End of the mega malls
High commercial real estate prices, ever fewer suitable sites and a boom in e-commerce could make this one of the last big shopping centres to be built in Germany.
So is Skyline Plaza just another investment project, or will its fate reflect the deep structural changes underway in modern retailing?
The European Retail Institute (EHI) duly records that the nine shopping centres opened in Germany last year had relatively small rental spaces of 10,000m² to 30,000m².
But ECE boss Alexander Otto also sees potential in larger sites: "The more space there is, the quicker one can react to new trends and find space for an exciting store concept."
Smaller than planned
Even at 38,000m², however, the Skyline Plaza has turned out to be a lot smaller than originally planned. At the turn of the century there were endless debates about the need for 50,000m². Otto reckoned that the site would require 220 shops in order to attract tens of thousands of visitors every day.
The logic was understandable when one considers that 1.8 million people live in the Rhine-Main catchment area. Add 2.3 million visitors to the neighbouring exhibition centre and 350,000 concert hall-goers every year and the maths all seem to add up.
But competition is strong. ECE, which manages 189 shopping centres throughout Europe, pioneered the Main-Taunus Centre in the west of Frankfurt, whose 90,000m² shopping space attracts 40,000 visitors per day — twice the number expected at the Skyline Plaza.
Then there is ECE’s smaller Hessen Centre and Isenburg Centre (44,000m²), not to mention the Northwest Centre and Sonae Sierra’s Loop5 in neighbouring Weiterstadt (55,000m²+).
However, My Zeil remains the star of the show on Frankfurt’s main shopping street, Die Zeil. Built in 2009, My Zeil, with its 100 shops on just under 50,000m², has brought a tiny bit of colour to this banking city’s otherwise uninspiring High Street retailing scene.
ECE boss Alexander Otto doesn't see this competition as a problem, however, and sees each site catering for a different clientele.
A conventional mix
So what’s Skyline Plaza got to offer? Commercial real estate agents claim that its rental mix is fairly conventional.
However, it has succeeded in attracting such trendy fashion retailers as Pull & Bear, Mango Touch, Strellson, Collin’s Jeans and 7 Camicie for the first time to Frankfurt as well as H&M, P&C, Zara and Desigual.
ECE has also managed to win book shop retailer Osiander, design retailer Pylones as well as food-court operators Frooters and Chipotle Mexican Grill. (Skyline Plaza's 16 gastronomy service providers account for 12 per cent of the total floor space compared with a Frankfurt-centre-average of 5 per cent.)
A Rewe City supermarket, a dm drugstore and a Saturn electronics entertainment store are the principal mass consumer anchors outside the core fashion offer. Most of the outlets will close at 8 p.m., but Rewe will stay open until ten at night.
Further attractions include an 8,000m² roof garden including a restaurant, run by Alex, that will stay open at weekends until three in the morning. A Meridian Spar wellness centre is to follow in November.
It will be interesting to see how much buying power the Skyline Plaza will pull away from the town centre. After all, its edge-of-city location is neither easily walkable from there nor particularly salubrious. The Hessian Retailers’ Federation, however, estimates that it could drain 10 to 12 per cent of downtown business.
En attendant Europaviertel
ECE is clearly banking on Frankfurt’s growing consumer spending power which has increased from €3.5bn in 2006 to €4.3bn today.
The nearby Europaviertel (European Quarter) is also expanding. It is hoped that around 30,000 persons will work and 3,000 live there by 2019, when a new metro station is set to open — but that’s in six years’ time.
It is significant that ECE has already extended its business activities well beyond shopping centres to embrace other city development activities. CEO Alexander Otto has virtually admitted that there is hardly scope for new shopping centres in Germany because there are already so many of them.
ECE clearly also has ambitions to make a European name for itself as a builder of offices and hotels. In the Europaviertel, for instance, it is constructing the “Kap Europa” conference hall for the Frankfurt exhibition centre in 2014.
A bet against e-commerce?
Meanwhile, all parties concerned are hoping that people will want to live in the Europaviertel and companies establish themselves there. Otherwise, the Skyline Plaza could struggle to win the customer frequency and revenues it needs to survive medium-term.
Skyline Plaza is a €360m investment product financed by Allianz Real Estate who has an 80-per-cent stake in the project (the remaining 20 per cent are held in equal parts by ECE/the Otto family and CA Immo) and who wants to sell the centre at a profit.
At the end of the day, Skyline Plaza could be viewed as a bet against the increasing popularity of online shopping. But this is disputed by ECE's Alexander Otto: "To date we have not noticed any decline in customer frequency or business revenues due to online retail (competition)."
Gentle reader, we can meet any time there for a coffee, but would you put your money on it?
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