1. The beginnings of ECE

To simply build away and focus on the company's real core business – that's what Werner Otto would have dearly liked to do during the rapid growth of the Otto Versand mail order company in the 1950s and early 1960s. But things are never that easy. Just about every construction contract awarded by the company ran into serious problems – and so Werner Otto made a virtue of necessity and founded his own property company in Hamburg in 1965. Initially called "Werner Otto Vermögensverwaltung G.m.b.H.", the company was subsequently renamed "Werner Otto Grundstücks-Entwicklung G.m.b.H." and, finally, "KG Einkaufs-Center Entwicklung mbH" – ECE for short. As the company was involved not only in the shopping center sector but increasingly also in the development of other commercial properties like office buildings and goods dispatch centres, the name was changed once again in 1979 to "ECE Projektmanagement". The abbreviation "ECE" has long since become an established trademark in the industry.

Community markets

The company started its activities in 1965 with good ideas and a great deal of courage and enthusiasm. Back then, all Germany had were big market-type stores – flat, plain buildings that were mostly located on out-of-town greenfield sites with huge parking lots. The Werner Otto Vermögensverwaltung company also operated three of these large-scale markets.

The general idea was to enable consumers to buy everything they needed under one roof. But this concept had one major shortcoming. The shops did not display individual names and were grouped together like departments in a department store without dividing walls. All the retailers ran joint advertising campaigns and operated under a single name. This meant that the more active retailers ended up doing some of the work for their “less committed” colleagues. As a result, it became more and more difficult to attract first-rate businesses to this retailing environment. Truly committed retailers want to achieve a level of performance and expertise that sets them apart from the rest. And Werner Otto was therefore quick to realise that these large-scale community markets had no future.

Shopping centers based on the North American model

Otto had seen the first shopping centers in the USA and Canada: "What impressed me was the customer-friendly variety of shops in these centers. I wanted to find out whether we could implement the same concept in Germany", says Otto. But he did not simply copy the US models, as he knew that the wholesale transfer of US magnitudes and mentalities to Germany would not work. From the outset, the basic preconditions for success were a prime location, a good team and the right attitude towards the customer. More precisely, every customer should be able to find more or less every product he or she wants to buy at least once a year in two different shops or stores (to ensure competition). The option of shopping in a friendly, covered mall in all weathers held a wide range of new and added attractions. And the concept worked because shopping was suddenly transformed into an “experience” – as opposed to merely being about satisfying daily needs. In other words, people enjoyed shopping.

The first ECE shopping center

The first ECE shopping center – the Franken-Zentrum – was opened on October 23, 1969 in Nuremberg-Langwasser. All retailers had their own shop entrance, their own shop-window and their own distinctive name. This meant that each retailer had the chance to set himself apart from the others; it made them independent and enabled them to perform at their own levels. This proved to be a real incentive. Retailers who failed to “deliver the goods” paid the price in terms of their reputation, but this did not directly reflect on the overall image of the shopping center. Even back then, Otto attached major importance to ensuring a balanced branch mix that made room for both national and regional retailers. Following extension and optimisation, the Franken-Center is still one of the most successful centers anywhere in Germany.

The first ECE project in Nuremberg was followed by the Alstertal-Einkaufszentrum in Hamburg-Poppenbüttel (1970), the Hessen-Center in Frankfurt-Bergen-Enkheim (1971), the Rhein-Center in Cologne-Weiden (1972), the Roland-Center in Bremen-Huchting (1972), the Leo-Center in Leonberg (1973) and the Allee-Center in Essen-Altenessen (1973). These centers have also been extended and modernised on an ongoing basis in response to ever-increasing consumer demands, and all the centers are still managed by ECE.

2. Consolidation and oil crisis

Halt to expansion

Werner Otto’s entrepreneurial know-how came into its own at the beginning of the seventies. Before many others had even recognised the signs of the 1974/1975 oil crisis, Otto ordered a general halt to expansion in 1973. ECE no longer purchased new properties, and negotiations with civic planners were terminated. In this way – and at exactly the right time – Otto ensured that the company did not enter a crisis of unknown duration with a portfolio of undeveloped sites and half-completed projects. A further factor was that the politicians and the authorities had begun to discuss options for building shopping centers on greenfield sites. It often appeared to be of little relevance whether people were actually talking about these greenfield sites or about integrated locations in city districts. One thing everyone was certainly talking about was city centres turning into “urban wastelands”, and this made the search for suitable properties increasingly difficult.

