We Stand for Retail

We stand for Retail

Retail Market Report Austria |2019

We stand for real estate.

Preface

The continued shift in consumer behaviour and the high volume of retail space combined with steady growth in online competition have created a challenging market environment for retail properties. However, challenges frequently also create opportunities for developers, investors and retail chains which must find the right answers to this new market environment. Michael Ehlmaier FRICS The experienced EHL retail team is ready to accompany you on this very Managing Partner interesting and promising course with its know-how, detailed market EHL Immobilien GmbH knowledge and creative solutions.

Shopping centre operators can no longer rely on tried and tested concepts and a well-known tenant mix for their success. What is needed are innovative concepts that make the shopping centre a real experience Stefan Wernhart MRICS for customers and a place to visit with family and friends. Managing Director EHL Gewerbeimmobilien GmbH More gastronomy and a wider range of activities like indoor playgrounds and other sport facilities have become just as indispensable as a unique offering for shoppers. All this requires not only courage, but also investments on the part of operators – but both will definitely pay off over the long-term because innovative concepts are the way of the retail future.

The successful repositioning of numerous retail properties and the successful market entry and roll-out of new retail chains underscore the quality of our comprehensive consulting and services.

Jörg F. Bitzer MRICS We would be happy to advise you and help you take off to a new direction. Head of Retail Properties EHL Gewerbeimmobilien GmbH

Overview Retail Market Vienna

Executive Summary

The new gastro boom Prime rents in Vienna under the global Top 10 Shopping is no longer the only reason for a trip to the store, dining out is playing an increasing The concentration on absolute prime locations – in important role: The percentage of gastronomy space this small market segment – has been responsible in shopping streets and centres is growing. System for a series of rental price records. Square metre gastronomy, in particular, is ready and able to match rents of up to EUR 400 on Kohlmarkt and part of the square metre rents paid by retailers and is Graben (both in the First District) again place Vienna looking for more space than ever before. in the Top 10 of the global rent ranking.

Production of space in Vienna Online and east competition benefit trending towards zero from the Sunday opening ban in Vienna

The demand for space in Vienna appears to be 24/7 “opening hours“ in online retail and top offer- satisfied for the time being. Only 9,000 sqm were ings in the neighbouring countries to the east make placed additionally on the market in 2018, and the Vienna’s restrictive Sunday opening regulations a trend is pointing downward. In comparison with the growing problem for the local retail trade. The result increasing volume of space that is being removed is a substantial outflow of purchasing power to from the market, this means a steady decline in the Austria’s neighbours and the Internet. selling space per capita. More and more alternative concepts for Further increase in tourism revenues in ground floor space Vienna and Salzburg There has been an increase in the range of alternative Tourism remains the bright spot for Brick & Mortar uses for space at weaker locations. In addition to retail. Revenues from city tourism are becoming the “conventional“ warehouses, offices and student progressively more important for shops in good and housing, the market is also seeing a greater number of very good locations, above all in the booming city medical facilities, day care centres and other services. destinations of Vienna and Salzburg. Important market indicators Creative newcomers Economic Data Austria 2019 Unemployment rate (Eurostat) Austria 4.6 % The top dogs are thinning out their branch networks EU (28) 6.6 % but, at the same time, a growing number of new and Nom. GDP EUR bn. 402.07 creative concepts are entering the market. Austria Economic growth 2.0 % remains one of the most popular expansion targets Inflation 2.1 % for international retailers. State budget 0.4 % Austria 40,369 EUR GDP per capita EU (28) 32,013 EUR Purchasing power per capita (2018) Österreich 23,282 EUR

Source: Austrian Federal Economic Chamber | GfK

3 Retail data Austria

Facts and Figures at a Glance

Revenue development in Brick & Mortar retail 2008—2018

4.0 %

3.0 % 2.7 2.0 % 2.1 2.0 1.8 1.0 % 1.3 1.2 1.2 1.1 1.0 1.1 0.9 0.2 0 0.4 0.3 0.6 0.3 -0.5 -0.9 -1.0 % -1.1 -0.3 -1.0 -1.7 -2,0 % 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

The development of revenues in Brick & Mortar retail includes food retailing based on the Nielsen reveneue 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 | Statistik Austria

