Shopping in Austria is fun – a lot of fun, actually, since there are plenty of places to do so. With 14.3 million square metres of retail space, the Austrian retail market reached a new record high in 2009. In terms of figures, there are 1.71 square metres of retail space for every inhabitant – as a total area, this corresponds to the equivalent of 2,000 soccer fields, or the size of Mondsee Lake. Causing this high density of retail space, besides a particularly high density of large furniture and hardware stores, are the “Big Boxes”, according to retail expert Mark Ruhsam from the economic service Regio Data Research, “and the high purchasing power of the inhabitants.” Another factor, Ruhsam says, is the large number of retail parks.

Growth Stop for Retail Space

The times of unstoppable growth of retail space, however, are over. According to current studies by Regio Data Research, growth in the retail sector has slowed down massively between 2005 and 2009, and in 2009, there was barely any net growth. Ruhsam: “This, however, is less due to the economic crisis and more due to the very high degree of market saturation.” After all, the Austrian retail property market has for the most part been unaffected by the economic crisis in 2009. As shown in a current study by the leading Austrian real estate provider, EHL, the traditionally low vacancy rates have largely remained stable in the good and excellent shopping street locations as well as the high-ly frequented shopping centres. Alexandra Ehrenberger, Director of Market Research for EHL Immobilien: “Rents have decreased only slightly, but there are more incenti-ves for new tenants, such as contributions by landlords to renovation costs, or rent-free periods.” Factors that have significantly contributed to the stable situation in the market are private consumption, which is still going strong and is keeping the effects of the crisis on the retail sector at bay, as well as the low production rate of new retail spaces. Ehren-berger: “In 2009, only four new shopping centres and retail parks entered the already highly saturated Austrian market. The current trend shows that at the moment, existing centres are exploiting their possibilities to compensate for their high average age of ten years through comprehensive revitalizations, upgrades and expansions. This is also necessary for them in order to remain competitive in the future.”

Upgrades and Expansions

Donauzentrum in Vienna’s 22nd district is the best example for the revitalization of an existing shopping centre: By the fall of 2010, Vienna’s largest shopping centre will grow by another 24,000 square metres of retail space. At the same time, the existing part of Donauzentrum will be modernized – a step that centre operator Radamco will not regret, according to Ehrenberger: “In the medium term, prospects for shopping centres are very good, since their current share of 25 percent of total consumer spending is well below that of the international average.” According to the EHL expert, due to the already high density of shopping centres, this potential will primarily open up growth opportunities for existing locations. Real estate developer René Benko took an even more radical approach than Radamco with the renovation of the traditional department store Kaufhaus Tyrol in Innsbruck. He tore down the entire outdated building and, with an investment amount of 155 million EUR, rebuilt approximately 33,000 square metres of shopping space and 260 parking spaces at the old location. The opening is scheduled for March of 2010. Benko: “I am certain that Innsbruck’s inhabitants will be very proud of their new Kaufhaus Tyrol.”

Changes in the Shopping Centre Landscape

The Austrian shopping centre landscape saw two exceptions with regard to growth in 2009. With the opening of EO in Oberwart and the new retail parks in Güssing, Mattersburg and Neusiedl am See, the province of Burgenland experienced a small explosion in retail space of 16.8 percent since 2005. Mark Ruhsam: “At first glance, an increase in retail space density of almost 17 percent within four years seems quite spectacular; however, it is put into perspective by comparison with the growth rates of previous years.” Up until 2008, Burgenland was placed second-to-last with 1.43 square metres of retail space per inhabitant. Today, Burgenland offers 1.67 square metres of retail space per inhabitant, which puts it into sixth place, but still keeps it below the Austrian average. The second growth zone for shopping centres in 2009 was the province of Carinthia. After the completion of City-Arkaden in Klagenfurt and Atrio in Villach, there are now almost two square metres of retail space per inhabitant in Carinthia. The 32,000 square metre large Atrio Villach, operated by Spar European Shopping Centers (SES), was also awarded the title of most sustainable shopping centre in the world last year. This annual “Best of the Best” award by the International Council of Shopping Centers (ICSC) honoured the multicultural architectural design with its central plaza and ecological building methods.

Highlights on the Shopping Centre Scene

Other new shopping developments can also score high, given the right selection of shops. The new Designer Outlet Salzburg, for example, which was opened in September of 2009, had a perfect start last year. The new shopping destination in Wals, developed by McArthurGlen and the Vienna Insurance Group, attracts shoppers with international premium brands such as Calvin Klein, Diesel, Tom Tailor and Jil Sander. In the first three weeks, operators welcomed over 200,000 shopping aficionados. Right next door, Salzburg’s Europark is located, which is operated by SES and was honoured as the “World’s Best Shopping Centre” by the ICSC in 2007. Since its opening in 1997, Europark recorded 80 million visitors to date – trend rising – and generated revenue of approximately 310 million EUR in 2008. Europark’s highlight: It is the only shopping centre in Europe to feature a cultural stage with regularly scheduled cabaret, theatre, concert and film events. Marcus Wild, Director of SES’ management: “We notice that people enjoy themselves at Europark. A generous space concept and many attractions turn the time spent at the shopping centre into an experience.”

Railway Stations as Shopping Hot Spots

The business with pre-finish rental agreements is going remarkably well at Vienna’s railway station projects, especially at BahnhofCity Vienna West, Wien-Mitte and the Central Station. The occupancy rate at BahnhofCity Vienna West is already at 50 percent. EHL’s Alexandra Ehrenberger: “We don’t assume that the enjoyably high pre-finish occupancy rate can be attributed to great future expansion efforts, but without doubt, there will be competition. Thanks to their excellent connection to the public transport network and their attractive industry mix, the railway station projects are in the best position in this competition.”

Chances for Regional Retail Parks

Besides spacious and architecturally unique shopping malls in prime locations, experts also attribute good chances to regional retail parks. Mark Ruhsam: “New retail space is mostly created by chain stores.” BAI for example will open their new 12,000 square metre retail park in Gerasdorf in the fall of 2010, thereby closing a gap in the shopping landscape north of Vienna. Krocon Holding is planning to finalize their 20,000 square metre retail park in Eisenstadt this year as well as the expansion of their retail park in Horn, which has existed since the 1990’s. The latest shopping concepts by large retail chains also offer new opportunities for those smaller shopping centres. In Vienna for instance, Rewe Group is currently testing a convenience store concept at Garnisongasse (“Billa Box”) with a wide range of instant dinners, convenience foods and articles of daily use. EHL expert Ehrenberger: “This shop concept only requires approximately 150 square metres of net retail space. This is significantly less compared to the traditional stores with 500 square metres on average.” Especially for retail parks in good locations and with a suitable environment including schools, businesses or railway stations, this concept could bring new tenants. [ CN ]