After all: there is a construction pit in Rheine. For many residents, this is progress. For 13 years there was only a ruin on the site, a gray concrete block on over four hectares, in the middle of the Münsterland community’s city center. Trade used to flourish here in the 80s and 90s. The Staelsche Hof, the name of the square in front of the building, was pulsating – there were restaurants, ice cream parlors and clothing stores. But after first Karstadt and later, in 2009, Hertie left the building, the Staelsche Hof also died. First the passers-by disappeared, then the shops. And it wasn’t until 2022, 13 years later, that the demolition took place, with the aim of building a hotel and residential building on this site at some point.

All over Germany, municipalities are struggling with empty Karstadt, Galeria Kaufhof or Hertie buildings in their city centers. Why? Some see online retail as guilty of having made the department store principle obsolete. But the matter is probably even simpler. Actually, the only thing that has changed is the way we shop. It is not the department store principle itself that is dead; Galeria Karstadt Kaufhof (GKK) has not been able to adapt to change. And after the third bankruptcy of GKK and the bankruptcy of René Benko’s parent company Signa, the future of the remaining locations is more uncertain than ever.

Many mayors are therefore once again in turmoil, fearing for the future of their inner cities and calling for new concepts. How many and, above all, which branches could be closed is still unclear. But experts like Johannes Berentzen from BBE Handelsberatung are certain: “In the long term, a large number of locations will be closed. Starting with small and medium-sized cities.”

Berentzen sees the problems at GKK as being of his own making: “You certainly can’t accuse René Benko of having no fundamental interest in trading,” said the expert. “For example, he had great luxury concepts developed. But when I look at the GKK branches, I get the impression that he was primarily interested in the real estate.”

Basically, says Berentzen, the department store principle is not dead at all. This can be seen about 40 kilometers east of Rheine, in Osnabrück. The L is flourishing there

In the Galeria and Karstadt branches, however, little has changed over the past 30 years. There are still lots of sweets on suitcases and underwear. And further up, fashion brands with timeless clothing compete for the last remaining customers in the huge space. “GKK has massively reduced its costs under René Benko. You can see that in the branches,” says Berentzen. “This leverage is almost exhausted. At the same time, the earnings side has hardly recovered since Corona. Things are looking much better for the competition.” Although the entire market for medium-priced products has suffered recently, GKK has suffered particularly badly.

Real estate expert Lars Jähnichen from IPH Handelsimmobilien also sees a problem in GKK properties. “Trading areas are generally becoming smaller horizontally and vertically, the locations are becoming shorter and retailers are occupying fewer floors. This is not yet apparent at GKK.” In addition, the situation is often no longer correct. “The GKK branches are mostly located in medium-sized cities. Today, these medium-sized centers are more likely to provide qualified basic supplies and significantly less to fashion purchases,” says Jähnichen. To do this, residents would travel to big cities or to huge shopping centers in the country – if they don’t order online right away.

Jähnichen also sees an end to most GKK branches sooner or later – not necessarily in the top locations such as Hamburg, Frankfurt or Munich, but in medium-sized cities. Vacancies are a short-term problem for cities. But such a stalemate as in Rheine is likely to occur only rarely, according to the expert. Jähnichen and his team have determined that of the 52 GKK branches that were recently closed, 30 percent were demolished and 50 percent underwent massive structural changes. This is due to the outdated building structure and the mixed use that follows the department store, says Jähnichen.

The classic mixed use would be offices, hotels or living space on the upper floors, with retail on the ground floor. However, this entails great risks for investors, as the buildings are usually in poor condition. “The system technology in many branches is more for the German Historical Museum than for everyday use,” says Jähnichen. That’s why fewer and fewer regulated corporations come into question.

Basically, says Jähnichen, there is still sufficient interest in the properties, especially from individual family offices from the respective cities or international investors.

But hardly anyone seriously expects to be able to rent the entire building to a tenant, says the expert. That’s why municipalities are also asked to enable accelerated approval processes for new concepts. “When a department store closes, speed is required. Especially when it comes to approving pop-up concepts, we should have simplified, standardized procedures in place so that the areas can be used again quickly while preparations for permanent reuse are underway.”

This article first appeared on Capital, which, like stern, is part of RTL Deutschland