Annual expenditure on gastronomy per inhabitant in EUR

Switzerland Austria Norway Italy Sweden Germany Belgium Spain Turkey France Portugal Finland Slovenia Slovakia Czechia Hungary Poland Bulgaria Croatia Russia Montenegro Macedonia Serbia Albania Bosnia and Herzegovina

0 500 1.000 1.500 2.000 2.500 3.000 Source: RegioData Konsumausgaben 4 Top-Seller in online shopping

30 Clothes / Textiles 10 26 Books / Magazines 16 23 Electronic devices 12 15 Shoes / Leather goods 2 13 Sporting goods 5 12 Toys 4 11 Cosmetics / Perfume 2 11 Music (CD / DVD / Download) 10 10 Furniture / Home decoration 2 8 Computer hardware 7 7 Tools / DIY 2 7 Computer software 7 6 Watches / Jewellery 2 6 Food / Beverages 2 5 Products for pets* 4 Glasses 1 CARD 0002 0003 0004 0005

0 5% 10% 15% 20% 25% 0002 000330% 0004

* Note: Product group not researched in 2006. Online shopping for selected product groups. 2006 2017. Share of Austrians (16-74 years, in %). Source: KMU Forschung Austria

MONEY PAY COLLECTION E-Commerce-Study Austria 2018 | Consumer behaviour in distance selling

11%

+ 100,000 = 2%

Shopping via distance selling 5.0 mln. shop via distance + 300 mln. Euro = 4% of total, retail • mail order shopping selling 7.9 bn. Euro relevant consumer • Online shopping = 67% of Austrians Shopping expenditures in spending • Online shopping via (ages 15 and up) Austria and abroad smartphone Source: KMU Forschung Austria

Number of Brick & Mortar shops decreasing – number of online shops increasing

47,800 44,500 41,600 37,400

7,500 9,000 5,700 3,200 2006 2010 2013 2017 2006 2010 2013 2017 Brick & Mortar shops Online shops

Source: KMU Forschung Austria 5 © Jake Sudgen © Mikko Hietanen / Shutterstock.com Revenue Killer: Sunday Opening Hours

Fans of travel on the Danube River will undoubtedly lost a significant part of their revenues due to the have a reason to celebrate with the start of spring restrictive Sunday opening hours in this country. And season in 2019. The Vienna-Bratislava route will now forecasts point to an increase in this trend. be serviced by a new Twin City Liner, which can carry twice as many passengers as its predecessor. Three developments underscore the fact that the general ban on Sunday opening does not lead to a Vienna’s retailers will most likely be less enthusi- shift in sales to Monday, but to a general loss for astic: Sunday by Sunday many Vienna residents Austrian retailers: and, above all, thousands of well-off, shopping-savvy tourists use the catamaran as well as specially •Competition from the Internet: Online shops are also organised bus trips for a shopping spree in the open on Sundays. A simple mouse click allows con- Slovakian capital – and these numbers are expected sumers to also shop on Sunday, instead of waiting for to increase in the future. Most of the passengers are a day when the stores are open. Sunday is becoming less interested in the beauty of historical Bratislava a very popular day for online shopping, above all than in the offerings in the modern shopping centres because of the substantial amount of free time. In and stylish shopping streets of the Slovak capital. addition, online shops frequently use special rebates on Sundays to generate even more revenues.

“A Sunday trip to Bratislava has •Easy-to-reach shopping facilities in the neighbouring countries: Increasingly stress-free and faster travel to already become a fixed point the attractive shopping centres across Austria’s bor- in the programme of many ders make these alternatives even more appealing, in particular for consumers from the greater Vienna area. international tour operators.“

•Booming city tourism: The record number of tourists who, as a rule, only book very short city trips is The expansion of river travel as well as the improve- becoming a more important factor for the retail trade ment of other traffic connections to the east have in comparison with domestic customers. The ban again moved a recurring issue into the centre of on Sunday opening disregards this significant and attention: Domestic retailers – especially in the steadily growing revenue driver and, instead, directs weekend tourism hot-spot Vienna – have always this income to Austria’s eastern neighbours.

