Scarce sites drive continued demand for grocery retail

A notable milestone passed almost unnoticed in the German grocery retail investment market last year: for the first time, foreign capital outpaced domestic investment in the sector. It was one of the more striking data points to emerge from a panel discussion on European retail at the Rueckerconsult INVESTMENT Expo in Berlin last week — and it set the tone for a conversation that made a persuasive case for an asset class that continues to outperform even as others struggle.

Kathrin Michalzik of Savills Investment Management, who opened the discussion, framed the investment criteria in practical terms: customer benefit, retailer quality and development potential. Does the location generate a regular, necessary shopping visit? Is the operator strong enough to sustain footfall over the long term? Can the space adapt as consumer needs evolve? These questions must be answered locally, but they apply universally. She added one observation that captured the intensity of the current location market: some sites, she noted, are developed simply to prevent a competitor from securing them. The fight for good locations has become that pointed.