Retail Market Report Austria | 2018

Retail Market Report Austria|2018 We stand for Retail

We stand for real estate.

Preface

The retail market is currently in the midst of a transformation, and creative new concepts are needed to deal with the growing competition from online retailing and shifts in consumer behaviour. This year’s EHL Retail Market Report is therefore focused exactly on these developments. The first signs are already evident on the market and they will heavily influence the market in the coming years and play an important role in future success. The implementation of new concepts, the development of the tenant mix and the utilisation of new technical opportunities will be decisive for the long-term success of real estate investors, shopping centre operators and expansion managers. The EHL team is your expert partner to support you in every step of the way.

Michael Ehlmaier FRICS Managing Partner

Yours,

EHL — the retail specialist For many years EHL has been one of the leading real estate service providers in Austria. Our retail specialists are pleased to assist you in realizing your real estate plans as well as in planning and development, from brokering, management, valuation and center management to (de-)investment. “The far-reaching changes in the retail sector also create opportunities to address new customer groups with attractive gastro and entertainment offers and innovative high-tech solutions. EHL is your partner for the successful target group-oriented implementation of new concepts.“ EHL Market Reports EHL market reports are updated regularly and offer a comprehensive assessment and overview of the most important development, facts and figures in the property markets in Austria. “The EHL Market Reports provide information on the most important indicators and developments on the various segments of the Vienna real estate market – all concisely compiled and extensively researched. Our reports on the retail, office, investment properties, residential and residential investment markets can be downloaded free of charge on our website www.ehl.at.“

Jörg F. Bitzer MRICS Head of Retail j.bitzer@ehl.at

Thomas Schanda, MA Head of Market Research t.schanda@ehl.at

Overview retail market Vienna

Executive Summary

Shopping as an all-inclusive experience

Vienna is one of the world’s most popular expansion targets

Shopping centres are undergoing a transformation from pure shopping locations to innovative experience worlds with an extensive gastronomy and entertainment offering. This trend will be connected with wide-ranging investments in refurbishment and modernisation over the coming years as well as a substantial reduction in the available space for traditional retailers.

Together with London, Paris, Moscow and Berlin, Vienna remains one of the five most popular expansion targets for international retailers in Europe. In the worldwide ranking, Vienna holds tenth place.

Less and less space is classified as prime

The search for space is increasingly concentrated on absolute top locations. At the same time, the definition of prime is narrowing, and many locations that were considered very good only a few years ago no longer meet the necessary criteria and are seeing an increase in vacancies.

Investment market limited by a lack of products

The demand by international investors for retail properties in Austria remains high, but the supply is limited – above all in the large-scale segment. Prime yields have fallen to a record low of four per cent for shopping centres and five per cent for retail parks and remain under pressure due to the lack of supply.

Tourism strengthens retail development

With a year-on-year increase of nearly four per cent to roughly 15.5 million overnight stays, Vienna set a further record as a tourist destination in 2017. The growing popularity of the city with financially strong tourists from China, the USA and, above all, Germany has become a key driver for the retail sector.

Important market indicators

Economic data Austria 2018

Austria 5.5% EU (28) 7.3%

Unemployment rate (Eurostat)

Nom. GDP EUR bn.

387.9

Continuing trend towards space reduction

Economic growth

3.0%

Inflation

2.0%

The production of new space in shopping centres and retail parks has practically come to a standstill. In addition, space in less sought-after locations that is no longer lettable is increasingly being removed from the market.

