Why city leadership is key to revitalising downtown retail

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For retail real estate investors, the recent Münchner Handelsimmobilientag offered more than just talk—it showcased actionable strategies for navigating the sector’s ongoing transformation. Organized by the Hochschulbund Nürtingen-Geislingen, BBE Handelsberatung, and IPH Handelsimmobilien, the event provided a platform for urban planners, developers, and retail innovators to share hard-won lessons. At its core, the message was clear: revitalization starts with bold city leadership, supported by private investment and strategic adaptation.

Mönchengladbach - a case study in public private partnership

Mönchengladbach was highlighted as a prime example of what can be achieved when cities take the initiative. Dr. Ulrich Schückhaus, CEO of EWMG, the city’s development company, detailed how targeted municipal investments have catalyzed private sector interest. "We need a lot less retail space than we have," Schückhaus said, reflecting on the oversupply that burdens many urban centers.

The city’s approach has been hands-on. It acquired the former Vitus Center near the main station and transformed it into a government and business hub. Similar strategies are planned for other aging properties, including a set of buildings on Hindenburgstraße set to be replaced by a public square with a direct connection to the Abteiberg Museum. "The property was cheap on the market and worked out well for us," Schückhaus remarked, highlighting the importance of timing in public acquisitions.

These efforts have already borne fruit. Art-Invest Real Estate is now developing a mixed-use complex near the Minto shopping center, while the Sahle Group plans a hotel and retail project nearby. Both initiatives, Schückhaus emphasized, came only after the city demonstrated its commitment to revitalization. The clear lesson for investors is to identify cities that are proactive in addressing vacancy issues—such partnerships reduce risk and create new opportunities.

12-point plan for the city of the future

Karen Klessinger of brand agency Dan Pearlman offered a complementary perspective, emphasizing the potential of multi-functional urban spaces. "City centers must become urban, green living rooms and stages," she said, underscoring a shift away from purely commercial uses. Her detailed "12-Point Plan for the City of the Future" calls for projects that integrate culture, leisure, and sustainability to ensure vibrant activity beyond standard retail hours.

Her message to investors was clear: empty department stores and other underutilized properties represent enormous potential if approached creatively. Klessinger argued for developments that incorporate elements like coworking spaces, community centers, or even urban farming. She also stressed the importance of designing for resilience, such as integrating biodiversity and addressing urban heat challenges. Investors aligned with ESG mandates should take note—these projects not only satisfy regulatory requirements but also attract stable, forward-looking tenants.

Investors need increased geopolitical awareness

Hans Volkert Volckens of Blacklake Partners brought a macroeconomic lens to the discussion, cautioning investors to pay close attention to geopolitical shifts. "I would rather invest in a region where Rheinmetall is based than in one where Volkswagen is based," he stated, drawing attention to the vulnerability of export-dependent industries like automotive manufacturing. The return of Donald Trump to the U.S. presidency, he warned, could trigger a trade war with significant consequences for Germany’s economy, including inflation and rising interest rates.

For retail investors, Volckens’ warning translates into specific risks. Locations heavily reliant on export-driven industries may see reduced consumer spending, impacting retail footfall and demand. By contrast, regions anchored by resilient industries, such as defense or healthcare, are likely to weather macroeconomic shocks better. Volckens’ advice? Diversify into mixed-use properties in economically diverse regions and stay vigilant about global trade developments.

Trend towards smaller footprints in high-demand areas

A practical case study came from Rafael Burckhardt of Decathlon Germany, who shared insights into the retailer’s evolving strategy. "We are becoming significantly smaller and more modern," he explained, pointing to a new focus on compact stores in high-traffic urban areas. Decathlon’s Hamburg branch, located in the former Saturn building near the central station, spans just 2,800 square meters and prioritizes top-selling products, supplemented by 24/7 pick-up stations for online orders.

This shift reflects a broader trend toward "rightsizing" in retail—scaling down to optimize costs and remain competitive. For landlords, this means increased demand for centrally located properties with flexible layouts. As Burckhardt noted, Decathlon’s smaller formats enable the brand to remain close to customers while avoiding the risks associated with larger, less adaptable footprints.

A Roadmap for Investors

We’d say these insights from the Münchner Handelsimmobilientag event offered several practical takeaways for retail real estate investors:

  • Partner with cities leading revitalization efforts: Look for municipalities actively addressing vacancy and underperforming retail assets. Public-private collaborations reduce risk and attract long-term investment opportunities.
  • Prioritize mixed-use and multi-functional properties: Spaces that blend retail, residential, and cultural uses are increasingly favored by tenants and regulators. Investors should focus on assets with redevelopment potential in urban cores.
  • Focus on resilient locations: Avoid overexposure to regions dependent on export-heavy industries. Instead, prioritize properties in economically diverse areas with stable local demand drivers.
  • Adapt to retail rightsizing: Smaller, high-traffic locations are in demand. Investors should seek assets that can accommodate flexible retail formats and capitalize on proximity to transport hubs or dense residential areas.
  • Stay geopolitically aware: Global trade dynamics and macroeconomic shifts will continue to influence local retail markets. Investors must monitor these developments closely and adjust strategies accordingly.

While challenges undoubtedly persist, the event highlighted how retail real estate remains a vital, continually changing asset class. For those willing to align with emerging trends, the opportunities are not just significant—they’re transformative. As Schückhaus aptly put it, "Cities must act first." When they do, he’s convinced that private capital will inevitably follow.