Consolidation

Solid foundations were laid for the future development of the company during the two-year consolidation phase that began in autumn 1973. Following the sometimes turbulent initial period, the architects now had the time to painstakingly plan conversion work and to complete the various drawings and plans, while the leasing specialists were given the opportunity to make the necessary adjustments to the tenant structures.
While the primary goal during the development phase was to create a large number of centers as quickly as possible, the focus shifted in the years that followed. In a market characterised by increasing competition, the main aim was to secure the activities of the existing centers by optimising them and ensuring profitable operation. This task was entrusted to Dr. Heinrich Kraft, who had been with the Otto Group's Cura Vermögensverwaltung asset management company since 1972. He totally reorganised the team at ECE and headed the company from 1974 to 2000. ECE was divided into three divisions – Center Management, Leasing and Administration – and Dr. Kraft built up a crisis-proven, committed and enthusiastic team whose motto could (and still can) be summed up as: “ECE has never had a flop, and that’s the way we want it to stay”.

The shopping centers that followed the Franken-Center became better and better in terms of design and more cost-efficient in terms of construction. Before long, the close cooperation with general contractors and the optimised planning routines of the ECE architects had reduced construction time to less than a year. And clients knew they could rely on the cost quotations and deadlines submitted by ECE. This dependability was anything but the norm in Germany, and it is still one of the central factors behind the success of ECE.

3. New operating fields

Office buildings

By the mid-70s, the process of consolidation was complete and most of the existing shopping centers had been modernised. It was now time to return to a policy of expansion. Increasingly complex planning approval procedures, factors relating to property ownership and political obstacles meant that it was still difficult to develop new, large-scale shopping centers. As a result, the company decided to diversify into new fields. One of the most important factors was that ECE was able to make the best possible use of its existing know-how and expertise. The wealth of experience in the construction and management of shopping centers formed an excellent basis for ECE activities in the sector of office buildings.

Following an in-depth review of the office market, the company chose Frankfurt am Main as a location for these activities. In the wake of a massive construction boom, several office buildings in Frankfurt were empty; in other cases, construction work on projects had been discontinued. ECE saw this as an opportunity to acquire real estate cheaply by adopting an anti-cyclical strategy in the crisis. The company believed that the forty one-floor City-Haus high-rise on the Platz der Republik square represented a particularly good buy. In the end, ECE did not actually buy the building, as DG Bank – the main creditor – decided to acquire it. However, DG Bank (now DZ Bank) commissioned ECE to take care of the interior development, leasing and administration of the gross floor area of 52,000 m2. During the work on this project, ECE was also able to gain valuable insights into the office market in Frankfurt and to hone its skills in the areas of general planning and project control.

The successful leasing of the City-Haus high-rise allowed ECE to rapidly gain a foothold in a new segment of the market. In 1979, the company showed an interest in the nearby FBC building on the Mainzer Landstrasse thoroughfare. This building had been left in a half-completed state during the oil crisis, and the substantial construction cost and leasing risk had scared off potential buyers. ECE acquired the building and completed it ready for leasing. After succeeding in attracting a number of high-profile tenants and numerous well-known banks, industrial companies and service providers, ECE turned the complex into one of the top addresses in Frankfurt’s banking district.

In 1981, ECE took the ambitious decision to develop its own office high-rise, the “Bürohaus an der alten Oper”. This building is at the heart of the banking district in the centre of Frankfurt. This was also the first time that ECE was responsible for the full range of services for the investor (in this case DG Bank) – from project development and general planning to leasing and management. The tenants were able to move into the exclusive twenty one-storey office complex just three years after building work began.

Parallel to its Frankfurt-based projects, ECE also acted as the general planner for a further large-scale development, the new Otto Versand administration building in Hamburg. The project was completed in 1982. Numerous other large-scale office construction projects have since been built, including the headquarters of the Mannheimer Versicherungen insurance company in Mannheim (in cooperation with star architect Helmut Jahn, 1991), the German-Japanese Centre in Hamburg (1995), the Atrium Friedrichstraße in Berlin (1997) and the headquarters of Philips Germany in Hamburg (2006).
ECE gained a wealth of experience and know-how during the development and leasing of these large-scale office complexes, and it was soon able to put this expertise to excellent use with other types of buildings like transport projects, industrial buildings or healthcare properties.

