Credit: nicotitto | unsplashJames McEvoy: Making groceries (even) greener
GFORM’s CEO reveals how to future-proof assets amid evolving ESG dynamics within the food retail sector in an exclusive interview
April 30, 2024Real Estate
Written by Helen Richards
The e-commerce boom and COVID-19 pandemic have been unforgiving on the retail real estate sector in recent years. Food retail, on the other hand, enjoys inherent resilience due to the inescapable demand for food. However, this does not absolve the sector’s need to address growing ESG regulatory challenges and changes in consumer habits.
GFORM, subsidiary of the Greenman Group, is one of Germany‘s leading market-specialised tenant and commercial real estate managers specialised in food-retail properties across Germany.
Launched in 2022, and already managing assets on behalf of numerous platforms and funds, including the Greenman OPEN fund - Europe’s largest Article 9 real estate fund - GFORM has the ambitious goal of becoming the largest operator in supermarkets and retail parks in the DACH region, with currently just over €1.22 billion of assets under management.
Ahead of his participation at Deutsche GRI 2024 on May 15-16 in Frankfurt, GFORM’s CEO, James McEvoy, sat down with the GRI Club content team to discuss their strategies within the dynamic food retail sector amid the ever-evolving context of ESG.
How does innovation play a role in GFORM’s strategy?
“Innovation stands at the core of GFORM's strategic framework, serving as a catalyst for sustainable progress in food retail real estate management.
With a portfolio spanning 90 assets nationwide, drawing substantial customer footfall with c. 280,000 German consumers daily, we recognise the importance to continuously advance our strategies to meet evolving market demands and enhance the customer experience.
This entails a deep dive into the catchment areas surrounding our retailers, enabling us to understand the customer journey, retailer‘s needs, and ultimately align our interests together with key anchor tenants to future proof the assets for our investors.
As a subsidiary of the Greenman Group, we leverage a network of sister companies comprising over 155 employees across six countries. These experts bring expertise in technology, hydroponics, and renewable energies, supporting GFORM in making data-driven strategic decisions, conducting R&D, and promoting environmental and social responsibilities.
A recently launched pilot project at one of our centres in Berlin focuses on collecting data from energy metres, as well as data from EV chargers and PV panels installed by our sister company, Greenman Energy, at the retail centre.
Additionally, we gather data on footfall to understand customer journeys and optimise centre capacity and usage. By rolling out this project to many other locations, this initiative enables us to provide tenants with real-time consumption data, fostering informed decision-making and enhancing operational efficiency.
Another initiative, Growing Further, was launched in 2023 as an innovation award competition aimed at identifying and supporting early-stage businesses in the food and retail industry across Europe.
Recognising that commercial grocery lease contracts often extend over 15-20 years, we understand the potential for significant technological changes during this time. Through discussions with our tenants, we realised that the role of a landlord will evolve from passive to more operational.
The awards serve as a platform for GFORM to gain insights and to be part of the discussion of industry developments and technological advancements that will impact the buildings we manage, our tenants' activities, and the entire supply chain.
What is GFORM’s ESG framework for the properties under management?
Our ESG framework is an important and binding factor in creating long-term value for not only our investors, but also for society. Our aim is to align the assets we manage with the EU’s climate goals under the European Green Deal, which extends to our efforts in achieving net-zero emissions emitted by our portfolio by 2050.
We have several new sustainability projects in the pipeline for this year, collaborating closely with German developers and leading grocers in Germany. These collaborations extend beyond our own sustainability objectives to support our tenants in their journey towards a net-zero future. Through a program led by GFORM, we are empowering our tenants with initiatives aimed at achieving their Scope 3 goals.
Our commitment to sustainability is evidenced by the presence of 14 DGNB-gold certified assets in our portfolio, along with assets aligned with EU taxonomy standards. Additionally, our partnership with our sister companies yes&, organising environmental projects and educational programs at the centres, and Greenman Energy, plays a pivotal role in our net-zero pathway, as we can provide our tenants with access to social initiatives and green energy solutions.
Where is the ESG pressure predominantly coming from within the real estate market?
ESG pressure stems from a combination of factors. Occupiers are increasingly prioritising sustainability in their leasing decisions, regulatory bodies are imposing stricter environmental regulations and standards, and lenders are also integrating ESG criteria into their lending decisions.
What we also notice is that investors are increasingly seeking ESG-aligned investments, putting pressure on companies to enhance their sustainability performance to attract capital.
