More Life, more Value:
Ideas for City Centres

How can strug­gling city centre loca­tions regain value and marketability?

Follow­ing solu­tions for asset class­es such as offices, hotels and data centres, this time in the Valdivia News­room we present approach­es to counter the decline in visi­tor numbers and loss of value in city centre commer­cial prop­er­ty. Owners and devel­op­ers will gener­al­ly not be able to tack­le this chal­lenge in isola­tion; joint action with local author­i­ties and asso­ci­a­tions is neces­sary. Never­the­less, indi­vid­ual prop­er­ties can make a differ­ence through inno­v­a­tive usage concepts – and perhaps act as a beacon for their surroundings.

Struc­tur­al chal­lenges for central commer­cial locations

Many city centres present a rather bleak picture to visi­tors, shop­pers and resi­dents, accord­ing to a recent study¹by BBE Handels­ber­atung: “Desert­ed pedes­tri­an zones, rising vacan­cy rates and falling visi­tor numbers are visi­ble symp­toms of struc­tur­al change – partic­u­lar­ly in small and medi­um-sized towns as well as on the outskirts of major cities – that extends far beyond the retail sector.” The caus­es are also well documented:

• Online retail now accounts for a signif­i­cant share of retail turnover. In 2024, this totalled 13.4%, but in some sectors it reached as high as 40%² – sectors such as fash­ion, acces­sories or consumer elec­tron­ics, which previ­ous­ly tend­ed to be locat­ed in central city centres.
• At the same time, consumer behav­iour has changed. Shop­ping remains the prima­ry reason for visit­ing, yet many people wish to combine this with leisure activ­i­ties or a visit to a restau­rant¹ .
• More and more of the remain­ing resi­dents are moving away, there­by contribut­ing to a further decline in vital­i­ty. The caus­es are not only high or rising rental costs, but also declin­ing resi­den­tial satis­fac­tion due to an increas­ing­ly absent or strained social envi­ron­ment³ .

For the owners of adja­cent prop­er­ties, these devel­op­ments mean a decline in rental income, a fall in the value of their prop­er­ties, and increas­ing diffi­cul­ties in market­ing them and find­ing exit oppor­tu­ni­ties. Look­ing at the asset class­es typi­cal of city centres, a recent Bulwienge­sa study⁴iden­ti­fies oppor­tu­ni­ties for accept­able returns only in invest­ments in office prop­er­ties, econ­o­my and mid-range hotels, as well as micro-living and senior apartments.

A model for transformation 

A compre­hen­sive study by TU Darm­stadt⁵ exam­ines poten­tial solu­tions in detail. Using the exam­ple of Darm­stadt city centre, it exam­ines in detail how urban plan­ners, neigh­bour­hood and prop­er­ty devel­op­ers can increase the util­i­ty and attrac­tive­ness of such loca­tions, there­by also improv­ing their marketabil­i­ty. In doing so, the study focus­es specif­i­cal­ly on prop­er­ty owners as key play­ers in a trans­for­ma­tion, as revi­tal­i­sa­tion requires not only the will to make a fresh start, but also fresh capital.

The study comple­ments the over­all picture with a detailed analy­sis. For instance, move­ment data show a measur­able decline in visi­tors with purchas­ing power. At the same time, the length of stay is decreas­ing. In surveys, consump­tion, ameni­ties, public space and qual­i­ty of stay are rated as having declined signif­i­cant­ly, whilst the cityscape is deemed visu­al­ly unat­trac­tive. The authors iden­ti­fy five areas of action which, when combined, can bring about a reversal:

• Multi­func­tion­al­i­ty as the key
  A return to retail alone is not enough; e‑commerce has perma­nent­ly altered demand too much for that. The solu­tion lies in a mix of uses compris­ing hous­ing, leisure, social meet­ing places, work, as well as green spaces and public open spaces. Hous­ing and work in partic­u­lar revi­talise the city centre beyond open­ing hours and sustain­ably increase attrac­tive­ness and turnover.
• Knowl­edge work as a driver of footfall
  Office and co-work­ing uses are key drivers. Knowl­edge work­ers also make above-aver­age use of restau­rants, shops and cultur­al venues, and as many as 42% of those surveyed can also envis­age work­ing in the city centre.
• Resi­den­tial living as the basis for last­ing revitalisation
  Living in the city centre ensures foot­fall beyond busi­ness hours and boosts ameni­ties in the evenings and at week­ends. 20% of respon­dents would like to live in the city centre, but high rents and poor qual­i­ty of living act as a deterrent.
• Expe­ri­ences, leisure and dining
  Sports, leisure and cultur­al facil­i­ties increase the length of stay and attrac­tive­ness. Many visi­tors crit­i­cise the lack of oppor­tu­ni­ties for chil­dren to move around and play. Addi­tion­al sports areas, multi-purpose spaces and, in partic­u­lar, high­er-qual­i­ty dining are seen as key drivers of satis­fac­tion and emotion­al anchors for a city centre.
• Rethink­ing shopping
  Shop­ping remains rele­vant, but is losing its lead­ing role. High-qual­i­ty prod­uct ranges, reli­able local ameni­ties and creative pop-up concepts are seen as attrac­tive. For prop­er­ty owners, this creates the strate­gic task of specif­i­cal­ly consid­er­ing concepts during re-letting that strength­en both the prop­er­ty and its surroundings.