State budget deficit

-0.4%

Austria 37,826 EUR EU (28) 30,825 EUR

GDP per capita

Austria 22,597 EUR Vienna 1st district 38,463 EUR

Purchasing power per capita (2017)

Source: Austrian Federal Economic Chamber| GfK

Economic data Austria

Facts and Figures at a Glance

Total sales space in selected locations (in sqm)

130,600

92,500

Vienna - Mariahilfer Straße

78,600

125,200

Vienna - City

64,200

116,400

Graz

78,100

59,800

Linz

64,800

51,100

Innsbruck

43,700

50,100

Klagenfurt Vienna - Landstraßer Hauptstraße

53,400

28,500

25,800

18,100 47,000

Salzburg Vienna - Favoritenstraße

53,500

13,500 11,800 18,200 14,800 25,600

43,700

St. Pölten

38,600

Wels Villach

28,400

26,500 13,100

Dornbirn Vienna - Meidlinger Hauptstraße Leoben (26,500 | 10,500)

B-/C-location

Source:

A-location

Annual change in sales space in % in Austria

2.0 % 1.5 % 1.0 % 0.5 % 0 -0.5 % -1.0 % -1.5 % -2.0 %

2010

2011

2012

2013

2014

2015

2016

2017 2018(F)

2019(F)

2020(F)

F = Forecast

Source: RegioData Research

Revenue development in selected branches 2007-2017

Food 1) Shoes and leather goods 4.1

15,0

3.3

Sporting goods Brick & Mortar retail 2.5

2.0

1.5

Construction and DIY Fashion

1.4

0.9

Other retail trade 2)

0.2 0.1

Furniture Cosmetics

1) Revenue development in food retailing based on the Nielsen revenue barometer (preliminary values) 2) Retail trade (all types of goods), tobacconists, retail trade (medical and orthopaedic articles), retail trade (textiles), floristry retail

-0.2

Watches and jewellery

-0.7 -1.5 -1.9

Books and stationery Toys

Electric appliances, Computer, Photo

Nominal changes in per cent vs. previous year

Source: KMU Forschung Austria

Online revenues per capita in EUR per year

1,118

15,0

United Kingdom

1,033

Switzerland

920

Norway

885

Austria

803

Denmark

678

Germany

641

Sweden

586

Finland

562

Ireland

France Netherlands 500

Italy 441

376

257

Portugal

231 227

Hungary Spain

207

Slovakia

167

Poland

Russia Turkey

72 selected countries in Europe

Source: RegioData Research

Revenue development in Brick & Mortar retail 2007-2017

4.0 %

3.0 %

2.7

2.4

2.0 %

2.1

2.0

1.0 %

1.3

1.2

1.1

1.0

0.9

0.6

0.0

0.4

0.3

-0.5

-0.9

-0.3

-1.0

-1.0 %

-1.1

-1.7

-2.0 %

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

The development of revenues in Brick & Mortar retail includes food retailing based on the Nielsen revenue barometer (preliminary values). The price adjustment for the real revenue development was based on a Statistik Austria branch deflator. Changes nominal and real in per cent vs. previous year Source: KMU Forschung Austria

SCS set new standards: The use of plants increases the quality of stay.

Change yes, crisis no

Worlds of experience replace the shopping trip

The branch-based retail and, in turn, the market for retail properties face major challenges. In view of the significant increase in consumer spending, there can be only little talk of crisis – however, a fundamental change is unavoidable. As seen from both the Austrian and international levels, the retail market has been characterised by stagnating and, on a local basis also, declining square metre rents, rising vacancy rates and a reduction in available space for many years. This trend has been accompanied by a steady rise in online retailing as a share of total retail revenues. These facts appear to be a clear sign of a serious crisis at first glance. Then again, private consumption is growing stronger at the same time. Immigration is increasing the number of consumers, and the boom in city tourism is providing added impulses for key regional submarkets. The perspectives are generally positive, at least for markets with stable or rising consumer populations, like the major cities and selected district towns. This solid basis in no way justifies fears of a crisis. The retail world is, however, in the midst of a deep-seated structural change, which can be effectively addressed with new strategic approaches and innovations.

In these times of online retailing, shopping alone has ceased to be the main reason for an increasing number of people to visit a shopping centre or shopping street. The best way to keep pace with the Internet competition and the change in spending habits is to turn the shopping trip into an all-inclusive experience. Conventional shopping centre entertainment programmes are, by far, no longer enough. The focus has shifted to a mix of attractive architecture, continuous entertainment and events for specific target groups. That creates a world of experience where shopping is only one of many reasons to spend an afternoon in the city or in a shopping centre, instead of online shopping on the couch. Shopping centre operators are also challenged to offer an alternative to other consumer events like holidays, concerts or theatre trips.

