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Germany's market for grocery-anchored retail properties has started 2025 with what REFIRE would describe as 'gritty resilience', confirming its status as one of the few bright spots in a still-fragile real estate landscape. Transaction volumes in the first quarter reached €1.1 billion, on a par with the strong final quarter of 2024, according to Colliers. Specialist stores and food-anchored retail parks continue to dominate activity, with foreign investors accounting for 68% of volume. Prime yields in the sector remain stable, in the range of 5.40% to 5.70%, despite a turbulent financing environment.
Ulf Buhlemann, Head of Retail Investment Germany at Colliers, noted, "Specialist stores and retail parks with an almost obligatory food anchor once again dominated the property market. Demand in this retail segment continues to pick up noticeably, with supply becoming a limiting factor." Supply shortages, particularly in core-plus and value-add segments, are now clearly constraining deal flow, as international investors such as Slate Asset Management and ILG drive competition for a narrow band of available assets.
Portfolio transactions dominate, but bottlenecks ahead
The recent spate of major portfolio transactions has been telling. Slate’s acquisition of 45 food retail properties for €420 million exemplifies the appetite for scale in a constrained market. Similarly, GRR's Blue Mountain portfolio deal (€210 million) and ILG's plans to invest over €200 million this year confirm that portfolios, rather than single assets, are the principal hunting ground. Greenman, whose funds specialise exclusively in grocery-anchored retail parks across Germany, is also actively expanding its portfolio alongside these investors. Portfolio deals accounted for 46% of total retail transactions, according to Colliers.
BNP Paribas Real Estate reports that within the specialist retail segment, retail parks were generally traded at higher prices than standalone supermarkets or discounters. Prime grocery-anchored retail parks now achieve purchase price multipliers up to 19.5 times, compared with up to 18.5 times for full-range stand-alone stores. In a sign of selective pricing power, BNP notes that ESG-compliant properties in prime locations are commanding premiums.
Nevertheless, the financing backdrop is becoming less benign. Rising swap rates and bond yields, fuelled by new geopolitical tensions and Berlin’s investment spending, have not yet fed through fully into transactional pricing. Colliers anticipates that higher financing costs will increasingly test buyers’ willingness to stretch on yields, even if the resilient grocery-anchored segment is better placed to weather the strain.
Investor preferences sharpen: core strength, value-add plays
Notably, investor strategies are diverging. Core and core-plus assets with strong tenants, long leases, and energy-efficient credentials remain fiercely contested. Yet a growing number of players, such as Deutsche Fachmarkt AG (DEFAMA), are finding opportunity further up the risk curve. As Angelus Bernreuther of DEFAMA told REFIRE at the recent MIPIM in Cannes, "We are one of the few for whom a food anchor is not absolutely necessary." DEFAMA is increasingly targeting smaller towns and mid-sized locations, provided transport links and re-use potential meet requirements.
Energy efficiency has moved from a secondary consideration to a primary investment criterion. BNP's analysis of 245 specialist stores reveals that properties built after 2010 consume 45% less primary energy, and 60% less heating energy, than those constructed before 2000. Given the scarcity of high-performing assets, modern properties are attracting intense bidding and achieving notable price uplifts.
ooking ahead, the prognosis is mixed. Appetite for grocery-anchored retail remains strong, and a slight yield compression in the prime segment cannot be ruled out, particularly if financing conditions stabilise. However, the limited availability of suitable product, combined with a volatile geopolitical and financial environment, suggests that transaction volumes for 2025 may struggle to materially exceed last year’s levels. As BNP's Christoph Scharf notes, "Demand in the specialist retail segment, particularly for food-anchored products, has continued to rise gradually in recent months." Yet even this resilient sector is not immune to the hard constraint of scarce supply.
In a market increasingly defined by selectivity, execution capability, and access to product, grocery-anchored real estate may still offer the safest harbour — but the scramble to secure it is intensifying.