Wandsbek Quarree in Hamburg: the Union Investment property has been expanded by 6,000 square metres.
Union Investment

Crowning discipline

Europe’s shopping centre map is being rejuvenated as many malls undergo expansion and modernisation. Changing customer needs and new labels require more space.

For 46 years the Ruhr-Park Bochum has been in existence. For two years Germany’s oldest shopping centre has been undergoing a gradual facelift and expansion. “The aim is to turn an agglomeration of specialist stores into a cohesive complex of buildings with an urban character,” says Michael Maas, describing the task scope. The architect from Münster has supervised the alterations from the outset. Together with the centre’s manager, the Essen-based company MFI Management für Immobilien, Maas has conducted customer surveys and laid down the key design features. “The Ruhr-Park’s customers were keen for the open structure to be maintained. They are now getting a modern shopping mall that is still very recognisable to them,” comments the architect. Even so, the alterations are making massive inroads into the centre’s original layout. The outdated dead-end structure in the main building is making way for modern navigation based on a circular route, and the arrangement of all structures on the 254,000-square-metre site will become more compact thanks to the demolition of outlying buildings and expansion of existing properties.

Union Investment manager Lars Richter revamped the outdated Wandsbek Quarree in Hamburg, making it fit for the competition again.
Sebastian Vollmert

Can you just go ahead and do that? “The biggest hurdle was the planning and building laws,” acknowledges Maas. The original open development was based on four building plans, which were to be merged into a single one. “That alone took three years,” reports the architect. The alterations are now well advanced. The former Quelle department store has been turned into a modern retail location for the fashion store chain Sinn Leffers and the electronics giant Mediamarkt. The second phase of construction saw the disappearance of the Toys “R” Us and Woolworths outlets. That building section was renovated and enlarged and is now used to house the young fashion chains H&M and New Yorker. Work on the third phase, rearranging the routes into the buildings, is continuing. An additional part of the complex will accommodate a completely new food court – an experience zone comprising various restaurants and cafés. The owner Ivanhoé Cambridge is spending €140 million on rejuvenating Ruhr-Park. A considerable sum, but by no means an exception.

Heavy investment planned

At the end of last year the Commerz Real Group announced its plans to invest some €120 million in expanding three shopping centres. “Our response to the sustained interest in lettable space in our shopping centres is to invest in large-scale expansions,” says Roland Holschuh, who as Commerz Real board member for real estate is also responsible for shopping centres. Some €30 million will go to the UK, for instance, to expand Westfield London, which with 150,000 square metres of retail space was already Europe’s biggest shopping mall before the enlargement. In the coming months two additional floors comprising 8,300 square metres of space are to be added to the existing Marks & Spencer store. Around €80 million is being spent by the fund initiator on expanding the Orio-Center in the northern Italian city of Bergamo. Thanks to the alterations here, the leasable area will increase from 52,000 to 69,000 square metres. A food court of 4,000 square metres as well as an eight-screen multiplex cinema are intended to further boost the centre’s appeal. Another mall in need of enlargement in the Commerz Real Group’s view is the Forum Bornova in Izmir, Turkey built by Multi Development. A sum of €8 million is to be invested in increasing the existing retail space by 2,000 square metres.

By putting money into renovation and expansion, retail investors are also responding to the growing competitive pressure, which is often increased by e-commerce. “Nowadays shopping centres perform social functions – as places of interaction and communication. The quality of the time spent there and the whole experience must improve accordingly, especially when the growth figures of Zalando and the like are considered,” notes retail expert Gerhard K. Kemper, Director of the Düsseldorf consultancy Geka Kemper. Those who do not respond now and rethink their strategy, run the risk of losing out, he adds. Even if all the schemes under way are not known or made public, the shopping centre investment advisors of Jones Lang LaSalle (JLL) have identified eleven expansion projects involving 73,000 square metres of additional retail space in Germany alone.

One project adding 7,000 square metres, at the Pasing Arcaden in Munich, was completed in 2013. According to the overview, the following malls are currently being enlarged: Bero Zentrum in Oberhausen (adding 12,000 square metres), the Hansa Center in Bottrop (an extra 5,000 square metres), the Ertl Center in Hallstadt, Bavaria (an extra 7,000 square metres), and the Blechen-Carré mall in Cottbus in Brandenburg (an additional 6,500 square metres). Six further expansion projects are at the planning stage, in such cities as Frankfurt am Main, Osnabrück and Lübeck. “Of course, expansions make sense only at shopping centres that are performing well,” notes Sabine Keulertz, who heads the shopping centre investment team at JLL, putting the situation into perspective. The reasons for increasing sales space are very mixed, she adds. “Sometimes the aim is to make existing centres more attractive for sought-after or new labels, which bring in additional customers, thus boosting sales. The revamping of a neighbouring shopping centre can also act as the trigger for expansion,” concludes Keulertz.