4. Revitalisation of the inner cities

Following the expansion of its activities into different fields (management on behalf of third parties as well as for other investors), the company again reviewed the options for new commitments in the retail sector at the beginning of the 80s. Encouraged by the declining importance of the traditional department store, ECE decided to follow up its development of district centers with projects for centrally situated inner city centers. The aim was to strengthen the city centre, to retain its charm, to counteract migration to rival locations, and to bring purchasing power back to the middle of the city. Projects like the Löhr-Center in Koblenz (1984), the Allee-Center in Remscheid (1986), the Saarpark-Center in Neunkirchen (1989) or the City-Arkaden in Wuppertal (2001) still bear witness to the success of ECE in mastering these new challenges. At the same time, the company also became a pioneer in the field – according to surveys conducted by the EHI Retail Institute, only one in three shopping centers built between 1964 and 1995 are located in the inner cities.
But ECE's pioneering spirit didn't stop there, and the company went on to develop a totally new center concept with its City-Point complexes in Braunschweig (1988), Bochum (1989), Nuremberg (1999) and Kassel (2002). The idea was to transform former department stores into state-of-the-art shopping locations. The common feature of these attractive City-Point projects is a light-flooded atrium that catches the eye on all sales levels, as well as transparent lifts and generously dimensioned escalators.

The concept of "vibrant marketplaces"

The development of city centre shopping projects by ECE is geared towards the concept of "vibrant marketplaces". The experience gained by ECE shows that attractive shopping centers characterised by high-quality architecture and management and a varied branch mix always generate beneficial stimuli for the inner cities. These projects make the city centres more attractive and help to win back lost purchasing power. They strengthen the position of the cities in the growing competition between locations, a phenomenon that is increasingly overshadowing the competition between and within retail branches.

Be it in Schwerin, Magdeburg, Bautzen, Wetzlar or Bayreuth – ECE shopping centers are bustling marketplaces that breathe new life into the city centre retail trade. It is not seldom the case that a retailer will suddenly “come to life” as soon as ECE moves into the city, and will begin to invest in shop design, marketing and product range optimisation. The attractive branch mix creates new synergies which drive sales growth in the retail sector – both inside and outside the center. As an integral part of the inner city, ECE shopping malls also play an active role in the area of “civic marketing”. The entire city centre retail trade profits from ECE’s commitment – generally at the expense of the greenfield competition. ECE shopping centers provably boost the centrality index of the cities, and the construction and development of a new shopping complex generate powerful economic stimuli for the inner city. In short, an ECE shopping center helps to pave the way for successful urban development projects and underpins the vibrancy of the local economy.

5. The fall of the Berlin Wall

When the Berlin Wall was opened on November 9, 1989, ECE was presented with a totally new range of options and opportunities. Whereas the first developers lost no time in setting up shopping complexes on out-of-town greenfield sites, ECE once again pursued a different strategy in the eastern region of Germany: the company resisted the temptation to take the short-term route and build cut-price complexes on the outskirts that would have taken shoppers out of the city centres. Leasing specialists and center managers travelled to all the major cities to decide first-hand which locations might be suitable for new projects. During this process, they encountered a number of difficulties. first, they had to find out who actually owned the plots of land. The ownership entry “EDV” (the letters stand for “property of the people”) made for a great deal of confusion. This was a lengthy process.

On the other hand, the widespread potential for development in east Germany also opened a lot of doors for ECE. The far-reaching restructuring measures also freed up sufficient space for attractive construction projects, particularly in the city centres. ECE recognised that it was the right time to promote this process and to develop well thought-out locational concepts to step up the “reconstruction” of east Germany – concepts that could provide stimuli for both business and urban redevelopment.

In east Germany, ECE implemented the same high quality standards it applied in the rest of Germany and also stuck by its stringent criteria for the selection of locations. And, as in west Germany, the assortment and branch mix was tailored to the needs and preferences of customers in the catchment area.

The first ECE shopping center to open in eastern Germany was the Oder-Center in Schwedt on September 29, 1994. The Oder-Center has meanwhile been joined by further projects in Hoyerswerda, Dessau, Leipzig, Potsdam, Neubrandenburg, Schwerin, Magdeburg, Erfurt, Chemnitz, Bautzen, Plauen and Dresden. One special development highlighting the convergence of East and West was the completion of the DaimlerChrysler project on the Potsdamer Platz square in Berlin, and the Potsdamer Platz Arkaden shopping center opened its doors to the public on October 2, 1998. ECE was commissioned by DaimlerChrysler Immobilien (DCI) to design the retail complex together with leading architect Renzo Piano and is still responsible for leasing and center management today. The success of the Potsdamer Platz Arkaden is also reflected by international awards like the main award of the International Council of Shopping Centers (1999) and the award presented by the Urban Land Institute in 2006.

