An investor from Luxembourg is putting money into a project in the Bavarian city of Hof, and not just any project, but a shopping center, though only few are now being built in Germany. That was worth taking a closer look at.
Let’s be honest: Who knows Hof? Until this year, I for one had never been to the city in Upper Franconia, which lies near the edge of Bavaria, right next to the border to the Czech Republic. But in Luxembourg people know about Hof. Because the Luxembourg Investment Group (LIG), which is domiciled in the Grand Duchy, is investing in the new shopping center “Hof Galerie”.
Somewhat unusual? Not for Vladimir Volkov, CEO of LIG, who says: “The arguments in favor of our investment in Hof are that there has never been a modern shopping center there, that the city is in a very central location in the region and that the site in the city center is an optimal one for commerce.” The last of these arguments is evident from the name of the now demolished, monolithic concrete predecessor structure, “Zentralkauf”, which dated from the seventies. And in part because it also accommodates the local bus station.
Focus on towns and small cities
The investment in Hof is certainly in tune with the trend, as towns and small cities are moving more and more into the focus of investors. There are also shopping centers being developed in Husum and Singen. And if one reads the market reports, commercial properties are still – despite all warnings of doom – very popular with investors. But it all depends on the right size and the appropriate concept. With about 20,000 m² of rental area, the new ‘Galerie’ is well suited to Hof. What is more, it is being built on an established commercial site in the city’s center. In discussing the concept, Vladimir Volkov mentions the keyword “local supply”. The grocery chain Edeka has already signed a lease for an area of 2,325 m². With regard to this anchor tenant, Harald Fichtner, Hof’s Lord Mayor, says: “Having Edeka in the Hof Galerie will significantly improve the local supply situation in the city center and the abutting train station quarter.”
Retaining purchasing power and stimulating urban development
This, in turn, fits into the “Hofer Kernstadt 2020” concept, a plan for modernizing the city’s center, because the new shopping center will not only eliminate an extensive, decade-old vacancy problem, but also stimulate new urban development. And in the best case scenario, it will also keep purchasing power in the city. Vladimir Volkov, CEO of the Luxembourg Investment Group, says: “The impression following the initial talks with the City of Hof was that we were very welcome with our investment and that we had come at the right point in time. This was confirmed later by the good cooperation, particularly with the subsidies.” Obviously, what is now happening there, far from the big city, can be described as a win-win situation.
I was initially skeptical when I heard that LIG was investing in Germany only in towns and small cities. And then, of all places, in Hof. Who knows Hof? In future, probably a number of retailers more than at present. At least “Hof Galerie”.