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Some call these challenging times. Others call them crises. The fact is that the real estate industry is facing turbulence. This is driven by geopolitical uncertainty and shifting economic models that are pushing Europe into sharper competition—especially with China and the US. Add volatile interest rates on the one hand and fragile consumer confidence on the other, and stability becomes hard to achieve.
What does this mean for retail real estate? It is worth developing a deeper understanding of the framework for our placemaking industry—or, more accurately, of the reframing now underway. Here are some major factors retail real estate has had to contend with:
- The COVID-19 pandemic accelerated many trends in retail that were already emerging, including market consolidation.
- Consumer behavior shifted—from predictable baby boomers to highly multi-optional Gen Beta.
- Omnichannel has become a must-have, meeting customers from early-stage information needs through online/offline purchase options, all the way to after-sales service and loyalty programs.
- Sustainability remains high on the agenda: ESG-compliant construction and revitalization, as well as retailers’ efforts to build more sustainable assortments and services (e.g., organic/regional food and fashion, and second-hand reuse platforms).
- Today, these trends are being overlaid by a new wave of AI innovation in retail, with consequences for logistics, marketing, and customer experience that are still difficult to predict.
This reframing raises the enduring question of how retail will adapt—and how retail real estate can use new technological possibilities while responding to changing customer behavior. Once again, it comes down to positioning. Let’s look at what this can mean for the main sub-asset classes in retail.
Positioning Trends For High Street:
Multi-Optionality
Retail is concentrating in dominant A- and B-cities and major metropolitan areas. Even there, the trend is toward limited high-street exposure. Flagship stores of international brands increasingly sit alongside downsized concepts—often with stronger omnichannel integration. Luxury, especially in tourist destinations, continues to perform well. In small and mid-sized towns, FMCG formats are filling some of the existing vacancies. Overall, inner cities are being reshaped by non-retail uses such as food & beverage, services, and—especially on upper floors—offices and residential space.
How Can We Improve Our High Streets?
In light of these realities, many narratives of Europe’s historic cities will need to be rewritten. Retail will remain an anchor, but in smaller cities it will play a more limited role. Everyday goods are increasingly sold in modern retail parks. Public facilities, housing, and—yes—only basic retail formats can help revitalize core areas. For the rest, especially in shrinking regions, the coming decade will unfortunately be marked by vacancies or total make-overs outside retail. In major cities, the focus is more on choosing the best use for each building—more options are on the table.
Positioning Trends For Shopping Centers:
Placemaking & Retailtainment
Shopping centers range from high-performing, dominant destinations to dead malls. This sub-asset class is therefore particularly exposed to positioning challenges. Once a key anchor—especially for fashion—many centers now require significant effort and capex to achieve a new tenant mix. More food & beverage and entertainment, less fashion. At the same time, there is no longer a long waiting list of retail concepts eager to enter.
Can We Do Better With Shopping Centers?
Owners have faced the need for reinvention for years. These are not easy questions—especially when rental income may fall while restructuring costs rise. In this often difficult situation, positioning can become unclear. The focus should be on distinctive, value-adding brands and experiences that customers cannot easily find elsewhere. Retailers such as non-food discounters—while often ideal partners in convenience-led locations—rarely support differentiation in destination centers. Placemaking is about telling a compelling local retail story, not assembling interchangeable concepts. More trend stores, constantly changing concepts, often aligned with social media campaigns are definitely part of the new retailtainment storytelling.
Positioning Trends For Retail Parks & Groceries:
Time-Efficient & Easy to Access
Retail parks and specialist stores focus on everyday needs. That is why they can be replicated more broadly across countries—from large regional parks to neighborhood centers. Retail parks stand for simple, time-efficient access. They combine footfall drivers such as grocery anchors and drugstores with footfall users such as value fashion, non-food discounters, and convenience services like laundries. With revitalizations in focus, there is a strong opportunity to reinterpret this straightforward idea—illustrated in recent years by the transformation of German REAL hypermarkets into modern retail-park destinations with a large supermarket and additional specialist stores. In general, groceries—even as stand-alone hypermarkets—provide a stable core offer and continue to evolve their concepts.
Still, There Are Limits. Be Careful Not To Overdo Retail Parks!
The expansion of grocery space in Europe is largely complete. While there are differences and admitteltly white spots by country, we should remember that, as an investment product, retailers ultimately depend on their catchment area. Especially in CEE, smaller retail parks are spreading into rural areas—good for the first one, but is it still viable when there are too many?
In my view, these different positioning dynamics across sub-asset classes are reflected in today’s investment market: retail parks remain in demand, with more predictable capex and pricing that is already closer to realistic levels. Shopping centers—long considered untradeable—are now back on the agenda for more opportunistic buyers, reflecting their significant repositioning needs. High streets are increasingly the domain of family-office capital, which sees an opportunity to access prime locations at lower entry prices with a long-term investment horizon.
About the Author
Angelus Bernreuther is Head of Business Development at DEFAMA – Deutsche Fachmarkt AG, where he leads transaction activities and supports the company’s strategic growth in the German retail real estate market.
With more than 20 years of experience in retail and retail real estate, he previously held senior positions at Kaufland and BBE Handelsberatung.
Bernreuther is also Co-Chair of the ULI European Retail and Entertainment Council, a member of the ACROSS Magazine Advisory Board, and a frequent speaker and author on retail real estate topics.