Gastronomy instead of shopping

Shopping centres and shopping streets must adapt to wide-ranging changes in their tenant mix. The old rule of thumb with a 10 to 12 per cent gastro share is hardly valid today and the share will rise to 20 to 25 per cent in the future. In particular, innovative concepts from the system gastronomy segment are

A window to the future

proving more and more successful as frequency bringers and are also attractive and reliable tenants. Shopping centre operators know that customers who also take advantage of the gastronomy offering in a centre not only stay 27 minutes longer, but also spend an average of 18 per cent more per capita.

Exemplary and successfully introduced innovations from the Austrian retail landscape will shape the future of Brick & Mortar retail.

New retail concepts

Entertainment world:

The branch networks operated by the major chains, especially in textile, shoe and furniture segments, will continue to contract over the coming years, and even a substantial reduction in rents will be unable to slow this trend. On a positive note, a growing number of new, original retail concepts are entering the market. They normally require relatively small units and will therefore be unable to replace the decline in space attributable to the major players over the short-term, but these shops increase the value of the respective location and have a substantial potential for growth over the long-term.

As the first shopping centre in Austria, the SCS set new standards for entertainment with the redesign of the Multiplex terrac- es. The 2,000 sqm green oasis includes a grassy area, bar, playground and beach volleyball court as well as an indoor surfing facility.

New system gastronomy::

Digitalisation and symbiosis with online sales

International gastronomy operators like Domino’s pizza chain are expanding at a rapid pace in Austria and represent a steadily increasing share of the companies looking for space. This influential trend is impressively underscored by the slogan “food is the new fashion“.

Last but not least, shopping centre operators and shopping street managers are challenged to make extensive use of digitalisation – key word: mobile marketing. Intelligent systems that lead customers to complementary products for their latest purchases or special offers as well as the display of products solely on the salesperson’s iPad are only some of the possibilities which will influence Brick & Mortar retail in the future. Similar to following online shopping behaviour through clicks, smart tracking systems in shops can analyse the shopping behaviour of customers, even on a gender basis, nearly step- by-step. The resulting data can then be used to improve the shopping experience on an individual basis. Digital signage makes it possible to switch on advertising at the press of a button and adjust it to meet local requirements. Digitalisation will make Brick & Mortar retail marketing activities individually adaptable over the short-term. That will create opportunities to defeat the online competition with their own high-tech weapons.

Creative retail concepts

The major shoe chains are downsizing their branch networks and reducing space while, at the same time, innovative newcomers like the Berlin shoe manufac- turer Shoepassion recently entered the Austrian market.

High-tech solutions:

With local Bluetooth mini-senders (bea- cons), retailers can communicate with customers via smartphone directly in their shops. Retailers like Merkur and PAGRO have already installed beacons in selected branches and inform their customers indi- vidually about current sales or vouchers.

EHL helped the innovative Berlin shoe manufacturer Shoepassion enter the Austrian market.

Market entries by selected new retailers (2017|2018)