So, I would say it's really a mix of market demand, regulatory requirements, and financial considerations that are pushing companies to integrate sustainability into their business strategies.
Are ESG regulations in Germany hindering or supporting the real estate market?
ESG regulations in Germany are primarily supportive of the real estate market, although with some challenges for many stakeholders.
Some market participants claim that the government's framework lacks clarity in defining what exactly constitutes “sustainable”, making it challenging for companies to measure their environmental impact effectively. As a result, many companies struggle to accurately assess and report their emissions and other ESG metrics.
Furthermore, some European, and especially German, governmental decisions can occasionally impact large-scale real estate investments, with potential revisions or withdrawals of once-guaranteed subsidies for ESG initiatives, leaving investors with uncertain planning security.
However, despite these challenges, ESG regulations incentivise sustainable investments and practices, contributing to the long-term resilience and attractiveness of the real estate market.
While there may be hurdles in compliance and measurement, properties with a focus on ESG considerations are gaining traction among investors. Particularly, new-build centres and properties with stringent ESG requirements, which align with investors' priorities, are expected to sustain high demand throughout the next years.
How do you envision the future of food retail 30 years from now?
I see a landscape shaped by technological advancements, evolving consumer preferences, and sustainable practices. Grocery retail will likely undergo significant transformation, with innovations in automation, personalised shopping experiences, and sustainable supply chains driving the industry forward.
Despite some challenges faced last year with a food inflation rate of 12.8%, which led the consumers to tighten their belts, there are positive indicators pointing towards recovery. Economic resurgence and wage increases in many countries are contributing to this positive trajectory.
In Germany, the retail real estate investment market has shown promising growth this year, with the grocery-anchored segment emerging as the second best-performing asset class according to CBRE data (April 2024). With a 15% growth to €1.7 billion compared to the previous year, this segment is leading the way in transactions.
Looking ahead, we remain optimistic about the future of food retail real estate. It has consistently demonstrated its resilience and importance as an essential asset class and investor preference in Germany. We anticipate this momentum to continue, with a growing number of transactions and promising deals for GFORM already in the pipeline.”
Join James McEvoy at the upcoming Deutsche GRI 2024, where he will be co-chairing the ESG & Innovation discussion session.
The e-commerce boom and COVID-19 pandemic have been unforgiving on the retail real estate sector in recent years. Food retail, on the other hand, enjoys inherent resilience due to the inescapable demand for food. However, this does not absolve the sector’s need to address growing ESG regulatory challenges and changes in consumer habits.
GFORM, subsidiary of the Greenman Group, is one of Germany‘s leading market-specialised tenant and commercial real estate managers specialised in food-retail properties across Germany.
Launched in 2022, and already managing assets on behalf of numerous platforms and funds, including the Greenman OPEN fund - Europe’s largest Article 9 real estate fund - GFORM has the ambitious goal of becoming the largest operator in supermarkets and retail parks in the DACH region, with currently just over €1.22 billion of assets under management.
Ahead of his participation at Deutsche GRI 2024 on May 15-16 in Frankfurt, GFORM’s CEO, James McEvoy, sat down with the GRI Club content team to discuss their strategies within the dynamic food retail sector amid the ever-evolving context of ESG.
How does innovation play a role in GFORM’s strategy?
“Innovation stands at the core of GFORM's strategic framework, serving as a catalyst for sustainable progress in food retail real estate management.
With a portfolio spanning 90 assets nationwide, drawing substantial customer footfall with c. 280,000 German consumers daily, we recognise the importance to continuously advance our strategies to meet evolving market demands and enhance the customer experience.
This entails a deep dive into the catchment areas surrounding our retailers, enabling us to understand the customer journey, retailer‘s needs, and ultimately align our interests together with key anchor tenants to future proof the assets for our investors.
As a subsidiary of the Greenman Group, we leverage a network of sister companies comprising over 155 employees across six countries. These experts bring expertise in technology, hydroponics, and renewable energies, supporting GFORM in making data-driven strategic decisions, conducting R&D, and promoting environmental and social responsibilities.
A recently launched pilot project at one of our centres in Berlin focuses on collecting data from energy metres, as well as data from EV chargers and PV panels installed by our sister company, Greenman Energy, at the retail centre.
Additionally, we gather data on footfall to understand customer journeys and optimise centre capacity and usage. By rolling out this project to many other locations, this initiative enables us to provide tenants with real-time consumption data, fostering informed decision-making and enhancing operational efficiency.