6 A Window to the Future The no-shopping Sunday therefore also has an indirect effect on the market for retail properties. The few winners include The following megatrends will influence shop space for travel necessities, like books and newspapers, the shopping centre retail trade in the at railway stations and individual locations where, for example, future and should be reflected in the supermarkets are also allowed to open on Sunday. The design of retail properties. Sunday lines in these stores are generally long. The negative effects are felt, in particular, by streets in the city centre, The third location which were considered prime locations only a few years ago. In addition to home and the workplace, A voluntary option for Sunday opening would create significant an increasingly important factor opportunities not only for the Mariahilfer Strasse and Vienna’s will be the creation of places for First District, but also for streets like the Rotenturmstrasse or “social interaction“ – meaning more Wollzeile, which have registered declines in rents and rising gastronomy and entertainment and vacancies despite the high tourist frequency in the inner city. less traditional selling space. Above all, interactive areas like language schools Hoping for tourism zones and sport facilities should be integrated in the floor space concepts. Neither the retail sector nor the real estate market sees a realistic chance for a general change in the Sunday rules, but Individuality as a substitute for location optimists are hoping for a certain loosening, at least through “LOCATION, LOCATION, LOCATION“ will the designation of tourism zones. In these areas, shops are be replaced by “CONCEPT, CONCEPT, also allowed to open on Sundays. Vienna is currently the only CONCEPT“. Customers are looking for Austrian province without a single tourism zone. individualisation and are also prepared to travel to less optimal locations for unusual concepts that make storytelling “There are tourism zones in every possible.

Austrian province – only the “Corporate atmosphere“ as a substitute cosmopolitan city Vienna is lagging for “corporate architecture“ Location-specific design elements behind this development.“ are becoming more important than strict conformity to a global corporate Inner city locations, above all, would benefit significantly design that creates the perfect brand from tourism zones. These sites would again become more presence, but leaves too little room for attractive for retailers in the premium to high-price segment regional specifics and personal, local from tourism-related branches like textile, jewellery and shoes. customer contacts. Another positive factor would be a stronger demand for space by traditional souvenir shops and food trade. In this way, the Experience as a substitute for shopping Sunday opening hours could be transformed from a revenue Shopping must also have a recreational killer into a revenue bringer. and experience value. Many items are not purchased because they are needed, but because they come from a specific place. The best examples are museum shops or the increasingly popular “concept stores“.

7 © WHYAT

EHL brokered a new location to fashion label WHYAT in Strauchgasse.

Market entries by selected new retailers (2018|2019)

Telecommunications Fashion Household Kärntner Straße Kärntner Straße Tuchlauben 1010 Vienna 1010 Vienna 1010 Vienna

100% SCHWARZ CMYK 0/0/0/100 Fashion Interior RGB 24/23/21 Fashion Spiegelgasse Am Hof Strauchgasse 1010 Vienna 1010 Vienna 1010 Vienna

100% WEIß CMYK 0/0/0/0 RGB 255/255/255

Gastronomy Shoes Sporting goods Mariahilfer Straße Siebensterngasse Währinger Straße 1060 Vienna 1070 Vienna 1090 Vienna

8 © WHYAT

Concept Store Indoor Playground Vapour products Auhof Center Auhof Center Auhof Center 1140 Vienna 1140 Vienna 1140 Vienna

Gastronomy Interior Discounter SCS SCS 2201 Gerasdorf 2334 Vösendorf 2334 Vösendorf

Gastronomy Lingerie Gastronomy Haidcenter Plus City Plus City 4053 Haid 4061 Pasching 4061 Pasching

Fashion Fashion Fashion Plus City 4220 Freistadt 6020 Innsbruck 4061 Pasching

Gastronomy Gastronomy Fashion Murpark Designer Outlet 6370 Kitzbühel 8041 Graz 7111 Parndorf