IT Kärntner Straße 1010 Vienna

Shoes Graben 1010 Vienna

Fashion Kohlmarkt 1010 Vienna

Shoes

Interior Am Hof 1010 Vienna

Food Kärntner Straße 1010 Vienna

Am Hof 1010 Vienna

Sports Mariahilfer Straße 1060 Vienna

Fashion Mariahilfer Straße | Westbahnhof 1060 | 1050 Vienna

Fashion Mariahilfer Straße 1060 Vienna

Optician Neubaugasse 1070 Vienna

Gastronomy Mariahilfer Straße 1060 Vienna

Fashion Mariahilfer Straße 1060 Vienna

Shoes Donauzentrum 1220 Vienna

Gastronomy

Fashion Hietzinger Hauptstraße 1130 Vienna

Angerner Straße 1210 Vienna

Pet supplies

Sports SCS | Donauzentrum 2334 Vösendorf | 1220 Vienna

Gastronomy several locations Vienna

several locations Vienna

Accessories SCS 2334 Vösendorf

Fashion SCS | Atrio Villach 2334 Vösendorf | 9500 Villach

Interior SCS 2334 Vösendorf

Dessous SCS 2334 Vösendorf

Jewellery SCS 2334 Vösendorf

Sports

Dessous Forum 1 5020 Salzburg

Fashion several locations Austria

2334 Vösendorf

The Vienna Retail Market

The most prominent new additions include international fashion chains like TOD‘s and Karl Lagerfeld as well as the sporting goods retailer XXL Sports and the Dutch retailer HEMA which was accompanied by EHL. An interesting factor is the high share of gastronomy companies among the new additions, including the US pizza chain Domino’s, which was supported by EHL and plans to open up to 40 branches. A number of new market players are also expected in 2018, including Decathlon in Vösendorf and Apple with its first Austrian location on the Kärntner Straße in Vienna. However, the overall demand for space is declining. Food retailers are one exception: the branch networks are growing and existing locations are expanding, not least due to the integration of additional offers like cafés or collection points for online orders. Develop- ments in the shoe and fashion branch are moving in the opposite direction with current searches focused on shops with 50 sqm and 100 sqm, in contrast to the 400 sqm which were standard only a few years ago.

The development of the retail sector in Vienna is generally sound as a result of the steady population growth, favourable economic climate and strong tourism. Results for 2017 show a nominal increase of two per cent in revenues. However, the branch-based retail trade can only benefit from this situation to a limited extent because online sales rise steadily and Brick & Mortar retail accounts only for a very limited share of the overall growth. International comparisons, in particular, point to an optimistic outlook for the Vienna retail market, and Vienna remains one of the most popular expansion targets for global retailers. The city currently ranks among the top five in Europe, in the same league with Moscow, Paris, London and Berlin, and is once again under the top ten expansion targets worldwide. Tourism plays a strong role in this picture with growth of four per cent to 15.5 million overnight stays in 2017. The international chains are focused on top locations – and the definition of a top location becomes increasing- ly narrow - and only a few prime locations can benefit from this: most notably parts of the first district and a limited number of high-frequency shopping centres. The variety of retailers at these locations is higher than ever before, which further strengthens their attractive- ness. In contrast, vacancies are on the rise in shopping streets like the Wollzeile in the first district, which were considered very promising only a few years ago.

Prime rents in Vienna in EUR/sqm

stable

Out look

| 17 | 18*

11 | 12 | 13 | 14 | 15 | 16

* Forecast

Source: EHL Market Research | Q1 2018

Market share of shopping centres and retail parks

Vienna 25.7%

Lower Austria 23.1%

Upper Austria

19.2%

Vorarlberg 18.6%

Burgenland 42.5%

Styria

Salzburg

22.6%

Tyrol

22.3%

27.6%

Carinthia

20.7%

Source :

| Q1 2018

Shopping centres and retail parks

gastro share in Austrian shopping centres is still clearly below 25 per cent, which represents the new medium- term international standard. Innovative recreational activities like surfing facilities or beach volleyball courts are also joining the offers. The tenant mix is becoming more flexible and, in addition to high-frequency anchor tenants, popup stores help to increase visitor frequency and revenues and diversify the shopping experience. Retail parks are also seeing a greater focus on quality improvements instead of expansion and new construction. Only two projects are expected to be completed in 2018: the Braunsberger retail park in St. Pölten and the Siegendorf retail park.