Alongside the Potsdamer Platz project, ECE played a key role in developing concepts for the retail trade in the city districts of the German capital in close cooperation with the Berlin Senate parliament – building the Allee-Center in Berlin-Hohenschönhausen (1994), followed by the Ring-Center (1995), the Linden-Center (1995) and the Gesundbrunnen-Center (1997). The latest ECE landmark project in Berlin is Eastgate, a futuristic shopping mall that opened its doors to the public in September 2005.

6. Alexander Otto

In 1994, a new employee joined ECE: it was Alexander Otto, the youngest son of the company founder. After studying in Harvard and taking his first career steps as a financial analyst and director of financial planning in New York, Alexander Otto joined ECE and was the project manager for the development of the Schlosspark-Center in Schwerin, an inner city shopping center located on the site of a former Russian army barracks.

After joining the management team at ECE, Otto moved to the Leasing division, where he was responsible for developing retail concepts as well as the leasing strategies for office and commercial premises. He was appointed Deputy Chairman of the Board of Management in October 1998 under Chairman Dr. Heinrich Kraft, who he succeeded at the helm of the company on July 1, 2000.

7. Transport interchanges and industrial buildings

Leipzig, Cologne and Hannover central railway stations

Through the redevelopment of Leipzig central station (1995-1997), ECE created a totally new kind of “shopping and experience project” in cooperation with the Deutsche Bahn AG rail company. The idea: to develop new utilisation concepts that would once again make major railway stations focal points of interest and attraction; to provide premises for shops and service outlets that would draw visitors and shoppers to the stations. The first project of this kind – the "Promenaden" in the modernised central station in Leipzig completed in 1997 – was a success from the outset. The central station in Leipzig has won a number of architectural awards and is today considered one of the world’s most handsome railway stations. Around 100,000 people visit the attractively designed service and shopping center every day.

The success of this concept resulted in further redevelopment projects at the central railway stations in Cologne (the “Colonaden”, 2000) and Hannover (the “Promenade”, 2000). ECE has also developed innovative space utilisation concepts for airports, in particular Frankfurt Airport, and is currently drawing up new sales concepts for the automotive industry and the automobile trade.

Goods distribution centres

It was necessary to build up an extensive close-knit network for the distribution of goods in order to ensure the effective supply of consumer goods in eastern Germany. This is another area in which the ECE experts gathered key know-how back in the 80s when building logistics facilities for clients like the Otto, Schwab and Heine mail order companies. The job now was to erect giant goods distribution centres for the Otto company in Haldensleben near Magdeburg and in the town of Ohrdruf in Thuringia. The planning and development work culminated in the building of Europe's biggest and most modern goods distribution centre in Haldensleben in several construction phases under the lead management of ECE. This facility is considered to be a "flagship of the logistics industry".

The industrial projects planned or built by ECE also include TV production facilities for Studio Hamburg and Studio Berlin; the company also drew up the masterplans for the Airbus plant in Hamburg, the Beiersdorf corporation in Hamburg and the new northern halls of the "koelnmesse" trade fair venue in Cologne.

8. Well-positioned on the global stage

Under the leadership of Alexander Otto, ECE has developed from a relatively small company into the European leader in the shopping center segment. The ECE portfolio meanwhile comprises 97 shopping centers throughout Europe. Under the ECE umbrella, highly motivated employees work in interdisciplinary teams in the SHOPPING, OFFICE, TRAFFIC and INDUSTRIES units.

ECE is also increasingly successful on the international stage through various subsidiaries and joint ventures. "By ensuring high-quality architecture and a systematically visitor-focused system of center management, we are also breathing new life into the city centre retail trade outside Germany", says Alexander Otto.

ECE began expanding into foreign markets back in 1996/97, starting with the Czech Republic, Hungary and Poland. The first ECE center outside Germany, the "Galeria Dominikanska" in the Polish city of Wroclaw, opened its doors in August 2001, followed a year later by the "Árkád örs vezér tere" center in the Hungarian capital of Budapest and the "Galeria Lódzka" in the Polish city of Lodz. The first center in the Czech Republic was officially opened in Brno in spring 2005, and the guests of honour at the festive opening ceremony for the "Galerie Vankova" included the former Czech President, Václav Havel.

ECE has already been operating in Turkey with great success since 2000 and fast became the leader in the country's shopping center segment. In 2006, ECE entered in to a local joint venture with GGP, the biggest shopping center REIT in the USA. Having gained wide-ranging experience as service providers, the two now want to pool their expertise in implementing their first development projects in the country – beginning with the Espark in Eskisehir.

