In its study on the future of inner cities, management consultancy PwC examined the potential uses of department store properties. The conclusion: A mixed use of the real estate is promising and is possible in almost all examined locations in terms of planning law.
Large department stores used to make the hearts of consumers beat faster. Now their days seem to be numbered. The pandemic was not the only thing that affected the department store groups; changing consumer behavior and the emergence of new retail concepts – especially online retail – were already troubling them and triggering a far-reaching change in brick-and-mortar retail. What happens now to the huge trading houses in the best locations? How can they be used further and which concepts could work?
Fast action is required
“In view of the change, investors and urban planners must inevitably deal with the future use of former department store properties. In view of this development, small to medium-sized cities in particular are faced with major challenges, because department stores often form the heart of the inner cities,” explains Benjamin Schrödl, Director PwC Germany. According to his thesis, those who now succeed in eliminating the vacancy quickly can significantly increase the attractiveness of the city centers again and, in addition to shopping opportunities, also bring other types of use, such as living in particular, back into the centers.
Conclusion from the 2020 study: Mixed concepts are promising
According to the study conducted by PwC in 2020, mixed-use post-use concepts for department store properties were identified as promising. In the current study, these findings were examined for practical feasibility at selected former department store locations that were affected by the wave of closures over the past two years. The focus of the investigation was on the given building planning requirements and the resulting implementation options and obstacles.
Structural changes are necessary
With around 88 percent, almost all of the former department stores examined are in designated core areas and only three percent in other special areas. Structural changes or adjustments are required in more than half of the former department stores.
According to PwC, just one year after the department store closures became known, plans for future use were available for more than 70 percent of the closure locations, whereby extensive structural changes were required for long-term subsequent use. In 91 percent of the cases, a promising mixed-use concept was possible under building planning law, although many houses are older – almost 60 percent are older than 30 years, 38 percent of them even older than 40 years.
63 percent of the existing mixed-use concepts are planning the integration of retail space for the ground floor. In addition to the basic usage types of retail, gastronomy, office and living, the planning of the locations is based on local trends and gaps in demand. “Examples of this are cultural subsequent uses such as an art pop-up store, the integration of a fitness studio, an opera or a library,” Schrödl continues.
Small towns find solutions faster
Mixed-use scenarios are implemented faster in small towns. “While investors avoid hasty planning decisions due to higher land prices in large cities, there is increased pressure in smaller cities to define a timely subsequent use due to the character of department store properties,” explains Schrödl. In addition, the bureaucratic paths in construction planning in large cities seem longer and more time-consuming than in smaller cities is another conclusion drawn by PwC.