The increase in shopping centre space has practically come to a standstill. Only two new projects were completed in Vienna during 2017: the successful expansion of the “huma eleven“ by 20,000 sqm and the new opening of the approx. 5,500 sqm “Post am Rochus“ which opened with slight start-up problems. No larger projects or expansions are planned for 2018, with the exception of the next Auhof Center expansion. Instead of further expansion, the top shopping centres – including Vienna’s four largest: the SCS, Donauzentrum, Auhof Center and huma eleven – are currently working on new concepts to counter the frequent decline in visitors. The shopping temple is increasingly becoming a recreational hot spot where people like to spend time with family and friends. One consequence of this trend is a further increase in the gastronomy offering. The

Rents shopping centres and retail parks | Q1 2018

Net rents EUR/sqm/m

Price trend

Prime location

40 - 120

stable

Development of shopping centre prime rents (EUR/sqm)

SCS, Donauzentrum, Auhof Center etc. Secondary location Q 19, Lugner City, BahnhofCity Vienna West District centres

15 - 50

stable

6 - 12 slightly decreasing

Retail parks Vienna

Out look

8 - 12

stable

Federal provinces

5 - 11 slightly decreasing

| 17 | 18*

11 | 12 | 13 | 14 | 15 | 16

Source: EHL Market Research | Q1 2018

* Forecast

Source: EHL Market Research | Q1 2018

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

Vienna Shopping centres | Shopping streets

Goldenes Quartier Tuchlauben | 1010 Vienna 11,500 sqm

Q19 Grinzinger Straße 112 | 1190 Vienna 15,000 sqm

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

Auhof Center Albert-Schweitzer-Gasse 6 | 1140 Vienna 45,000 sqm

EZ 09

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

EZ 02

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

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

EZ 01 Arcade Meidling EZ 02 Bezirkszentrum Meiselmarkt EZ 03 EKZ Lutz - Floridsdorf EZ 04 EZS Floridsdorfer Spitz EZ 05 Gasometer City EZ 06 Mahü 77 EZ 07 Großfeldzentrum EZ 08 Hanssonzentrum EZ 09 Interspar EKZ Ottakring EZ 10 Kaufpark Alt Erlaa EZ 11 Ringstraßen-Galerien EZ 12 Trillerpark EZ 13 Zentrum Simmering FMZ 14 Stadlau District centres in Vienna

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

Riverside Breitenfurter Straße | 1230 Vienna 22,000 sqm

Data: GLA in sqm

Source:

| EHL Market Research

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

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

EZ 03

EZ 07

EZ 04 EZ 12

FMZ14

Seestadt Aspern Maria-Tusch-Straße | 1220 Vienna 8,500 sqm

EZ11

Kärntner Str.

EZ 06

EZ 05

EZ 01

EZ 13

EZ 08

EZ 10

Galleria Landstraßer Hauptstr. 97-101 | 1030 Vienna 13,900 sqm

The Mall Landstraßer Hauptstraße | 1030 Vienna 26,800 sqm

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

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

Vienna‘s High Streets

Sales space (in sqm) and share of retail (in %) in Vienna’s High Streets

90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 %

250,000

200,000

150,000

100,000

50,000

Retail-supporting supply

Retail trade

Vacancies

Share of retail trade

Source:

Vienna‘s High Streets In Vienna’s shopping streets, the trend towards con- centration on the absolute top locations is particularly noticeable. This is true, above all, for the “Golden U” and selected side streets as well as the Mariahilfer Straße and Neubaugasse. Other previously well-es- tablished local shopping streets (with the exception of the Meidlinger Hauptstraße and parts of the Favoriten- straße) are faced with increasing vacancies.

developing. One excellent example is the Neubaugasse, which benefits from the frequency in the Mariahilfer Straße and has successfully established itself with an independent tenant mix.

Rents for top shopping streets | Q1 2018

Net rent EUR/sqm/m

Kohlmarkt

250 – 400

Graben

190 – 300

In the first district rents are rising and the level of rents in the individual locations is becoming more homogeneous. Prime rents on the Kohlmarkt remained largely unchanged at EUR 400/sqm, while the slightly “less expensive“ locations on the Graben and Kärntner Straße followed a clear upward trend. The variety is higher than ever before and, especially on the side streets adjoining the best shopping streets, a colourful retail landscape with numerous innovative shops is