ECE is also active in Greece: "The Mall Athens" in Athens (opened in 2005) is the country's first big shopping and leisure center. And in 2006, ECE opened the City-Arkaden in the Carinthian capital of Klagenfurt, the first ECE-developed shopping complex in Austria.

The City-Center in Doha, the capital of Qatar, offers visitors a shopping experience that could have been taken from "1001 Nights". This mega-mall with a sales area of 116,000 m² is one of the biggest shopping centers in the Middle East, and ECE took on the management of the complex in 2004. ECE is also active, in some cases via subsidiaries, in Russia, Lithuania, Romania, Bulgaria and Switzerland.

ECE is a sister company of the Otto Group – the world's biggest mail order operator – and also has excellent contacts overseas thanks to its sister companies: the Paramount Group in manages real estate on the east coast of the USA, for example, including 10 towers in New York, while the Sagitta property company in Toronto, Canada, specialises in apartments and commercial real estate.

9. Commitment in the social sphere

At ECE, commitment in the social sphere has a long tradition. We contributed our know-how during the construction of the State Youth Music College in Hamburg, for example, ensuring that the construction costs were kept to a minimum and that the building was completed on time. ECE also supported the reconstruction of the historic Belvedere Castle on the Pfingstberg in Postdam by providing efficient project coordination services and keeping a close watch on costs.

Upon taking over at the helm of ECE in 2000, Alexander Otto set up the "Lebendige Stadt" Foundation – a joint project in which leading figures from the worlds of politics, culture, business and research promote the development of the European cities. The Foundation's projects include the redevelopment of the Jungfernstieg promenade in Hamburg, the illumination of the Rhine panorama in Cologne and the new design scheme for the courtyard in front of the Nikolaikirche church in Leipzig.

Moreover, Alexander Otto is Chairman of the Urban Land Institute Germany (ULI). The nonprofit research and educational organisation set up in Washington D.C. in 1936 enjoys a worldwide reputation for its far-sighted research geared towards achieving the highest standards in the fields of regional planning, urban development and the property industry.

10. Looking to the future

In years to come, there will continue to be a demand for modern and flexible retail premises in central city locations, and ECE will draw on the know-how acquired over several decades in the development of new shopping centers. Systematically customer-friendly and future-oriented planning is a key factor in the long-term success of ECE. Alongside an attractive architectural design, this above all means a balanced branch mix tailored to the needs and preferences of the people in the catchment area. Small, local retailers and start-ups are just as important in a center as high-profile chain outlets. "Shopping centers that are properly designed and operated are one of the best ways of promoting small and medium-sized businesses", says Alexander Otto.

Moreover, each and every shopping center should be a "one of a kind" and help to shape the identity of the city or region where it is located – by providing generously dimensioned and well-lit surroundings where people enjoy spending their time. Innovative design elements like light columns, interactive fountains and artistic facades as just as much part of the overall ambience as high-quality leather benches, wooden floors and wooden railings. Examples of successful projects of this kind include the "Ettlinger Tor" in Karlsruhe opened in 2005, the Altmarkt-Galerie in Dresden (2002) and "nova eventis" near Leipzig.

There is a trend towards the "spectacular shopping experience" complete with wide-ranging services, well-known brands and the attractive showcasing of goods and products. The restaurant/café segment also offers major potential for future growth, and attractive areas like the foodcourts provably increase the amount of time visitors and shoppers spend in the shopping centers. During the next ten years, the percentage of the area taken up by restaurants, cafés and refreshment areas is expected to double. A further trend is the increasing use of modern customer loyalty tools like Center Cards (credit cards issues in cooperation with banks), shopping vouchers and parking credit schemes.

The internationalisation of the retail trade is also set to increase at a continued fast pace. There is already fierce competition for the best locations in Eastern Europe, and the prospects for expansion in the Western European market are also promising. On the whole, shopping centers will promote the international exchange between retailers and underpin the rapid spread of successful concepts with international potential. Today, many retailers are already following ECE into new markets, as this presents them with an excellent opportunity to gain the necessary experience in local markets together with a well-known and trustworthy contractual partner at their side.

Against this backdrop, Alexander Otto expects to see further concentration in the shopping center sector in the years to come: "Only big international operators can generate the necessary synergies when it comes to leasing, customer loyalty strategies and the events and activities staged by the center management teams. In 2004, ECE leased out a higher volume of retail sales area in Germany than the ten biggest estate agents together – and this know-how is priceless."