9 © SES © SES

The Vienna Retail Market

Steady population growth, solid purchasing power an influence on the real estate market. The Austrian (+3.1 per cent per capita) based on strong economic market currently shows a demand for 400 additional growth and booming tourism, which reached a new gastronomy locations. This segment can, to a certain record high with 16.2 million overnight stays or a extent, offset the declining demand in the traditional plus of four per cent, form the stable foundation for retail trade. Vienna’s retail trade. This was reflected in 1.8 per cent nominal revenue growth in Austria during 2018. Vienna’s prime locations – the Graben, Kohlmarkt and Kärntner Strasse – are showing very positive Brick & Mortar retail is, however, on the decline development. A top rent of EUR 400/sqm on the in real terms due to the growing share of online Kohlmarkt again placed Vienna among the world’s shopping. Every eighth shopping Euro in Austria ten most expensive retail locations. The prices is currently spent in the Internet, with a further in the other top areas of the “Goldenes Quartier” increase expected, and nearly 50 per cent of all (Graben, Kärntner Strasse) are also moving towards consumers buy regularly online. Fashion, shoes, elec- the top rents on the Kohlmarkt. In contrast, prices tronics, books and toys are the branches particularly have come under slight pressure on re-letting in affected by this trend. nearby streets like the Rotenturmstrasse or Wollzeile. Vienna‘s inner city remains a fascinating location This development has been reflected in a decline for global chains and attracted further well-known in the demand for space and a steady drop in the international retailers in 2018 – above all, the selling space per capita. The substantial slowdown Kärntner Strasse with Apple, Cheese & More and in this trend during the past year indicates, however, &otherstories as well as the Mariahilfer Strasse with that the major market shakeout is apparently over for HEMA and Scotch & Soda. the most part. On a smaller scale, ground floor areas outside the top locations are still being rezoned. Former retail space is being transformed, above all, into medical facilities, day care centres or offices, Prime rents in Vienna in EUR / sqm all of which create new opportunities for property owners. stable 400 400 400 400 400 400 400 390 340 340 320 Eating is the new shopping Outlook

An ever-greater share of consumer spending is 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19* directed towards gastronomy and, consequently, has * Forecast Source: EHL Market Research | Q1 2019

10 Market share of shopping Vienna 26.7 % centres and retail parks

Lower Austria 25.1 % Upper Austria 20.4 %

Vorarlberg 18.9 % Burgenland 44.6 % Styria Salzburg 24.0 % Tyrol 21.3% 27.4 %

Carinthia 21.8 %

Source: | Q1 2019 Shopping centres and retail parks

Austrian shopping centres will turn their attention Steyr, one of the few new concepts to open in 2019, to the realisation of new concepts in the coming already has three restaurants in addition to its 35 years, since the growth in space has largely come to shops. Retail parks have also been unable to avoid a standstill. Innovation and creative refurbishments this culinary trend: Gastronomy facilities have now will also be required to address the recent steady become key frequency drivers in larger centres and, decline in visitor frequency and vacancy rates which for smaller properties, at least one supermarket is an have reached an average of five per cent. indispensable success factor.

One trend has become clear: Space that was The second major development is the reduction in previously occupied by traditional retailers is average shop size. This is a result, on the one hand, being used more frequently for gastronomy and of cost considerations and, on the other hand, of entertainment. One good example is Vienna‘s the shift in revenues to online and a change in the Auhofcenter, which has leased 50 per cent of the function of branches to “showcases“ which present 9,000 sqm expansion areas to non-retailers. Included the absolute brand highlights. That requires less here, among others, is the spectacular 2,000 sqm space than actual selling, but also creates the need “Tiger’s World“ indoor action recreation area for for new space allocation concepts. families. The “Hey“ in the Upper Austrian city of

Rents shopping centres and retail parks | Q1 2019 net rent EUR/sqm/m Price trend Development of shopping centre prime rents Prime location 40 - 120 stable in EUR / sqm SCS, Donauzentrum, Auhof Center etc. Secondary location 15 - 40 stable Q19, Lugner City, BahnhofCity Wien West stable

District centres 8 - 12 slightly 125 125 120 120 decreasing

110 105 Retail parks 105 100 Vienna 8 - 13 stable Outlook Federal provinces 5 - 11 slightly decreasing 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19* Source: EHL Market Research | Q1 2019 * Forecast Source: EHL Market Research | Q1 2019

11 Shopping Center Nord Ignaz-Köck-Straße 1 | 1210 Vienna 32,000 sqm Vienna Shopping Centres | Shopping Streets © SCN

STEFFL Department Store Goldenes Quartier Q19 Kärntner Straße 19 | 1010 Vienna Tuchlauben | 1010 Vienna Grinzinger Straße 112 | 1190 Vienna 12,500 sqm 11,500 sqm 15,000 sqm

EZ 09

Gerngross Mariahilfer Straße 42-48 | 1070 Vienna District centers in 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 © Deka Immobilien Management GmbH EZ 07 Großfeldzentrum EZ 08 Hanssonzentrum Riverside SCS Shopping Mall EZ 09 Interspar EKZ Ottakring EZ 10 Kaufpark Alt Erlaa Breitenfurter Straße | 1230 Vienna Vösendorf Süd | 2334 Vösendorf EZ 11 Ringstraßen-Galerien 22,000 sqm 192,500 sqm EZ 12 Trillerpark EZ 13 Zentrum Simmering EZ 14 Stadlau

