Densification: The supermarket as a landlord – your SZ

So far, the corona pandemic has not caused large cities in Germany to lose their appeal and people are moving to the countryside in droves. Land prices are still extremely high, there is hardly any vacant space left, and the lack of housing, especially affordable housing, continues unabated. In the search for ways to create living space, densification is increasingly coming into focus, for example the subsequent addition of stories to houses, be they residential or office buildings or multi-storey car parks.

In a study from 2019, researchers from the TU Darmstadt and the Pestel Institute came to the conclusion that up to 2.7 million apartments could be created in Germany through densification. After that, there is great potential above all in retail. Up to 400,000 apartments could be created by adding stories to single-storey grocery stores and discounters.

In many places it is the same picture: A little outside of the center, but still in the middle of the city, there are large, unadorned, single-storey grocery stores lined up with the same gabled roofs – Aldi, Lidl, Penny, Netto, but also drugstores and other branches of retail chains. Mostly surrounded by spacious parking lots. One wants to be close to the customer, say the retailers unanimously. All four major food chains, i.e. Edeka, Rewe, Lidl and Aldi, are therefore planning further locations in the cities where people live. Only their prospect of getting comparable building plots in the future is slim. Not to mention that they are unlikely to be available at affordable prices anymore.

“The shortage of space in large cities will mean that we will no longer find any space where we can build freestanders. We must therefore think more vertically and will increasingly include additional uses in new projects,” says Jan Riemann, Director Property Cooperation at Aldi Süd . In addition to apartments, this could also be other uses that make sense in the respective location. Aldi Süd has already set up a day care center in a branch near Stuttgart, and there is a student residence above a shop in Tübingen. However, it is usually not possible to increase a building. The statics usually do not allow such a project. Then the only alternative left is to demolish the existing building and build a whole new, multi-storey one. But that’s also a good thing to think about. Because the construction time is significantly longer than for a one-storey building. And during this time there is no turnover because customers cannot shop.

The trucks usually arrive early in the morning and they make a lot of noise

Densification is also made more complicated by the fact that noise protection must always be taken into account where people live. A grocery store on the ground floor of a residential building needs delivery. The trucks usually arrive early in the morning and they make a lot of noise. The TA Noise administrative regulation specifies exactly which limit values ​​are permitted in which areas. “Each building application from us contains a noise protection report. We state how many trucks will come each day, what refrigeration systems we have and how many customers are to be expected, because the shopping trolleys also generate noise,” explains Riemann. “It can also very well be that we can’t build residential buildings because a soundproofing report doesn’t allow it.” In many cases, retailers also try to reduce the noise. For example, by building unloading garages for trucks or installing particularly low-noise cooling systems. There are already shopping trolleys with rubber wheels that make less noise than conventional ones.

Open detailed view

Whether densification is possible also depends on the respective development plan. If an area is designated as purely residential, efforts must be made to change it. That’s not always easy. “It is often a challenge to deal with the respective building authority. It would be nice if you had a certain flexibility in general. But German building law is quite strict in the specifications,” says Martin Leinemann, CEO of real estate investor Arbireo Capital. Nevertheless, in the case of the properties in the portfolio, one examines where a densification through overbuilding would make sense.

But Arbireo comes to the same conclusion as Aldi Süd. Demolition and new construction are usually the only way to bring living and shopping under one roof. And that’s expensive. The situation is different if you invest in a new building. “In this case, one looks above all at whether the total return on the purchased property fits into the respective real estate fund. From a return perspective, it can definitely make sense to invest in such a mixed use,” says Leinemann.

“Our new concepts aim to combine the shopping experience and living.”

Regardless of the costs or the return, the trend is towards mixed use. Individual supermarkets will become increasingly rare in the future. You see it that way at Rewe too. “Our new concepts aim to combine the shopping experience and living,” explains Rewe spokesman Thomas Bonrath. The superimposition of life and shopping is a very positive factor for urban development. However, Rewe only rents most of its supermarkets. Unlike Lidl and Aldi. The two discounter giants often develop their locations themselves and are owners. If they overbuild their markets, they sometimes come up with a considerable number of apartments. Aldi Nord, for example, is planning a location in Berlin-Pankow where around 100 apartments are to be built.

Additional new apartments above supermarkets naturally contribute to defusing the housing shortage because they increase the housing supply in a city. But are the new apartments affordable for average earners or are they sold as expensive condominiums? The fact that there is a busy supermarket on the ground floor is likely to have a dampening effect on the price. “Where we are owners, we rent our apartments,” says Riemann from Aldi Süd. The rent depends on the regional location. An apartment in the Eifel then costs less than one in Cologne. Some of these are also social housing and subsidized housing. Even at the sister company Aldi Nord, the apartments that are being built in Berlin are not in the luxury segment. There it is emphasized that the current housing shortage is being helped with affordable housing.

Especially in large cities, the trend towards mixed use could lead to noticeably more apartments. Because the retail chains want to increase their presence in the centers and are therefore looking for space – mostly larger ones, so that they can rent part of it to drugstores, cafés or service providers such as shoemakers. And more apartments can be built on a larger area.