Kärntner Straße

130 – 290

Innere Mariahilfer Straße

35 – 120

Rotenturmstraße

35 – 130

Favoritenstraße

15 – 65

Neubaugasse

15 – 55

Landstraßer Hauptstraße

10 – 50

Meidlinger Hauptstraße

10 – 30

Source: EHL Market Research | Q1 2018

Comparison of pedestrian frequency in Vienna‘s most important high streets

54,677 54,333 53,453

70,379 69,776 70,121

Mariahilfer Straße Kärntner Straße Graben

38,084

41,261

Favoritenstraße

22,763

33,666

Kohlmarkt Rotenturmstraße

25,385

27,047

19,984

19,065

Meidlinger Hauptstraße

16,268

19,180

Neubaugasse Landstraßer Hauptstraße

18,518

14,546

10,636

12,958

Wollzeile

Thursday

Saturday

Source: Austrian Federal Economic Chamber 2017

Vienna‘s High Streets

Vienna | City

Kärntner Straße remains a high-frequency location

Dsquared Dsquared

Prada Prada

Louis Vuitton Louis Vuitton

Meinl Gourmet Chanel Meinl Gourmet Chanel

Jimmy Choo Jimmy Choo

The Kärntner Straße remains the most important shopping location in the first district, with rental increases possible on re-letting. ZARA Home and the Apple flagship store represent two of the most prominent market entries by international retailers on the high-frequency axis between St. Stephen’s Square and the Opera. EHL also brought the Dutch com- pany Cheese & More to the Kärntner Straße. Rents range from EUR 130 to 290/sqm. Prime rents in the Goldenes Quartier luxury locations are stable at up to EUR 400/sqm, while up to EUR 600/sqm can be realised on the smallest space.

Hermès Hermès

TOD's

Tiffany Tiffany

Fendi

Versace Versace

Fendi

Michael Kors Michael Kors

Max Mara Max Mara

Zara Zara

H&M H&M

Michaelerpla tz

Humanic Humanic

Michaelerpla tz

Palmers Palmers

Forever 21 Forever 21

Footlocker Footlocker

Apple We ihburggasse

Kaufhaus Steffl Kaufhaus Steffl

Bedarfsgruppen D mand grou s Short-term Apparel

P&C P&C

Hausrat, Elektrowaren Sonstiges Kurzfristbedarf Bekleidung Wohnungseinrichtung Leerstand Shopping Mall EH-begl. Angebot Home furnishing o ehold, elec. appliance Miscellaneous Retail supporting supply i ai Vacancy

Swarovski Swarovski

Calzedonia Calzedonia

Desigual Desigual

Lage Location

Begegnungszone Fußgängerzone Pedestrian zone Shar d space

Hotel Sacher Hotel Sacher

Data as of Q4 2016

Zara Home Zara Home

Meter Meter

INTERNATIONAL PROPERTY CONSULTANTS

0 0

100 100

200 200

Source:

CHARTERED SURVEYORS

Vienna | Mariahilfer Straße

Revenue decline for retail, plus for gastronomy The aftermath of the reconstruction phase and the related restructuring of the tenant mix have passed, and the Mariahilfer Straße has regained its former strength. Vacancies are declining and rents have stabilised. Cafes and restaurants are responsible for increas- ing frequencies, and new leases have been signed with further prominent tenants like the HEMA flagship store and numerous other market entries from the fashion area.

Leiner

P&C

Urban Outfitters

P&C

Gerngross Gerngross

Humanic Hu anic

Monki

onki

Bedarfsgruppen Demand grou s Short-term Apparel

Pull & Bear Pull & Bear

Hausrat, Elektrowaren Sonstiges Kurzfristbedarf Bekleidung Wohnungseinrichtung Leerstand Shopping Mall EH-begl. Angebot H me furnishing o ehold, elec. appliance Miscellaneous Retail supporting supply i Vacancy

CCC

Weekday ekday

TK Maxx TK Ma x

C&A

Lage

Terranova Te ranova

ocation

Hämmerle Hämmerle

Begegnungszone Fußgängerzone Pedestrian Shar d space

Data as of Q4 2016

Westbahnho f

INTERNATIONAL PROPERTY CONSULTANTS

Meter t r

Source:

150

300

CHARTERED SURVEYORS

Investment

Supply shortage in the retail segment

contrasted by substantially higher demand on the part of international investors. Since the production of new space has basically come to a standstill – for shopping centres as well as retail parks – the market will also be limited in 2018, above all by the lack of large-scale projects. One particularly notable development is the growing activity by private investors in the retail segment. Their primary focus is placed on smaller retail units with a local supply function, which are generally not interesting for international investors. In contrast to the exhausted market for shopping centres and retail parks, this submarket is comparatively active.