Data: GLA in sqm

Source: | EHL Market Research © Riverside © SCS

12 Shopping Resort G3 Gerasdorf Donau Zentrum | Donau Plex G3 Platz 1 | 2201 Gerasdorf Wagramer Straße 81 | 1220 Vienna 70,000 sqm 120,000 sqm Citygate Wagramer Straße 195 | 1210 Vienna 17,800 sqm

EZ 12 EZ 07 EZ 04 © Millennium City Gewerbepark Stadlau Gewerbeparkstraße | 1220 Vienna 66,000 sqm

Thaliastr. A22 FMZ14

Gürtel EZ11 S 2 Graben Seestadt Aspern Ringstraße Maria-Tusch-Straße | 1220 Vienna Donaukanal Kohlmarkt Kärntner Str. Landstraßer Hauptstr. 8,500 sqm Neubaug.

Favoritenstr.

EZ 06 Innere Mariahilfer Str. EZ 05 © schreinerkastler.at EZ 01 Stadion Center Olympiaplatz 2 | 1020 Vienna EZ 13 26,700 sqm

A23

EZ 10 EZ 08 Galleria © Stadion Center Landstr. Hauptstr. 97-101 | 1030 Vienna 13,900 sqm The Mall Landstraßer Hauptstraße | 1030 Vienna 26,800 sqm

BahnhofCity Wien © CCreal Hauptbahnhof Columbus Center huma eleven Am Hauptbahnhof 1 | 1100 Vienna Columbusplatz 7-8 | 1100 Vienna Landwehrstraße 6 | 1110 Vienna 23,000 sqm 18,000 sqm 50,000 sqm

13 Shopping streets Vienna

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

250,000 90 % 80 % 200,000 70 % 60 % 150,000 50 % 40 % 100,000 30 % 20 % 50,000 10 %

City Innere Äußere MeidlingerHauptstr. LandstraßerHauptstraße FloridsdorfCentral areaSimmeringerHauptstraßeThaliastraße AlsergrundCentral area Mariahilfer Str. Favoritenstraße Mariahilfer Str. Retail Retail-supporting supply Vacancy rate Share of retail trade Source:

Vienna‘s High Streets

The structural change in retail trade is clearly visible ments. The decisive issue for two side streets, the on Vienna’s high streets. Weaker locations are faced Neubaugasse and Kirchengasse, is the construction with rising vacancies and the conversion of space of the U5 underground line. Space which becomes to other uses, while the good and top locations are vacant is now difficult to rent because retailers fear a seeing higher tenant turnover. The Kärntner Strasse substantial drop in revenues during the construction is one example of this trend: The opening of the period. However, both of these streets can expect Apple flagship store was also accompanied by shop strong positive effects over the long-term. closings on the part of traditional tenants. The interest in available space remains high, but it takes longer Rents top shopping streets | Q1 2019 Net rent EUR /sqm/m than normal for the renter and tenant to agree on a Kohlmarkt 250 - 400 common price basis. Graben 190 - 300 Kärntner Straße 110 - 330 On the Mariahilfer Strasse, the structural change is Innere Mariahilfer Straße 20 - 110 also in full swing with less textile and more gastro- Rotenturmstraße 30 - 120 nomy. The “Vienna KaDeWe“, which was announced Favoritenstraße 15 - 55 Neubaugasse 15 - 55 by Signa as a replacement for the current Leiner Landstraßer Hauptstraße Quelle: EHL10 Market- 50 location, and the future City-Ikea at the west railway Meidlinger Hauptstraße 10 - 30 station will play an important role in future develop- Source: EHL Market Research | Q1 2019

Pedestrian frequency in Vienna‘s most important shopping streets

54,677 70,379 Mariahilfer Straße 54,333 69,776 Kärntner Straße 53,453 70,121 Graben 38,084 41,261 Favoritenstraße 22,763 33,666 Kohlmarkt 25,385 27,047 Rotenturmstraße 19,984 19,065 Meidlinger Hauptstraße 16,268 19,180 Neubaugasse 18,518 14,546 Landstraßer Hauptstraße 10,636 12,958 Wollzeile

