Continuing on the path of growth
by Olaf Petersen, member of the Management Board, GfK GeoMarketing
As documented by the illustrated facts and figures which follow, during 2007, shopping centers were once again able to make a positive showing in contrast with the general development of trends in German retailing. Due to the pull-forward effects attributed to the significant VAT increase at the turn of the year, the overall retail sector had to wrestle with a relatively weak first half-year. In the course of the ensuing year, the consumer climate clouded, not the least of which was due to sharp price increases primarily among groceries and petroleum products. With respect to earnings, revenue in German retail increased in nominal terms only by roughly 1% to approximately €390 billion. Thus, after adjustment for the price increase rate, the figure was just below that of the previous year.
Measured against this scale, the German shopping center landscape posted tangibly above-average results. According to calculations by GfK GeoMarketing GmbH, total sales in 2007 amounting to a good €34.6 billion (gross, incl. VAT, preliminary results) were posted. The basis for defining shopping centers was according to the Cologne-based EHI Retail Institute meaning that that all properties with leasable space amounting to over 10,000 m² were taken into consideration. At the end of 2007, there were 400 such centers, for each of which a sales value was calculated based on available confidential actual figures as well as projections/estimations derived from knowledge of the spread and regional development of sales. These were then subsequently added to achieve a preliminary aggregate value.
Thus, a stately nominal revenue increase of roughly 6% was posted against 2006. Nevertheless, new openings play a considerable role with regard to this rate of change. In 2007 alone, 15 new shopping centers were opened: from the Sonae Sierra Group’s Alexa center at Alexanderplatz in Berlin to the mfi Group’s Wilmersdorfer Arcaden. However, the 12 shopping centers which opened the previous year distort the picture to a certain extent as well, since these - each opening between spring and autumn - did not post sales-relevant full-year figures until 2007. Finally, the changes occurring among the other ‘older’ shopping center locations (expansions vs. major vacancies) in 2007 must naturally be taken into consideration as well.
Meanwhile, with respect to overall German retail sales, the concluded year now shows a market share of just under 9%, which is marginally exaggerated due to service providers which are closely related to retail trade and gastronomy.
At the end of 2007, the leasable space operated by Germany’s 400 shopping centers amounted to a good 10.2 million m² and thus exceeded the previous year‘s figure by a respectable 400,000 m². With respect to average productivity per unit of area, the sector generated revenue of just under 3 3,400 per m² of leasable space, however, it must be noted that this is an average value. In individual cases, the performance per unit of area varies to some degree considerably in both directions when considering the differences in types and sizes of centers (from regional shopping centers to localsupply- oriented centers and retail parks) as well as regional and local situations and specifics regarding individual centers.
In the context of positive development trends in the shopping center sector, the number of wage earners employed in German shopping centers once again increased considerably. Roughly estimated and based on the number of employees in retail trade, gastronomy and serviceproviding businesses in centers (excluding center and facility management as well as indirect employment), this is likely to be at just under 390,000 persons. Meanwhile, this provides impressive evidence of the considerable overall economic importance of the German shopping center sector.
1 Figures regarding retail trade in a narrow sense i.e. excluding vehicle and petroleum trade as well as pharmacies. Official statistics for 2007 show a slight decline in revenue both in nominal as well as real terms. However, one must note in this case that the (price) effect of the VAT increase is not regarded due to the recording of net revenue. The development illustrated was calculated primarily from developments among various GfK panels in 2007.