The next steps

Prop­er­ty and space in city centres improve their prospects of success when adapt­ed to a new, sustain­able profile of demand and use. Howev­er, this trans­for­ma­tion can only succeed through the collab­o­ra­tion of all stake­hold­ers. Prop­er­ty owners, trade, tourism and hospi­tal­i­ty asso­ci­a­tions, and local author­i­ties should act in a coor­di­nat­ed manner, joint­ly devel­op public spaces and active­ly promote the regen­er­a­tion of the prop­er­ty sector. The afore­men­tioned paper by BBE Handels­ber­atung¹ supple­ments the recom­men­da­tions in sever­al respects:

• Well-found­ed, data-driven loca­tion analy­ses are neces­sary to lay the foun­da­tions for the trans­for­ma­tion and suit­able mixed-use concepts. Social, envi­ron­men­tal and mobil­i­ty aspects must also be taken into account.
• The retail sector in partic­u­lar needs advice and support to adapt to chang­ing market condi­tions and customer pref­er­ences – for exam­ple, through omnichan­nel strate­gies and expe­ri­en­tial formats. 

From the vibrant to the smart city

Digi­tal­i­sa­tion will also play a role in the revi­tal­i­sa­tion of city centres, accord­ing to a white paper by real estate consul­tan­cy Drees & Sommer⁶ . The cities of the future, the paper argues, are ‘smart’ and connect­ed: ‘The smart city of the future will, as stan­dard, take into account vari­ous areas of urban plan­ning and devel­op­ment, using smart data on every­thing from mobil­i­ty, health­care, indus­try and ener­gy to migra­tion, envi­ron­men­tal protec­tion and climate change. An inte­grat­ed, multi­dis­ci­pli­nary and user-orient­ed approach, in which people are at the fore­front, will be essential.’

Concrete start­ing points on the path to becom­ing a smart city include data-driven systems, such as intel­li­gent traf­fic manage­ment or a city app that connects retail, hospi­tal­i­ty, events and munic­i­pal services. Retail in partic­u­lar can meet customers’ needs through digi­tal services such as up-to-date infor­ma­tion on stock avail­abil­i­ty or flex­i­ble collec­tion options. Accord­ing to the BBE paper¹, this requires close “coop­er­a­tion between the city admin­is­tra­tion, the retail sector, tech­nol­o­gy providers and digi­tal plat­form oper­a­tors”, as well as the consis­tent expan­sion of digi­tal infrastructure.

Conclu­sion

The future of inner-city commer­cial prop­er­ty depends less on indi­vid­ual types of use or asset class­es than on the qual­i­ty of their inter­ac­tion with­in a resilient, multi­func­tion­al envi­ron­ment. Mixed-use devel­op­ment, stable foot­fall and qual­i­ty of stay are becom­ing key factors influ­enc­ing rental income, suit­abil­i­ty for third-party use and exit options.For owners, devel­op­ers and investors, this means consis­tent­ly align­ing port­fo­lios and projects with a mixed-use profile and view­ing their prop­er­ties as part of the urban fabric. The neces­sary trans­for­ma­tion is based on a will­ing­ness to invest, robust data and coop­er­a­tion with all stake­hold­ers involved. The aim is to strate­gi­cal­ly devel­op usage concepts, take digi­tal infra­struc­ture into account and real­is­ti­cal­ly assess long-term demand trends . This not only makes it easi­er to market indi­vid­ual prop­er­ties. At the same time, it strength­ens the resilience of the entire loca­tion, with owners becom­ing co-creators of a live­able and econom­i­cal­ly robust city centre.

Sources

• “The Future of City Centres – How Struc­tur­al Change is Redefin­ing Urban Space”, BBE Retail Consul­tan­cy, July 2025
• “HDE Online Moni­tor”, German Retail Asso­ci­a­tion – HDE e. V., 2025
• Andreas Pfnür, Fabi­an Lachen­may­er, Yassien Bach­tal: “City, Coun­try, Suburb: How the Reassess­ment of Urban­i­ty is Chang­ing Hous­ing – An Empir­i­cal Study of Private House­holds”, Tech­ni­cal Univer­si­ty of Darm­stadt, Work­ing Papers on Real Estate Research and Prac­tice, Volume No. 54, Janu­ary 2024
• “The 5% Study 2025 – Where Invest­ment is Still Worth­while”, Bulwienge­sa, Septem­ber 2025
• Andreas Pfnür, Maria Günther, Jonas Rau: “Real Estate Trans­for­ma­tion of Darm­stadt City Centre”, Tech­ni­cal Univer­si­ty of Darm­stadt, Work­ing Papers on Real Estate Research and Prac­tice, Volume No. 59, July 2025
• “10 Theses on the Future of the Construc­tion and Real Estate Indus­try”, Drees & Sommer Inno­va­tion Centre, 2023

(Image source: istockphotos.com)