{"id":10712,"date":"2024-07-30T10:14:55","date_gmt":"2024-07-30T08:14:55","guid":{"rendered":"https:\/\/www.stadtmanufaktur.com\/living-with-the-demise-of-department-stores-opportunities-and-scope-for-proactive-city-administrations\/"},"modified":"2025-06-08T15:04:19","modified_gmt":"2025-06-08T13:04:19","slug":"living-with-the-demise-of-department-stores-opportunities-and-scope-for-proactive-city-administrations","status":"publish","type":"post","link":"https:\/\/www.stadtmanufaktur.com\/en\/living-with-the-demise-of-department-stores-opportunities-and-scope-for-proactive-city-administrations\/","title":{"rendered":"Living with the demise of department stores: Opportunities and scope for proactive city administrations"},"content":{"rendered":"

Vacancies on a large scale: When department stores close<\/h2><\/div>

More and more department stores are being closed and more and more large properties in German city centers are standing empty. As part of the takeover of Galeria Karstadt Kaufhof (GKK), which has now been decided, the doors of further locations will close this summer. The owners of the properties are faced with the challenge of finding new occupants, while city centers are threatened with a loss of appeal and the emergence of new vacant locations. <\/p>\n

There are examples of successful transformations<\/a> of such large properties, but it is clear that every solution is as individual as the character of a city. Copy-paste will not be an option anywhere. The time has come for proactive city administrations.<\/b><\/p>\n<\/div>

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Abstract:<\/strong><\/p>\n

Many cities are struggling with vacancies in large properties. The best-known example is the former Galeria Karstadt Kaufhof department stores. Retail expert Mathias Sander shows which approaches and opportunities city administrations can now take advantage of.<\/b><\/p>\n<\/div><\/div><\/div><\/div>

Impact on retail, city centre and real estate industry<\/h2><\/div>

Nostalgia does not overcome crises<\/h3><\/div>

As is so often the case, when people talk about the crisis in department stores, it is primarily the retail aspect of this crisis that is highlighted. Yet this is anything but new. The relevance of department stores as a competent shopping destination has been in free fall for decades. <\/b><\/p>\n

Older people in particular look back with nostalgia on their beloved department store, a form of business that is now unfortunately no longer in keeping with the times and can no longer be operated economically in many places, meaning that they are being closed and people are losing their jobs. Taking Galeria Karstadt Kaufhof as an example, 1,400 department stores are now set to close again, and 16 more will close by the end of August 2024 as part of the takeover by the investor duo Bernd Beetz and Richard Baker. To be continued. <\/p>\n<\/div>

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“You see the sun slowly setting and are still startled when it suddenly gets dark.”<\/p>\n<\/div><\/div><\/span><\/blockquote>

Franz Kafka, writer<\/strong><\/span><\/div><\/div><\/div><\/div>
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Large property in Reutlingen: formerly Horten, now Galeria Karstadt Kaufhof – and in future …?
<\/span>City Archive Reutlingen, Photo: E. Maier<\/span><\/p>\n<\/div>

German city centers in an identity crisis<\/h3><\/div>

The effects on German city centres <\/strong>of the closure of large department stores are discussed up and down. Existing and impending vacancies of large, cityscape-defining key properties<\/a> in prime locations, the vicious circle of the loss of footfall and the associated loss of visitor attractiveness leads in a downward spiral to a <\/b>increasingly weaker retail offering<\/b> and an increasingloss<\/b> of <\/span>loss of importance and identity of the city centre as a<\/b> as a shopping location.<\/span><\/p>\n<\/div>

“Department store to let”: The real estate industry’s problems with vacancies<\/h3><\/div>

Everyone involved is aware of this, but it is rarely mentioned in the abbreviated public discussion. <\/span>real estate aspect<\/strong> of the crisis: there is considerable vacancy, which can often only be filled inadequately despite excellent locations, because subsequent use concepts can rarely be depicted as profitable investments.<\/span><\/p>\n

So-called single-tenant secondary uses for department stores, i.e. lettings to just one main tenant, no longer exist in the large retail sector – with the possible exception of furniture stores. <\/span>Alternative uses<\/b><\/span> (office, hotel, residential, culture, entertainment) or even a <\/span>mix of uses<\/b><\/span> (mixed-use) generally require investment in the building structure, but still do not achieve rents comparable to retail, especially on the upper floors that have been abandoned by retailers. <\/span> <\/p>\n<\/div>

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Problem of the real estate industry:<\/strong><\/p>\n

Both the sale and re-letting of vacant department store properties is currently an extremely difficult task with mostly unpromising profitability forecasts.<\/p>\n<\/div><\/div><\/div>

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Difference between department store and shopping center (picture): Department stores are designed for one operator (single-tenant), shopping centers for several tenants (multi-tenant)<\/p>\n<\/div>

Operation Vacancy: What city councils can do<\/h2><\/div>

What opportunities do cities have to exert influence and what instruments and skills do they need to use their influence on the overall process surrounding large-scale real estate in the long term?<\/span><\/p>\n<\/div>

Act before vacancies become a standstill<\/h3><\/div>

The real estate industry cannot be forced to abandon the profit orientation of its core business in order to quickly fill the property. On the other hand, continuously sitting out the poor market situation in some cities not only <\/b>leads to vacancies, but also to a standstill, a backlog of investment <\/b>and, in the worst case, to a visible decline<\/b> that can permanently jeopardize the individual location qualities surrounding the large property. Owners should not shirk this responsibility in their own – especially long-term – interests. <\/b> <\/p>\n

Cities should (if they have not already done so) urgently seek and maintain contact with the owners of every key property. Unfortunately, the current market dynamics in the retail sector point to further closures of large spaces – currently, no key property can be considered safe.<\/b><\/p>\n<\/div>

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The market dynamics point to further closures. At present, no key property can be considered safe. <\/p>\n<\/div><\/div><\/span><\/blockquote>

Mathias Sander, expert for retail and retail trade<\/strong><\/span><\/div><\/div><\/div><\/div>

Aiming for individual solutions<\/h3><\/div>

All those responsible must be aware that although there are some good examples for the reuse of large properties, there is no blueprint. Owners, reputable consultants and real estate professionals can’t just shake standardized solutions out of their sleeves.<\/b> If this is the case, it should be viewed with a large dose of scepticism, because standard solutions – as with city centre management<\/a> – never offer the right answer to (location) individual problems.<\/p>\n<\/div>

Determine the starting point and target image together<\/h3><\/div>

As a first step, it is important to understand the interests of the owners<\/b> and to develop an ideal vision for <\/b>the city itself <\/b>. Through regular exchange, these points of view should be brought together in a vision that is supported by all those involved. In particular, the following issues need to be clarified:<\/b><\/span><\/p>\n