Thursday Saturday Source: Austrian Federal Economic Chamber 2017

14 Shopping streets Vienna

Vienna | City Hoher Markt

The “Golden U“ is shining Nr. 16Dsquared2 lauben

brighter Bognergasse Prada The luxury miles Kärntner Strasse, Nr. 4 Seitzergasse Tuchlauben

Louis Vuitton Brandstätte Bauernmarkt Nr. 4 Chanel Jimmy Choo Graben and Kohlmarkt, which Nr. 3-7 Nr. 1 ße Meinl Gourmet Petersplatz

together form the “Golden U“, have Nr. 19 Jasomirgottstraße Rotenturmstra

Wallnerstraße Nr. 22 Hermès been largely successful in avoiding TOD's Nr. 5 Fendi Tiﬀany Graben Michael Kors Goldschmiedgasse Nr. 8-10 Versace the general problems which face Nr. 14 Nr. 1 Nr. 14 Max Mara Stephansplatz Trattnerhof

Brick & Mortar retail. It is, however, nga Kohlmarkt sse Habsburgergasse Zara

Stock-im-Eisen-PlatzNr. 12 striking that (especially on the Nr. 8 H&M

Singerstraße DemandB edarfsg groupsruppen Kärntner Strasse) the pace of Nr. 1 Humanic

Bräunerstraße Dorotheergasse Palmers KShort-termurzfristbedarf tenant turnover has increased and Stallburggasse Nr. 4 Seilergasse BApparelekleidung Nr. 9 Forever 21 Liliengasse the significant differences in Spiegelgasse Foot Locker Weihburggasse Nr. 12 Apple WHomeohnu furnishingngseinrichtung rental prices, which range from HHousehold,ausrat, E l eelec.ktro appliancewaren

EUR 100/sqm of selling space on Kaufhaus Steﬄ Sonstiges Nr. 19 Miscellaneous the Kärntner Strasse up to ERetailH-be supportinggl. Angebot supply EUR 400 on the Kohlmarkt, are Neuer Markt Himmelpfortgasse LShoppingeerstand Mall

Kärntner Straße Peek & Cloppenburg Swarovski SVacancyhopping Mall levelling out. This development was Nr. 29 Nr. 24 also fuelled by the prestigious LocationLage Johannesgasse Apple flagship store, which opened Tegetthoﬀstraße FPedestrianußgänger zzoneone Führichg Calzedonia asse Nr. 39 BSharedegegn uspacengszone on the Kärntner Strasse in 2018. Annagasse

Maysedergasse Desigual Data as ofSta 09/2018nd: 09/2018

Nr. 32-34

Krugerstraße Hotel Sacher INTERNATIONAL PROPERTY Philharmonikerstraße CONSULTANTS Nr. 4 Meter Source: CHARTERED Nr. 49 Zara HomeSURVEYORS 0 100 200

Vienna | Mariahilfer Straße M useumsplatz Price pressure on new rentals Karl-Schweighofer-Gasse The Mariahilfer Strasse is not really DemandB edarKandlgassefsg rgroupsuppen Short-termKurzfristbedarf Siebensterngasse

Stiftgasse confronted with longer vacancies, ApparelBekleidung Zollergasse Westbahnstraße Leiner W ohnungseinrichtung Home furnishing Kirchengasse

Schottenfeldgasse but there has been an increase in Household,Hausrat, E lelec.ektro appliancewaren Neubaugasse Nr. 18

Sonstiges Theobaldgasse tenant turnover and rental prices Miscellaneous Mariahilfer Straße RetailE H-be supportinggl. Angebo tsupply Peek & Cloppenburg Urban Outfitters Nr. 37 ShoppingLeerstand Mall Nr. 26-30 have become difficult to hold Seidengasse Humanic Gerngross constant on re-letting. The shift VacancyShopping Mall Zieglergasse LocationLage Monki Nr. 42-48 from retail with its very high textile FPedestrianußgänger zzoneone Lindengasse Nr. 50 Richtergasse sse Gumpendorfer Straße BSharedegegn uspacengszone Nr. 63 Pull & Bear Andreasgasse Barn component, among others, towards Windmühlga Stand: 09/2018 Stollgasse Data as of 09/2018 abitengasse Nr. 71 Nike Store Hema gastronomy also requires substantial Schadekgasse Apollogasse Nr. 77 CCC Nr. 83 investments by landlords. Since the Weekday Amerlingstraße Linke Wienzeile Kaiserstraße TK Maxx

inner Mariahilfer Strasse is more C & A ße Mariahilfer Stra Neubaugürtel Nr. 96 Rechte Wienzeile

