop in revenue. The gastronomy and club scene is also suffering under the declining number of international students. In the long run, the crisis in tourism could also have a growing effect on the purchasing power and buying behaviour of the local population.

“Innsbruck has an attractive supply of city-centre retailers with rents of up to EUR 105/sqm”.

On Maria-Theresien-Straße there are two city- centre shopping centres, Kaufhaus Tyrol (32,800 sqm) and Rathaus Galerien (9,000 sqm). Souvenir shops and gastronomy dominate around the

“With its affinity to sports, Innsbruck is an attractive

Innsbruck Demography & Economy

location for strong international brands from the sporting goods industry”.

Innsbruck has 132,000 inhabitants and is Austria’s fifth largest city. Around 300,000 people live in greater Innsbruck, and about 30,000 students and other have a second residence in Innsbruck. Purchasing power in Tyrol is EUR 23,490 per inhabitant. With around 1.6 million overnight stays per year, the city on the river Inn is the third most important Austrian destination for city tourists, after Vienna and Salzburg.

Compared to Graz, Linz and Salzburg, Innsbruck has still not become as much of a focus for expanding international retailers despite its importance for tourism. Nevertheless, with the flagship stores from Rossignol, Black Diamond and Odlo, three

20

located in the east of the city. With around 64,000 sqm of shopping space, the most important is cyta Shoppingwelt in Völs, which is about ten kilometres away.

prominent new openings have been reported in the sporting goods segment.

“dez” is the most attractive centre in the Innsbruck area

The largest centre in the Innsbruck area is the well-established “dez” with a sales space of approximately 65,000 sqm, immediately next to which there is an IKEA branch. In addition to top international retailers, dez focuses heavily on retail- supporting services, also in the medical sector. Service providers such as hairdressers, shoemakers, tailors as well as a fitness studio have leases in dez. Other important retail park agglomerations are

Innsbruck rents

Location

Net rent EUR/sqm/m

Shopping streets prime location Shopping streets secondary location

105

35

Shopping centres

95 Source: Standort + Markt 2019/20

Innsbruck retail locations

± 0

Fläche 2 sqm

Shopping Malls 1

m

750

1 500

1 dez

65.400 m²

2 Cyta Shoppingwel t

64.000 m²

3 Kaufhaus Tyrol

32.800 m² 29.500 m²

4 Sillpark

5 west

16.200 m²

6 Greif Cente r

15.000 m²

7 Rathaus Galerien 9.000 m² Fachmarktagglomerationen (FMA) 3 8 Innsbruck - Neurum 88.100 m² 9 Innsbruck Ost 1 41.100 m² 10 Innsbruck West 21.900 m² 11 Hall West 10.900 m² 12 Innsbruck Ost 2 8.300 m² 13 Hall – Behaimstraße 5.500 m² Retail Park Aggl s (FMA) 3

13

12

8

11

Innsbruck City

4

7

3

5

6

9

1

10

2

City Shopping Mall !( Retail Park (FMZ) ") FMA $+

Projekt #*

1) inkl. Department Stores & Town Center. 2) Flächen Shopping Malls, Retail Parks & Projekte: GLA, Flächen Fachmarktagglomerationen: VKFL. 3) Flächen exkl. etwaige integrierte Shopping Malls & Retail Parks.

21

© ZOOM VP.AT

© ELEPHOTOS / Shutterstock.com

Focus on Greater Parndorf

Outdoor Center Parndorf, in which retailers focused exclusively on outdoor sports such as hiking, climbing, etc. will be located on 14,000 sqm. As yet unparalleled in Europe, the concept will be enhanced with high-quality gastronomy and indoor sports facilities such as a bike test track and a water park. Despite the corona crisis, for retailers, developers and investors the prospects for the Parndorf site are positive in the long term. The focus on price-conscious brand buyers is a strong USP that may even gain in appeal in a weaker economic environment. Parndorf benefits first and foremost from its enormous catchment area spanning from Vienna via Bratislava to Hungary. Around 10.5 million consumers can reach it in a 90-minutes drive. Customers particularly from Bratislava prefer to shop in Parndorf. The most important draw is the designer outlet with seven million visitors every year. Increased investments in the quality of stay, such as exceptional sanitary facilities and spacious parking areas as well as the inclusion of numerous gastronomy services have significantly enhanced the value of the retail parks adjacent to the designer and fashion outlet in the last few years.

What began with the opening of the McArthurGlen Designer Outlet in 1998 has meanwhile become Austria’s biggest and most successful retail park agglomerations. While sales space overall is down in Austria, Parndorf has continued to grow in 2020 and will in 2021 as well. There are no declining frequencies there, and demand for space remains highly satisfactory. Rents were therefore stable until the corona lockdown and since then have also turned out to be more robust than the overall market.

New projects enhance the region’s value further

A total of around 64,000 sqm are being developed in four projects in 2020/21. In spring 2020 the 6,000 sqm retail park K2 opened in Kittsee. A recent addition was PADO Galerien, an expansion of the PADO Shopping Park with 30 shops and popular anchor tenants such as Merkur, Intersport and Humanic. Two new projects are also planned: it is currently uncertain when Frunpark Parndorf (23,000 sqm) will open. The first well-known major tenant is XXL Sports with 3,000 sqm of rental space. Further momentum will be provided by the

22

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