The demand by international investors for Austrian retail properties remains high, and prices rose by a further substantial margin in 2017. Yields remain under pressure, with a declining trend from the current top level of roughly four per cent for shopping centres and five per cent for retail parks. The real estate investment market in Austria generated a record transaction volume of EUR 4.7 billion in 2017. The change of the volume traded in the retail segment was positive with an increase of 60 per cent from EUR 350 million to roughly EUR 560 million, but played a minor role in the total transaction volume with a share of only 12 per cent. This reflects the low number of attractive properties available for sale, which is

Prime yields

High streets | Shopping centres | Retail parks

Outlook 2018

18*

* Forecast

High Street

Source: EHL Market Research | Q1 2018

Selected retail transactions 2017 | Q1 2018

PROPERTY

SIZE (sqm)

LOCATION

SELLER

BUYER

Retail portfolio

70,000 Austria 16,650 Salzburg

ADIA

BVK

ZIB

IMMOFINANZ

Private investor

ELI - Shopping center Liezen 15,000 Liezen

Rutter

KGAL

Hornbach Stadlau Retail park Stadlau

13,000 Vienna 11,000 Vienna 9,420 Vienna 8,000 Leoben 7,370 Vienna

Private investors Private investors Private investors TH Real Estate

Leasinvest Leasinvest

Shopping center Hietzing

INVESTER United Benefits

Star Center

Private investor

Leiner Flagshipstore

Steinhoff

Laura Privatstiftung

Source: EHL Market Research | Q1 2018

Outlook

Consumer demands influenced by the demographic shift

The retail sector will also be influenced by three major social trends in the coming years that will sustainably alter the structure of Brick & Mortar retailing: the change in spending habits, the demographic shift and the growth of online retailing. These factors are responsible for the decline in frequencies as well as per square metre revenues. Countering these trends requires an in-depth understanding of the latest developments plus an excellent international contact network to convince attractive retailers of the benefits of market entry in Austria and to create specially designed concepts for operators and developers.

The average age of the Austrian population is rising steadily due to the increase in life expectancy and despite the high level of immigration. This demographic shift is also changing the demands on retail space. There will be an increased focus on target group- oriented concepts, which also include spending on events and increase the time spent in a shopping centre. An expanded service offering, e.g. style advisors, storage services, shopping guides etc., will become a more important success factor in the future.

Shop less, experience more

The essential combination of online and offline

Consumers‘ spending habits are changing at an increasing speed. Shopping is less important, experience is the word of the day. Gastronomy, vacations and other recreational activities are consuming a greater share of household income. Shopping centres can also benefit from the trend to of dining out with an attractive gastronomy offering. In the future, the culinary offering is expected to be just as important as the classical retail mix and gastronomy will be a key factor in deciding which shopping centre to visit.

Online retailing grew by a further six per cent in 2017, meaning substantially stronger than Brick & Mortar retail. Retailers, but also shopping centre operators, are therefore challenged to integrate their online and offline businesses even stronger in the sense of an omni-channel strategy. Click&Collect concepts are becoming established in a growing number of branches, and operators as well as developers must address the resulting shift in space requirements towards increased warehouse areas.

EHL References

Reference projects

Consulting

NEMA Starnberg The owner of the land exclusively commissioned EHL to conduct a market study and develop a retail strategy for the planned shopping centre.