Nr. 105 Esterházygasse Terranova than two kilometres long, trends Hämmerle Nr. 120 differ considerably. The most positive Otto-Bauer-Gasse Rechte Wienzeile

development has been noted in the↑ Westbahnho f

central pedestrian zone, which has INTERNATIONAL PROPERTY ndorfer Straße CONSULTANTS pe Meter Source: CHARTERED the highest frequencies. SURVEYORS 0 150 300

15 Investment

Sound demand, stable prices

The very low production of new retail space explains the comparable figures for office properties. In why prime yields are unable to keep pace with the other words, this segment is definitely attractive for office segment. In addition, the steady increase in yield-oriented investors with a retail affinity. Private online retailing has led to a certain reservation on investors are also looking toward the retail segment the part of some investors. Demand is concentrated in their search for better yields. Supermarkets and on shopping centres and retail parks with long-term DIY-markets as well as smaller retail parks up to leases as well as retail buildings in shopping streets. EUR 10 million in the investor’s immediate catch- Transactions also include properties with vacancies ment area are in strong demand by this target group. and/or the need for positioning and restructuring, The earnings potential of business locations on which are being acquired primarily by developers and the ground floor of residential or office properties retail specialists. is often rated much higher by local buyers than by institutional investors. The price dynamics in the retail sector are lower than for offices or residential properties. Prime yields for retail properties are roughly 50 basis points above

Prime yields | Shopping streets | Shopping centres | Retail Parks % %

% %

6.25 % 6.25

5.75 5.90 5.50 5.50 5.50 % %

% % %

5.00 5.00 % %

4.75 % % %

4.25 4.00 4.00 4.00 4.00 3.75 3.75 3.50 3.50 3.50 3.25

Outlook 2019 13 14 15 16 17 18 19* * Forecast Shopping streets Shopping centres Retail parks Source: EHL Market Research | Q1 2019

Selected retail transactions 2018 | Q1 2019

Property Size sqm Location Seller Buyer kika/Leiner-Portfolio n.a. Austria Steinhoff-Group SIGNA Retail portfolio AT 70,000 Austria ADIA BVK Donau Portfolio 51,100 Austria Uniqa Investor consortium 50% Weberzeile Ried 25,000 Ried SES TH Real Estate Property Mariahilfer Straße 16,000 Vienna M&A Real Consult Imfarr K1 Kittsee 13,100 Kittsee Private investor TH Real Estate Pittarello Vösendorf 10,000 Vösendorf Semper Constantia Private investors Kärntner Straße 12 3,540 Vienna Private investor Private investor

Source: EHL Market Research | Q1 2019

16 Outlook

Outlook

Fast-tracked structural change vacant spaces on the Kärntner Straße as well as on the Mariahilfer Strasse (former BERSHKA, former The trends which have characterised the Austrian Forever 21). Large, long-standing branch networks retail market in recent times – the low production of will continue to grow smaller (for example, the crisis- new space, the shutdown of properties at weak ridden Vögele Group will close further branches) locations, gastro as a substitute for retail, the and selected retailers will probably be forced to exit thinning out of traditional branch networks – will the market. However, a number of newcomers have continue to dominate developments in 2019 and been very active. HEMA, the Dutch department store the years beyond. This challenging environment will, chain which first entered the Austrian market in in fact, accelerate and strengthen the structural 2017, plans to open at least two further branches in change. Graz and the SCS by summer 2019, and the French sport retailer Decathlon will add at least one further The production of new space (excluding standalone location to its previously sole branch in Austria. properties) is expected to fall below 50,000 sqm in 2019. The few new properties include the “HEY“ in the northern section of Steyr with approximately “Shopping centres must offer an 15,000 sqm as well as a further retail park in Völker- markt with an estimated 3,000 sqm and the Matters innovative experience to attract burg shopping centre at a central location in this customers over the long-term.“ district city in Burgenland. Other announcements included the opening of the Frunpark in Parndorf with 18,000 sqm and the expansion of the Welaspark in Wels by roughly 3,500 sqm. In total, the competition between real estate providers for the increasingly limited number The production of new space in Vienna will be of strong, long-term tenants can be expected minimal in 2019. The market is eagerly anticipating to intensify. Good locations (excellent traffic a concrete timetable for the “Vienna KaDeWe“ in line connections, attractive catchment area) will with Signa’s announced plans for the current Leiner no longer represent a sufficient condition for location on the Mariahilfer Strasse. The opening sustainable success. The saying “location, location, of the first inner city Ikea branch at the western location“ will be gradually replaced by “concept, railway station is still dependent on the speed of concept, concept“. Shopping centres and shopping the termination of current rental contracts and streets must create the requirements for a colourful construction is, in any event, scheduled to begin this offering to linger, they must offer an attractive year. entertainment programme and – in line with the “third place“ for social interaction (in addition to Even though the development of new locations has home and the workplace) – actually fill these areas dropped to an absolute minimum, the changes in with life. existing shopping centres and the major shopping streets will be very visible. The Vienna market is actively following the subsequent use of the newly

