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Energy Boost – MEC’s Retail Park Report: “Rethinking Retail Locations!”

It is time for pioneers who rethink the future of retail real estate with courage, good ideas, and determination. This is the essence of MEC’s current Retail Park Report (FMZ Report) 2023.

“The retail real estate sector has a special responsibility in the real estate industry because it creates marketplaces for encounters instead of retreats!” – This is one of the key messages from the 11th FMZ-Report 2023 published by the retail real estate specialist MEC, together with its partners Nuveen, Savills, Dr. Lademann & Partner, and Wisag. “Energieboost. Rethinking Retail Locations” – is the title of the current issue.

The FMZ Report 2023 deals with the numerous major changes in the retail real estate asset class and the resulting opportunities (click to downlaod)

“While the general conditions have remained relatively constant in recent decades, we are now experiencing the greatest challenges this asset class has ever faced. It is a transformation process on an unprecedented scale, as changes in the retail real estate market have been particularly rapid and far-reaching lately. This has led to an urgent necessity: the revitalization and modernization of retail properties,” says Christian Schröder, COO of MEC.

This year’s FMZ Report devotes over 100 pages to this essential topic and highlights the current trends and challenges facing real estate owners, asset, property, and facility managers. The authors address the issues currently shaping the successful future of retail real estate.

Time for a Mix

“The days when a simple retail location caused a stir are long gone. Online retail is booming, space concepts are being revolutionized, and vacancies drive us to embrace innovative approaches. One thing is certain: the sole use of retail space has had its day in many cases – it’s time for a mix,” explains Jörg Krechky, expert for retail real estate, in the latest FMZ report. The expert clarifies: “Customers don’t just want to shop, they also want to work, eat, entertain themselves and perhaps even live – all in one place.” Even if investors are still cautious regarding mixed-use concepts, Jörg Krechky is certain: “The premise of the decline in retail space remains, as does the need to reposition real estate. So what is still a niche topic today could soon be the new normal.”

Individual concepts are necessary

As an investor representative, Maria Grubmüller, Senior Research Associate at Nuveen, looks at the need for change in retail properties and sees individual communication between all relevant stakeholders as a success factor: “The development of a new concept for retail locations depends on the individual circumstances. A partnership-based dialogue with tenants, customers, and administrations is indispensable for such individual revitalization strategies. Sustainability is also becoming more of a focus than ever because of a changing zeitgeist. New lifestyles, leisure habits, and different consumption patterns must be reflected in the properties to retain their value.”

Up to 80 retail parks suitable for district development

Uwe Seidel, Managing Partner at Dr. Lademann & Partner, sees great potential in this development of retail locations: “The planning and realization of residential districts with mixed-use properties has increased fivefold in Germany within a decade.” Seidel estimates that around 50 to 80 retail parks in Germany could be developed into neighborhoods: “Not only does the retail park have excellent starting conditions for enrichment with other types of use, many locations have already achieved a significant mix of uses. What is usually lacking is a settlement-structural character or enrichment with residential uses.”

Creating Sustainability together

When a retail location is revitalized, the focus is increasingly on the property’s sustainability. One key to success on this path to a green future is interdisciplinary cooperation: “All players must pull together and enrich the process with their expertise. This kind of intensive exchange is the best way to support decarbonization,” explains Joaquin Jimenez Zabala, Managing Director at WISAG Facility Management Retail. The results of the eleventh WISAG Sustainability Radar also confirm this. “Property managers, asset managers, facility managers, etc., each bring specific expertise to the table so that together they can develop an effective strategy for the sustainable orientation of real estate development,” Joaquin Jimenez is convinced.

Broad focus on refurbishment

Jörg Wege, Head of Strategic Development at MEC, knows that a broad focus is required when realigning retail properties: “Retail properties need to be modernized in a well-thought-out manner. Such an adjustment not only has an impact on the core business of retail locations but also the entire value chain of these assets: from their contribution to our economic system as an investment property to private retirement provision through the inclusion of retail locations in corresponding funds, to the workplace for numerous employees.”

Retail Park Report 2023

The Retail Park Report 2023 “Energie boost – Rethinking Retail Locations” can be viewed and downloaded here: FMZ-report. (disclaimer: only available in German).