VÖLKEL REAL ESTATE has been one of the best-known and largest German shopping center management companies for many years. Founded and based in Hamburg by Dirk Völkel, the company attaches great importance to a balanced relationship between owner, manager and tenant, while always keeping an eye on the constantly changing needs of customers. In an interview with HI HEUTE editor-in-chief Thorsten Müller, the company founder reveals how he views the latest developments within the industry.
HI HEUTE: Many German shopping centers have been rethinking their product mix for some time now. What do you think should be the main focus here?
Dirk Völkel: Nothing particularly new: a satisfied customer who gets a high percentage of what they want and is pleasantly surprised from time to time. This requires a consistent focus on promising customer segments. Marketing in its holistic and best sense. Asking yourself the questions: who is my customer, what does he want, what are his needs? Can I generate and satisfy their needs? Which customers can I acquire in contrast to the competition? This is our classic approach in our centers and consulting mandates. Analysis, segmentation, clustering, target formulation, strategic positioning, alignment of all measures accordingly. In hard facts, these are the appearance of the center, i.e. the shell, and the core with the tailored sector and tenant mix paired with the soft factors such as the appropriate service offering and marketing. Good communication with customers plays a key role here. What is meant here is exchange and dialog, not a constant, penetrating barrage.
HI TODAY: How are investors looking at the current situation? What is important to them?
Dirk Völkel: The first question is what type of investor we are talking about. There are opportunistic investors who are just waiting for the opportunity to buy shopping centers. As soon as an opportunity arises to acquire a promising property with a high expected return on equity, they will strike. For longer-term portfolio holders, the focus is on optimization in all areas: stability of the investment, exploiting opportunities to optimize the mix, reducing operating costs to the benefit of rental income, but also the costs remaining with the landlord (from vacancies or caps in anchor leases). To this end, large investments are also being made, particularly in the area of energy costs, which enable rapid amortization or better control from the point of view of “needs-based consumption”. Fine-tuning is the order of the day and that is a good thing.
HI TODAY: Visitors not only want original stores and regular events, but above all good service. As an experienced center manager, how do you manage to continuously improve this?
Dirk Völkel: First of all, it’s worth making a comparison with other countries. Service starts with the right attitude, the service mentality. For example, Italian sales assistants take this more for granted than we do. With the exception of top German restaurants, service staff in the catering trade are also much friendlier in comparison. Waiters and waitresses take a certain pride in their work; we’re not talking about tourist strongholds like Venice here.
There is still room for improvement here in Germany. At the end of the day, visitors should feel at home in the center. This kind of welcoming culture is what we are striving for. I have always wished for joint events for all people working in a center, including training courses on this topic, a common approach, a “We are the center”. Unfortunately, this has taken too much of a back seat in recent years. That has to change and come to the fore.
HI TODAY: What else do you think a center has to do for both tenants and consumers to be successful in the long term?
Dirk Völkel: Constant adaptability to new developments and needs is the basic prerequisite. Keeping a watchful eye on trends, recognizing which ones are sustainable, i.e. have a long-term impact, and assessing their influence. Center management must know its customers. The aforementioned customer communication, which is easier than ever today, offers the approach. Recognize changes seismographically and (re-)act at an early stage. I would like to see close cooperation with the rental partners so that the “center” can play to its strengths.
HI HEUTE: Speaking of tenants: How do you see rents developing in the coming years? Will there be any significant changes compared to the current situation?
Dirk Völkel: Of course, rents cannot rise significantly at the moment. Successfully revitalized shopping centers in the portfolio, which are now experiencing extraordinarily high increases in footfall, can also expect rents to rise as rental demand for the space increases. In addition, we have just examined another long-term property in a good location in our consulting department that actually has upside potential.
However, this is not the majority of properties. Demand and the desire to expand have increased noticeably, and the old pre-pandemic rent level is rarely reached. The level will gradually rise via indexation. More is not to be expected in the period mentioned.
HI HEUTE: Digitalization, AI and ESG are buzzwords without which center management is no longer possible these days. What are you doing in these fields?
Dirk Völkel: A lot. As communicated time and again, we regularly test proptechs, which we then keep or discard. Proptechs that reduce energy consumption were and are particularly valuable. Intelligent control systems that measure, monitor and control serve all three key areas. Building technology must be made centrally controllable. Here, the machine is better than man. Humans set the benchmarks. At the same time, the machine provides much of the data required for ESG certification. We are a member of ECORE and have been heavily involved in the development of the list of questions relating to shopping centers.
But we also rely on digital support via sensor technology and evaluation software, apps and social media to analyze customer origin, customer behavior, frequency patterns and customer communication. We have always tested many innovations, such as video-assisted shopping from home with personal shopping advice and scheduled appointments. We are interested in anything that brings us closer to the customer.