Aldi enters real estate business

They still shape the image of German cities and villages: Ten years ago, food discounters such as Aldi or Lidl set the principle of low-rise construction in the construction of new markets. They opened wide, low markets, preferably on the arterial roads. The typical, single-storey branches with pitched roof are one hundred times in Germany. But at least in big cities the time of the low buildings comes to an end. If you open a new supermarket these days, you will also be planning offices or apartments on the upper floors. The fact that discounters become property managers in a sense is in line with the trend.

At the same time, the retail chain Aldi Nord wants to join in as well. The discounter announced on Wednesday to enter the business with the so-called project development. By 2030, Aldi wants to build at least 20 new branches in Berlin, on or at which apartments are to be created. Overall, the retailer wants to create a good 2,000 new apartments in the capital. The necessary land belongs Aldi partially for decades. The company does not want to sell the apartments according to their own information, but rent.

With the project Aldi follows its competitors in the trade. Lidl, Rewe, Edeka, yes, just about all major discounters and supermarkets now rent apartments. They thus follow the guidelines of the cities and municipalities. These increasingly rely on compaction: they want free space to be used as effectively as possible. As a result, traders are building up and building multi-storey buildings, which will inevitably house many different tenants.

The industry is reacting to the high demand for apartments. Big cities like Berlin have grown by tens of thousands in recent years, mainly because young people are moving to the cities for study or job. Added to this is immigration from abroad. At the same time, many investors are investing more in real estate because construction rates are low, and fixed-income investments are unlikely to yield returns. As a result, project developers are tearing up building plots in major cities.

“The situation in and around Berlin affects us in two ways,” says Jörg Michalek, head of the Aldi real estate administration. The retail chain wants to expand in the capital. However, it is increasingly difficult to find suitable locations for new branches. In addition, owners today demand significantly higher rents for ground floor shops in many urban centers. “Of course, we want to be there at the highest possible frequency for our customers,” says Michalek. “The combination of Aldi markets and connected living space is therefore a consistent and, above all, future-oriented solution.”

However, investments such as those of Aldi Nord also tie up capital that is no longer available elsewhere. Such arguments, however, seem to take a back seat when it comes to preempting the competition. “Part of the strategy is to have locations that would otherwise go to the competitors,” says Joachim Stumpf of the retailer BBE in Munich. The rental of housing has the advantage for discounters and supermarkets to be close to the customer. They move with the people back to the cities and thus follow the trend towards urbanization.

In addition, it is cheaper to buy in many places than to pay high and rising rents. Therefore, all major grocers are currently expanding their real estate holdings. Rewe, for example, purchased six specialized market centers in western and southern Germany at the beginning of the year; At each of the sites, Rewe itself is the main tenant. Although objects with living space are an exception for the Cologne retail chain. “Basically, it’s not part of our real estate strategy to acquire housing,” says a spokesman. Nevertheless, Rewe’s expansion strategy is also open to more complex locations that include housing – especially in good city center locations.

Initially, Aldi Nord plans to implement two projects in Neukölln and Lichtenberg, where 200 new apartments are to be built on and in their own markets. At another 15 locations in Berlin, the retail chain is already planning new combinations of branch and apartments. “We want to actively support the densification of Berlin and the ecological urban redevelopment,” says Michalek. The combination of new apartments and Aldi markets creates “added value for the whole of Berlin”.