Supermarket in Freyburg, Saxony-Anhalt
Food-anchored retail parks are quietly powering Germany’s commercial real estate revival. Once seen as a staid and unglamorous corner of the market, Fachmarktzentren have re-emerged as a prime target for institutional capital. The drivers are clear: resilient income, long leases, inflation-linked rental uplifts and an asset type that proved its worth during the coronavirus pandemic. Recent activity suggests momentum is returning.
BNP Paribas Real Estate’s Grocery Investment Market Report points to renewed interest despite a 37% drop in the overall investment volume for specialist retail properties in 2024. The sector saw €2.1 billion in transactions, with a notable concentration of activity in the second half of the year. Retail parks accounted for €1.1 billion of this, up 12% on the previous year. Nearly half of the annual total was recorded in the fourth quarter alone.
Well-located supermarkets and discounters in functioning regional catchments are once again commanding price premiums. Purchase price factors for prime retail parks have risen to 19.5 times annual net rent, while full-range standalone grocers are transacting at up to 18.5 times, according to BNP. Core and core-plus risk classes dominated, with energy efficiency now a key determinant of pricing. Properties built post-2010 show up to 60% lower heating energy demand compared with pre-2000 stock.
Specialised investors leading the charge
Asset and investment managers drove most of the volume, led by specialised investors including ILG, Slate Asset Management, and PGIM Real Estate. ILG, which acquired €137 million in retail assets last year, now targets €200 million of new purchases in 2025, backed by a €400 million institutional mandate.
The Canadian group Slate made four major acquisitions totalling €420 million, encompassing 45 food retail sites let to tenants such as Aldi, Lidl, Rewe and Edeka. The properties span 209,000 square metres with an average lease term of 5.7 years. Slate now manages around 500 properties across Europe in the essential retail segment, underscoring its long-term strategic focus on food-anchored real estate.
PGIM Real Estate returned to the sector in 2024 after a six-year hiatus, acquiring four food-anchored assets in Bavaria as part of a core-plus strategy. The firm aims to double the portfolio over the medium term, citing the defensive qualities of local supply properties and the opportunity for rent-led returns. Rüdiger Schwarz, Head of Asset Management for Germany, Austria and the Netherlands, described the assets as "a cashflow play" with the potential for ESG improvements, tenant extensions and second-phase leasing to non-food tenants including chemists and fitness operators.
Long-term tenant alignment seen as critical
The Irish-owned Greenman and its asset management subsidiary GFORM have also emerged as highly active players. Managing over €1 billion through the Greenman OPEN fund, the group focuses exclusively on food-anchored assets. CEO James McEvoy emphasises long-term tenant alignment as a core strategy: “The tenant must always come first. These relationships create long-term value and drive sustainable performance.” GFORM’s 30-person team offers end-to-end real estate and financial services, including lease framework agreements, ESG implementation, digital integration, and receivables management. A pilot project now under development aims to deliver a net-zero supermarket in collaboration with a major German grocer, incorporating Direct Air Capture and advanced smart building technologies.
Smaller, value-add investors such as DEFAMA are also active, albeit with a different profile. The listed Berlin-based investor targets retail parks with partial vacancies or redevelopment angles, including non-food formats. Food anchors are not strictly necessary, provided cashflow and tenant synergies are evident. “We need to have a certain re-use idea,” says Angelus Bernreuther, Head of Business Development, when REFIRE met him recently at the MIPIM in Cannes.
Pricing across the sector appears to have stabilised. Colliers and CBRE report net initial yields for food-anchored retail parks in the range of 5.3% to 5.7%, with prime discounters slightly tighter. The forecast is for marginal yield compression in top locations, supported by improved financing conditions and the appeal of inflation-hedged income.
Strategically, investors are prioritising lease length, tenant quality and ESG adaptability over capital growth. In the words of Values Real Estate’s Thilo Wagner: “We will see the 20 again.” Few asset classes offer the same combination of operational resilience, price transparency, and long-term cashflow visibility. After several years in the background, Fachmarktzentren have regained their place in the institutional spotlight.