Colliers Aarhus Delrapport 2023 UK

RETAIL

Enterprising retail market battles headwinds

With the coronavirus pandemic behind us, the sentiment in the Aarhus retail market was one of optimism: The market had proved its strength during the pandemic by virtue of an enterprising sprit, customer appreciation and successful tenant-landlord negotiations, among other things.

Traditional retail market challenged The renegotiations, relocations and flexible landlords wit nessed during the pandemic remain the key drivers of the Aarhus retail market’s resilience. Recent years have seen a much stronger call for landlord-tenant dialogue, with mainly landlords being forced to accommodate the wishes of be- leaguered tenants, for instance by offering a cap on rent adjustments and shorter lease commitment periods. Due to the change in market conditions and consumer pat terns, many Aarhus retail chains have sharpened their focus on setting up shops that offer a better interaction with their online platform, e.g. via customer loyalty programmes and click & collect services and by installing in-shop self-service terminals to make it possible for the customer to order goods for home delivery. In addition, a couple of home fur nishings stores and kitchen retailers have returned to the city centre, leaving behind big-box clusters. In the Aarhus grocery retail market, Wolt and Nemlig are gaining ground as they offer subscription services that precisely meet con sumers’ demand for convenience and minimal time ex- penditure. In the period ahead, we expect stable rent levels for retail units in the most attractive Aarhus locations, whereas the rent levels of retail units in more secondary locations may come under downward pressure.

Although 2022 turned out to be a year when the retail market experienced headwinds from deteriorating market conditions, the market has shown its continued resilience. Aarhus retail vacancy rates remain low but are likely to rise in 2023 as several tenants continue to struggle financially. Moreover, judging by the Danish consumer confidence in- dicator as well as ever-weakening Danish household bud- gets, multiple retail chains will be forced to scale back shop numbers. For instance, at year-end 2022, Sportmaster an- nounced eight shop closures. For minor retailers, the im- plications of the market outlook may be even more grim. The main Aarhus high street, Strøget, including the streets of Ryesgade and Søndergade along with the squares of Lille Torv and Store Torv, is the prime and most attractive Aarhus location for shopping goods stores. In the middle of Strøget lies the Salling department store, an important customer magnet that has boosted Strøget as a shopping destination. At Aarhus Central Station, located at the south ern end of Strøget, lies Bruuns Galleri, one of Denmark’s best-performing shopping centres in terms of footfall. Known for its charming architecture and pulsating city life, the Latin Quarter is located at the northern end of Strøget. The Latin Quarter is considered the most popular F&B loca tion. Due to the change in market conditions and reduced customer purchasing power, competition is expected to intensify for prime locations in future. Similarly, retail chains under financial pressure are expected to retain shops in prime locations and terminate retail leases in more second ary locations.