GLA

11,000 sqm

Location

Starnberg Germany

Leasing

ernstings family The Ernstings Family textile chain opened its largest location in Aus- tria – 360 sqm – at the SC 17 retail park in Brunn am Gebirge. The retail park is now fully occupied.

s.oliver | TC Telekomcenter EHL again reached full occupancy in one of the most important retail properties in the inner city of Wels. The s.Oliver fashion chain and TC Telekomcenter leased commercial space in this building and will now increase the attractiveness of the Wels pedestrian zone. clever fit EHL brokered 1,140 sqm on the Dresdner Straße in Vienna’s 20th district to the clever fit health club chain. This location benefits from favourable traffic connections as well as close proximity to a large student residence.

GLA

360 sqm

ca. 500 sqm

Location

Brunn am Gebirge

Wels | Upper Austria

colloseum EHL acquired another attractive tenant, the Colloseum fashion chain, for the Stadtparkcenter in Spittal an der Drau. EHL is also responsible for the general management of this shopping centre.

GLA

1,140 sqm

GLA

325 sqm

Location

1200 Vienna

Location

Spittal/Drau Carinthia

Market entries

HEMA EHL supports the Dutch retailer HEMA on its market entry in Austria and brokered the first two branches on the Mariahilfer Straße and in BahnhofCity Wien West. EHL will also assist the company with the realisation of its future expansion plans.

SHOEPASSION EHL helped the innovative Berlin shoe manufacturer Shoepassion enter the Austrian market and brokered the first retail location, Am Hof, at a prime location in Vienna’s inner city.

Asset Management

Retail park Knittelfeld The Kollibri Center in Knittelfeld covers approx. 19,500 sqm. In addition to Eurospar, the tenant mix includes Fussl, Bipa, Deichmann, Takko and others. Many of the 260 parking spaces are covered and provide comfortable parking in any weather.

Euromarkt Kapfenberg The Euromarkt Kapfenberg and the adjacent retail park include approx. 14,000 sqm of sales space. The shopping centre benefits from its convenient location directly on the B 116 motorway and its diverse branch mix.

GLA

6,300 sqm

14,000 sqm

Client

Semper Constantia Immo Invest GmbH

Center Management

ZIB Salzburg EHL took over the centre

Stadtpark center EHL manages the Stadtpark Center in Spittal an der Drau and is also responsible for brokering the retail space.

management for the ZIB Salzburg, which was revitalised in 2009 and is now almost fully let.

GLA

18,500 sqm

14,100 sqm

Client

OBJ Errichtungs- und Verwertungs GmbH

Institutional investor

Valuation

dez Innsbruck This shopping centre is located in the southeast of Innsbruck between the Amras district and the Rossau commercial zone. It offers directs connections to the Inntal A12 Autobahn via the Innsbruck- East junction at a distance of roughly one km.

Frunpark asten This retail park is located in the Asten/St. Florian commercial zone and can be accessed directly from the A1 West Autobahn. It has 24 shops and two restaurants. A 5,200 sqm photovoltaic plant is also located on the centre roof.

GLA

32,600 sqm

18,140 sqm

Client

financial service provider

Institutional investor

Investment

retail park stadlau The fully let Stadlau retail park with approx. 11,000 sqm of usable space was sold by two private investors to Belgian Leasinvest. EHL brokered this off-market transaction.

shopping center Hietzing EHL brokered the sale of the Hietzing shopping centre by a private investor to INVESTER United Benefits.

GLA

11,000 sqm

9,420 sqm

Client

Private investors

Private investor

This report is a translation. In the event of doubt the German-language version is to be used.

The information and forecasts in this report are made without guarantee, warranty or liability.

The digital version of the report can be downloaded under www.ehl.at/en/marktberichte

Our view is always directed ahead:

As one of Austria’s leading real estate service provider, we strive to optimise our consulting performance and continue expanding our portfolio.

Retail properties Office buildings

Rental Sale Administration Valuation Investment Facility Management Construction Management Market Research

Residential properties Investment apartments Investment properties Residential investment Commercial real estate Land Hotel properties

Asset Management Center Management

EHL Immobilien GmbH Prinz-Eugen-Straße 8–10, 1040 Vienna | T +43-1-512 76 90 | office@ehl.at | www.ehl.at

We stand for real estate.

www.ehl.at

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20