December: Residential and office are most common uses in transformed properties

December: Residential and office are most common uses in transformed properties


Chart of the Month
01.12.2021 Author/s: Ralf-Peter Koschny, Felix Schrader

The topic of "transformation real estate" has become more explosive, especially due to major changes in the retail sector. Together with Union Investment, we have prepared a comprehensive study. One of the most important findings: More office and industrial properties are being transformed into new types of use than retail properties.

Transformation properties will not only gain importance in the increasingly necessary redesign of city centres, but also in project development. In contrast to new construction, these embody advantages such as re-use of the existing building fabric, diversity of use and new urbanity. For the study "Transformation real estate - how ESG, e-commerce and social trends accelerate mixed use", we interviewed project developers and others in numerous qualitative interviews. On the other hand, in a quantitative analysis we have highlighted regional and use-specific patterns of transformation properties for the German real estate market.

Based on an analysis of bulwiengesa's RIWIS database, the study shows that - contrary to what the current discussion about the future of bricks-and-mortar retail might suggest - offices and industrial properties undergo transformation more frequently than retail properties. Office and residential uses dominate the completed properties.

The most common former uses are offices no longer in line with the market, logistics/industry and retail/restaurants. The largest share of new uses (single use) are flats with 30 %, offices with 27 %. However, around half of the transformation properties analysed are converted to mixed use. At the same time, it is also clear that retail remains one of the most important building blocks of the new use concepts even after transformation: Around 28% of the uses in mixed-use concepts are retail/restaurants, which thus continue to have a high relevance. However, it is no longer a single use, but a mix of uses - in the sense of risk diversification in the real estate sector.

The analysis included properties that have undergone a change of use in the years 2015 to 2021 or are currently under construction and for which a change of use is being sought. The properties have a total floor space of > 5,000 sqm and are located in the 127 class-ABCD cities. Projects that are supplemented or extended by new buildings in addition to transformed existing buildings are also part of the analysis. In the 408 transformation properties analysed, a total of around 3.18 million sqm NF have been or will be built after their change of use.


Note: The study (PDF) can be ordered free of charge from the Union Investment website (in German).

Contact persons: Ralf-Peter Koschny, Spokesman of the Management Board at bulwiengesa, koschny [at] bulwiengesa.de and Felix Schrader, Project Manager, schrader [at] bulwiengesa.de