Outlet Management GmbH
Fashion Outlet - Montabaur
Outlet centres – including the nearby Montabaur centre itself - frequently look like ordinary shopping centres, albeit decorated to look like charming country villages.
Germany remains the No. 1 expansion target for many international manufacturers of brand-name goods, as revealed in the "Outlet Center Performance Report Europe" by the Wiesbaden-based retail consultancy ecostra.
The report states that two-thirds of the 89 European brand manufacturers surveyed are looking for locations in Germany for their outlets. Another survey result: tenants consider the "Designer Outlet Roermond" located on the border between Germany and the Netherlands to be the most profitable outlet centre in Europe, followed by "The Style Outlets Vicoluno" (Italy) and the "McArthurGlen Cheshire Oaks" (UK).
All German outlet centres are performing well above the European average, says the report. Leading the list of the most profitable outlet centres in Germany is the "Outlet-City Metzingen", which takes 5th place Europe-wide, ahead of "The Style Outlets Zweibrücken" (6th place in Europe) and “Ingolstadt Village” (8th place in Europe).
The outlet centres in Germany all recently gathered for the 4th FOC Congress in Schloss Montabaur, between Frankfurt and Cologne. High on the agenda was a debate over removing the very word "Factory" – as in Factory Outlet Centre – from the product description, as the industry has little any more to do with the sale of factory 'seconds' or overruns, having become a much more mainstream part of brands' distribution strategy.
Outlet centres – including the nearby Montabaur centre itself - frequently look like ordinary shopping centres, albeit decorated to look like charming country villages. Most brand owners have made their peace with the existence of the outlet centres, after a period when they feared the debasement of their brand and cannibalisation of their turnover in their primary retail outlets. They now integrate the outlets in their distribution, using them both as a channel to shift excess production and odd job lots, as well as a platform to promote their brand, particularly to women, who make up 55% of outlet centre visitors.
Germany still lags the rest of Europe in FOCs. According to consultant ecostra, mature markets like the UK or Switzerland offer 9 sqm of outlet space per 1,000 inhabitants, compared to 2.4 sqm in Germany, which still only has a total of about 14 such centres.
A further 20 are currently in the planning phase, although according to ecostra CEO Joachim Will, not all will ultimately come on stream. This has to do with local rivalries, with for example Wuppertal, Solingen, Remscheid and Duisburg all bidding to get planning permission for an Outlet Centre in North Rhine-Westphalia. However, if one of them is granted permission, it will kill the prospects for all the others – hence many planning applications are entangled in complicated legal objections from rival interests.
Furthermore, according to well-known Düsseldorf lawyer Johannes Grooterhorst, who advises several investors on German retail projects, German planning law is very restrictive when it comes to planning permission for retail property that could endanger the inner-city existing shops and the 'living quality' of regional town centres.
For investors this often means engaging in expensive legal assistance to redefine space utilisation and retail projects to avoid falling foul of local planning authorities, said Grooterhorst, who tend to tar all 'retail' projects with the same brush. This applies particularly to northern German states, including North Rhine-Westphalia, he said, while the southern states of Rhineland-Palatinate, Baden Württemberg and Bavaria tend to take a more pragmatic approach.
A new trend is the development of COs, or City Outlets, whereby (generally) local business people try to set up an outlet within the established town area (rather than on a greenfield site) to ensure a steady stream of visitors to what might be a tired downtown retail concept. Delegates heard of the success of Bad Münstereifel, a historical spa town in the Eifel region in south of North Rhine-Wesphalia, which was opened in 2014.
According to Marc Brucherseifer, CEO of the City Outlet Bad Münstereifel, the investors put up 70% in equity capital with the rest borrowed from local Sparkassen. Retail turnover in Bad Münstereifel has since doubled due to the improved local offering, while demand for property in the town has since soared, effectively wiping out the town's persistent local vacancy headache.
Even within Germany's limited outlet scene, there is still plenty of investor activity afoot. One of Germany's top centres, the Zweibrücken Style Outlets, is being sold along with outlets in Porto, Seville and Wroclaw by its Spanish owner Neinver to British outlet investor Via Outlets for €587m.
Via Outlets itself owns six outlets (Prague, Gothenburg, Palma de Mallorca, Amsterdam, Lisbon and Zürich), while one of its investment partners, British group Value Retail, also owns nine outlets, including Europe's top centre Bicester Village. In Germany, Value Retail owns Wertheim Village and Ingolstadt Village.
For Via Outlets, the most profitable of its new acquisitions will be Zweibrücken, with a sales density of €6,000 per sqm of lettable space, compared to less than €4,000 per sqm by the other three centres. The fully-let Zweibrücken with 21,000 sqm of sales space is the sixth most profitable centre in Europe, according to the ecostra study, and second in Germany only to Outlet-City Metzingen.