17 EHL References

Reference projects

Consulting Market entries NEMA Starnberg Cheese & More The owner of the land exclus- EHL brought the Dutch deli-

© Hans Beigel ively commissioned EHL to catessen company Cheese & conduct a market study and More to Austria, brokered the develop a retail strategy for first retail space in Kärntner the planned shopping centre. Straße and supports Cheese The first rental contracts have & More to set up its second already been signed. branch outside the Nether- GLA 11,000 sqm GLA 50 sqm lands in Munich. Location Starnberg Germany Location 1010 Vienna

Leasing HEMA Action © EHL EHL continues to support the © EHL EHL supports the discounter during Dutch retailer HEMA after its its further expansion Austria and has market entry in Austria and brokered sales space in Bruck an brokered two more branches in der Mur, G3 Gerasdorf and the EHL- Graz and Linz. managed Stadtparkcenter in Spittal an der Drau.

Scotch & Soda Zgonc EHL brokered the second © EHL EHL brokered a former LIDL sales space in Vienna to Dutch branch to DIY-retailer Zgonc. retailer Scotch & Soda on Maria- hilfer Straße.

Asset Management Retail park Knittelfeld Euromarkt Kapfenberg The Kollibri Center in Knittelfeld The Euromarkt Kapfenberg covers approx. 19,500 sqm. In and the adjacent retail park © LLB Immo KAG © LLB Immo KAG addition to Eurospar, the tenant include approx. 14,000 sqm mix includes Fussl, Bipa, Deich- of sales space. The shopping mann, Takko and others. Many centre benefits from its of the 260 parking spaces are convenient location directly covered and provide comfort- on the B116 motorway and its GLA 6,300 sqm able parking in any weather. GLA 14,000 sqm diverse branch mix. Client LLB Immo KAG Client LLB Immo KAG

18 Center Management Columbus Center Stadtpark Center © EHL Since January 2019 EHL took © EHL EHL manages the Stadtpark over the Center and Property Center in Spittal an der Drau Management for this well- und is responsible for brokering established shopping center retail space. Recently the new in the Favoriten district and is large tenant Action rented sales exclusively commissioned with space in Stadtpark Center. brokering space. GLA 15,500 sqm GLA 14,100 sqm Client Institutional Investor Client Institutional Investor

Valuation DEZ Innsbruck Merkur Kittsee © EHL This shopping centre is located © EHL The food market Merkur in Kitt- in the southeast of Innsbruck see is situated at the B50 street between the Amras district and in Buinesspark Kittsee und was the Rossau commercial zone. opened in mid-2017. It offers directs connections to the Inntal A12 Autobahn via the Innsbruck-East junction at a GLA 32,600 sqm distance of roughly one km. GLA ca. 1,670 sqm Client Financial service provider Client Owner

Investment Pittarello Kärntner Straße 12 © EHL EHL advised Upper Austrian © EHL EHL brokered a commercial private investors on the buidling with a GLA of acquisition of the Pitarello- 3,500 sqm in Kärntner grounds with a total of Straße, one of Vienna‘s 10,000 sqm sales space in prime locations, to private SCS. investors.

GLA 10,000 sqm GLA 3,500 sqm Client Private investors Client Private investors

19 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.

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