Another initiative, Growing Further, was launched in 2023 as an innovation award competition aimed at identifying and supporting early-stage businesses in the food and retail industry across Europe.
Recognising that commercial grocery lease contracts often extend over 15-20 years, we understand the potential for significant technological changes during this time. Through discussions with our tenants, we realised that the role of a landlord will evolve from passive to more operational.
The awards serve as a platform for GFORM to gain insights and to be part of the discussion of industry developments and technological advancements that will impact the buildings we manage, our tenants' activities, and the entire supply chain.
GFORM’s CEO, James McEvoy, will be co-chairing the ESG & Innovation discussion session at Deutsche GRI 2024. Credit: GRI Club
What is GFORM’s ESG framework for the properties under management?
Our ESG framework is an important and binding factor in creating long-term value for not only our investors, but also for society. Our aim is to align the assets we manage with the EU’s climate goals under the European Green Deal, which extends to our efforts in achieving net-zero emissions emitted by our portfolio by 2050.
We have several new sustainability projects in the pipeline for this year, collaborating closely with German developers and leading grocers in Germany. These collaborations extend beyond our own sustainability objectives to support our tenants in their journey towards a net-zero future. Through a program led by GFORM, we are empowering our tenants with initiatives aimed at achieving their Scope 3 goals.
Our commitment to sustainability is evidenced by the presence of 14 DGNB-gold certified assets in our portfolio, along with assets aligned with EU taxonomy standards. Additionally, our partnership with our sister companies yes&, organising environmental projects and educational programs at the centres, and Greenman Energy, plays a pivotal role in our net-zero pathway, as we can provide our tenants with access to social initiatives and green energy solutions.
Where is the ESG pressure predominantly coming from within the real estate market?
ESG pressure stems from a combination of factors. Occupiers are increasingly prioritising sustainability in their leasing decisions, regulatory bodies are imposing stricter environmental regulations and standards, and lenders are also integrating ESG criteria into their lending decisions.
What we also notice is that investors are increasingly seeking ESG-aligned investments, putting pressure on companies to enhance their sustainability performance to attract capital.
So, I would say it's really a mix of market demand, regulatory requirements, and financial considerations that are pushing companies to integrate sustainability into their business strategies.
Experts in technology, hydroponics, and renewable energies support GFORM in promoting sustainable practices. Credit: Potager Farm
Are ESG regulations in Germany hindering or supporting the real estate market?
ESG regulations in Germany are primarily supportive of the real estate market, although with some challenges for many stakeholders.
Some market participants claim that the government's framework lacks clarity in defining what exactly constitutes “sustainable”, making it challenging for companies to measure their environmental impact effectively. As a result, many companies struggle to accurately assess and report their emissions and other ESG metrics.
Furthermore, some European, and especially German, governmental decisions can occasionally impact large-scale real estate investments, with potential revisions or withdrawals of once-guaranteed subsidies for ESG initiatives, leaving investors with uncertain planning security.
However, despite these challenges, ESG regulations incentivise sustainable investments and practices, contributing to the long-term resilience and attractiveness of the real estate market.
While there may be hurdles in compliance and measurement, properties with a focus on ESG considerations are gaining traction among investors. Particularly, new-build centres and properties with stringent ESG requirements, which align with investors' priorities, are expected to sustain high demand throughout the next years.
How do you envision the future of food retail 30 years from now?
I see a landscape shaped by technological advancements, evolving consumer preferences, and sustainable practices. Grocery retail will likely undergo significant transformation, with innovations in automation, personalised shopping experiences, and sustainable supply chains driving the industry forward.
Despite some challenges faced last year with a food inflation rate of 12.8%, which led the consumers to tighten their belts, there are positive indicators pointing towards recovery. Economic resurgence and wage increases in many countries are contributing to this positive trajectory.
In Germany, the retail real estate investment market has shown promising growth this year, with the grocery-anchored segment emerging as the second best-performing asset class according to CBRE data (April 2024). With a 15% growth to €1.7 billion compared to the previous year, this segment is leading the way in transactions.
Looking ahead, we remain optimistic about the future of food retail real estate. It has consistently demonstrated its resilience and importance as an essential asset class and investor preference in Germany. We anticipate this momentum to continue, with a growing number of transactions and promising deals for GFORM already in the pipeline.”
Join James McEvoy at the upcoming Deutsche GRI 2024, where he will be co-chairing the ESG & Innovation discussion session.
