HIH Invest
Jens Fieber, Managing Director, HIH Projektentwicklung
The combination of higher interest rates, geopolitical crises and a weak economy, among other factors, is currently leading to a significant increase in distressed assets. Older existing properties are slipping into distressed status because refurbishment costs exceed owners’ budgets. At the same time, many developments initiated before the shift in interest rates can no longer be completed under today’s market conditions based on their original assumptions.
Turning properties that are no longer lettable into assets that generate stable cash flow and appreciate in value often requires extensive refurbishment involving substantial intervention in the building fabric. HIH Projektentwicklung (HPE) demonstrates what such an approach can look like in practice.
A property on Zeughausstrasse in central Cologne illustrates the challenges involved in repositioning an existing office building. HPE was commissioned by an institutional investor to transform the former single-tenant property into a multi-tenant building targeting DGNB Gold certification. The plans include a new distinctive façade with floor-to-ceiling windows, additional balconies, loggias and terraces, as well as a spacious rooftop terrace overlooking Cologne Cathedral. The property will also offer around 7,215 square metres of flexibly lettable space, with up to two rental units per floor to accommodate tenants of different sizes. A two-storey atrium will serve as both a central point of orientation and a new source of natural light. The overall concept also includes a prestigious reception area, a coffee point, communication and meeting areas, and a ground-floor bike hub with bicycle parking, e-bike charging facilities, a repair station, showers and changing rooms. Preparations are also being made for electric vehicle charging infrastructure.
wearenarrativ
Proposed terrace on the property on Zeughausstrasse, Cologne
Premium Space Instead of Dark 1980s Offices
Given the starting point, this is a demanding task. Built in the early 1980s, the property features deep floor plates and consequently limited natural daylight, which no longer meets today’s expectations of a modern office environment. Ceiling heights are restricted, meaning that flooring systems and technical installations need to be carefully coordinated to maintain both spatial quality and flexibility. The existing load-bearing structure requires every intervention to be precisely aligned with the building’s available structural capacity. As part of the refurbishment, the façade, ventilation, cooling, solar shading and building automation are being developed as an integrated system. Landscaping, waterproofing, drainage and rainwater management were also incorporated into the planning process at an early stage to help adapt the building to the consequences of climate change.
By the end of 2028, a team combining complementary commercial and construction expertise will have created a future-proof building with flexible and divisible working environments, while retaining the load-bearing building structure. Compared with complete demolition and new construction, this approach preserves embodied energy and thereby avoids substantial additional CO₂ emissions. During operation, a ventilation system with heat recovery, modern cooling technology and energy-efficient lighting will help reduce energy consumption, complemented by insulated roofs and intelligent building automation that controls lighting, heating, cooling and solar shading in line with actual demand.
Densification, Timber and Extensive Greenery
At HEY MAX, an office redevelopment on Pettenkoferstrasse in Munich near the Theresienwiese, HPE is refurbishing, stripping back and extending the existing building dating from 1991. Completion is scheduled for the middle of next year.
Following refurbishment and extension, HEY MAX will provide around 8,200 square metres of lettable space, which can either be leased as a single property or divided into units starting from 180 square metres. This is being achieved through the addition of further storeys as well as a two-storey timber extension in the inner courtyard. The landscaped courtyard and spacious terraces will become communal areas, while a café will complement the ground-floor amenities. A central bike hub and 72 underground parking spaces will provide mobility options for users of the building.
A dedicated greening concept for the façade and outdoor areas will improve the microclimate within the dense urban environment. The concept was co-developed by Swiss landscape architect Enzo Enea, whose vertical gardens on the façade and green roofs will contribute to a pleasant indoor and outdoor climate. When selecting plants, Enea focuses on robust native species suited to the location, creating new habitats for birds and insects in the heart of Munich. The green flat roofs and courtyard operate according to the sponge-city principle: they absorb rainwater, retain it and release it gradually through evaporation. This helps relieve pressure on the municipal sewer system during periods of heavy rainfall.
HIH Real Estate
Koryfeum in Unterschleissheim, Munich
Rethinking Stalled Developments
Another project for which HPE has been awarded a comprehensive restructuring mandate is Koryfeum in Unterschleissheim, in the Munich metropolitan region. The project was originally conceived as a campus comprising around 80,000 square metres of gross floor area for companies in the technology, automotive and research sectors. However, changed market conditions no longer support the continuation of the original development plan. To date, two buildings comprising a combined lettable area of around 24,500 square metres have been completed, while the remaining development plots are still undeveloped.
Koryfeum is a prime example of how a stalled development can be restructured in a distressed-asset context. HPE is therefore focusing primarily on stabilising the completed phase from an economic perspective and strategically reorganising the undeveloped plots. Specialists from project development, asset management, marketing and leasing are working closely together to stabilise the existing assets. HPE is analysing how the original office concept can be supplemented with hybrid, research, development and light-industrial uses, while also assessing alternative uses for the remaining undeveloped phases or the potential sale of these plots.
Recognising the Opportunity in Distressed Assets
Distressed assets are therefore no longer simply cases for remediation. They also offer opportunities to unlock hidden value potential. Achieving this requires an integrated approach that combines project development, asset management, marketing and technical expertise. By proactively developing existing buildings, adapting utilisation concepts to changing market requirements, and giving equal consideration to economic and sustainability objectives, problematic properties can once again become future-proof investments. Particularly in a market characterised by uncertainty, the ability to reassess existing assets and reposition them decisively is becoming an increasingly important success factor for investors and owners.
About HIH Projektentwicklung
As part of the HIH Group, HIH Projektentwicklung has been delivering office, residential and commercial projects, as well as schools and social facilities, throughout Germany for over 20 years. A particular focus is on the regeneration of existing properties.