Expansions make sense only at shopping malls that are performing well.
Sabine Keulertz, head of the shopping centre investment team at Jones Lang LaSalle

Attracting new tenants

That is exactly what happened at Wandsbek Quarree in Hamburg, a complex belonging to Union Investment. The shopping centre built in 1988 is only three kilometres away from the Hamburger Meile, a very popular mall owned by ECE Projektmanagement. “The competition facing Wandsbek Quarree has intensified over the years, with the catchment areas of the two centres overlapping,” comments Lars Richter, Head of the Shopping Centre Division at Union Investment Real Estate GmbH. Surveys also showed that customers were leaving Wandsbek Quarree in order to make fashion purchases at the C&A store some 500 metres away. That is now a thing of the past. Thanks to the purchase of a neighbouring Volksbank property, Wandsbek Quarree has been expanded over a 12-month renovation period by 6,000 square metres and now offers some 36,000 square metres of sales space. Prelios Deutschland designed and implemented the development project and then marketed the retail space for Union Investment. At the same time, the centre has repositioned itself with a confident new look and clear focus on the popular Wandsbeker Marktplatz location.C&A was attracted as the anchor tenant in the refurbished building. The former fashion competitor occupies 4,800 square metres of space in the Wandsbek Quarree centre. The mall’s extension met H&M’s need for greater space and the fashion retailer now has 2,650 square metres to play with. “Thanks to the expanded floor area, a new-look façade and upgrades in the centre’s design, we have made our site competitive and viable for the future,” Richter stresses. 

The decision to increase the retail space in Hamburg may have been the subject of heated debate. Filling many more files, however, is the project to expand Les Grands Prés in the Belgian city of Mons, a shopping centre belonging to the open-ended retail real estate fund UniImmo: Europa. The reason: in its search for a location for a third furniture store in Belgium, Ikea came across the successful Union Investment mall in Mons. The Swedes immediately hit on the idea of locating their store close to the popular shopping centre. The solution involved tough negotiations and a highly complicated land swap: Union Investment transferred a building plot around the fund property to Ikea, receiving another plot of land as compensation from the City of Mons as well as permission to expand Les Grands Prés by 9,600 square metres of retail space. The new Ikea store and alterations to the existing shopping centre required the building of additional car parks, an adapted route and a further motorway link. Not only the size and complexity of the project cost time, the number of project participants created something of a log jam. In addition to Union Investment as the investor, City Mall and Ikea as developers, Carrefour as the anchor tenant, the city council as the owner of the plot of land, and the Belgian state and European Union as sponsors of the infrastructure measures were all involved in the planning process.


million euros is being spent by Union Investment on expanding Les Grands Prés, a shopping mall in the Belgian city of Mons.

“Owing to the many different interests, this centre’s expansion became the focus of public debate. It has taken four years to reach an agreement. Its implementation will take another three to four years. There are up to 100 versions of the various contracts, and the files amassed fill whole corridors,” reports project manager Lars Richter. Implementation of all the measures involved affects 110,000 square metres of land, with 1,450 additional parking spaces – Union Investment alone is investing €70 million. The Union Investment representative describes the agreement as “treading a difficult political tightrope”. That was mainly because the City of Mons was not very enthusiastic at first about allowing Les Grand Prés to expand. In contrast, they were very keen to attract Ikea to the location, he continues. “Six to seven million furniture customers a year as well as considerable revenues from trade tax swayed many minds,” adds Richter. Conversely, he assumes that without Ikea the centre’s expansion would not have been approved. Such complex conflicting interests are not encountered in other parts of Europe. In Turkey, for example, which does not have enough shopping centres, “expansions” are “a major topic”, says Andreas Hohlmann, who manages the Turkish business activities of the German shopping centre developer and operator ECE.


shopping centres in Germany will be expanded by 73,000 square metres of sales space in total by 2015.

The reasons for the drive to renovate Turkish shopping malls are varied. They include building age and quality. Many first-generation centres, dating back to the 1990s, are gradually disappearing from the market: shopping centres with 30,000 to 40,000 square metres of retail space are simply too small for the market conditions in Turkey, Hohlmann goes on. “The buildings served for a period as shopping malls, but the needs of both retailers and customers have grown over time. Converting the outdated centres into hospitals, schools or flats is a possibility,” he adds. Another reason cited by the expert is rapid population growth, as reflected in high rates of construction primarily in Turkey’s major cities. “Hypermarkets that were built in peripheral locations barely 20 years ago are now situated in city centres. This means that local stores are being expanded into modern shopping centres with a fashion and entertainment provision,” says Hohlmann.

One example is the Carrefour Ümraniye in Istanbul. Together with the Turkish Akasya Group, ECE is to expand the existing shopping centre into a retail, office and experience complex with 100,000 square metres of space and 240 shops. Work on the €200-million project is due to be completed during 2015, after which it will be called the Center Akasya Park. “Ten years ago there were 700,000 people living in the centre’s catchment area, but that figure has now risen to three million. The many new residents also need shopping facilities,” explains Hohlmann. The good thing is that developers such as ECE are receiving great support from the Turkish authorities. “The politicians are not opposed to the idea. They see that the cities are growing,” the ECE representative concludes. Since most western European countries and regions are more likely to be faced with the prospect of declining populations, such alliances between policy-makers, authorities, centre operators and investors may be more difficult to achieve there. That they are possible is demonstrated by the many examples cited. It all depends on a convincing case being made. If that is done, all doors will be open to the future – and to the customers.


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