Retail Market Overview Germany
H1 2024
Retail letting market remains on a positive trajectory
Letting market records a remarkable half-year result
A strong second quarter contributed to a very good result of 245,800 sqm in Germany's retail letting market in the first half of 2024; an increase of 15.5% compared to the corresponding period of the previous year. The number of deals rose from 413 in the first half of 2023 to the current level of 459. Once again, rental units larger than 1,000 sqm accounted for roughly half of the take-up result, a trend that has been observed since late 2022. The most active tenant in this size category was the Fashion & Textiles segment with almost 75,000 sqm.
International chain stores continued to penetrate the German market, accounting for 58% of the total letting deals. New additions to the country’s top locations included the Canadian outdoor brand Arc'Teryx with two stores, one in Berlin and one in Munich, and the Italian denim cult brand Dondup. The French sustainable bag label Cabaïa also opened a store in Cologne.
After recovering slightly in the first few months of 2024, consumer sentiment dipped in May due to the slight rise in the inflation rate; however, the latest figures present a more optimistic picture. In August, the GfK barometer for consumer sentiment rose to minus 18.4 points from a revised minus 21.6 points in the previous month. The euphoria triggered by the European Football Championship in many parts of the population contributed to an improvement in consumer sentiment, but it remains to be seen whether this effect is sustainable or was just a short-lived burst of excitement. This is because the propensity to save is still high and the propensity to buy, which was already at a low level, has fallen once again. Despite these mixed signals, the German Retail Association (HDE) is sticking to its retail sales forecast of +3.5% for 2024. Germany’s economic recovery is expected to continue over the course of the year, leading to a significant upturn in spending.
More restrained demand in the Big 10 locations
With a 39% share of take-up, the performance of the Big 10 locations lagged behind the first half of the previous year, when they still accounted for half of the letting volume. At 20,000 sqm, Berlin seized the top spot once again. Shopping centre space was in particularly high demand in the German capital and accounted for over a third of the lettings recorded. Following a weak start to the previous year, Munich achieved its best half-year result in the last five years thanks to the number of lettings concluded in the larger size categories, thereby assuming second place with 14,000 sqm. Hamburg, still in the top spot in the first half of 2023, fell back to third place with 13,600 sqm; however, last year's top ranking was largely due to the numerous lettings concluded in the brand-new Westfield Überseequartier district. Leipzig, Düsseldorf and Frankfurt formed the middle ranking, with Leipzig significantly exceeding its five-year average with 13,200 sqm following a number of lettings in the Höfe am Brühl and Petersbogen shopping centres. Hanover, Cologne, Stuttgart and Nuremberg were in the lower third of the ranking. Of these four cities, only Hanover recorded a decent result, while the demand recorded in the other three cities was more subdued.
Fashion & Textiles continue to lead the way
With a share of just under 40%, albeit seven percentage points below the previous year's result, the Textiles segment clearly led the rankings of take-up by sector. Clothing stores and young fashion retailers accounted for more than 80% of retail sales. C&A led the way among the clothing stores with four lettings and while the fashion retailer has been consolidating its store network for some time, it is currently opting to focus on the renting of optimised space for its new store concept. The two Inditex Group brands, Bershka and Pull & Bear, continued to expand in the Young Fashion sub-segment with the opening of eight new stores; this is similar to Bestseller with ten leases for its Only, Only & Sons and Jack & Jones labels. The second-strongest sector, Restaurants & Food, secured a share of just 18%. This segment has steadily lost shares over the last four years, despite remaining ahead of Textiles sector during the Covid-19 pandemic years, with 30%. The decline in the letting activities of food retailers in city-centre locations has been particularly noticeable.
The Health & Beauty segment was able to maintain its traditional third place with 6.0%, just ahead of the Sports & Outdoors segment; however, the volume of space secured by this segment has halved in the last five years. Take-up by drugstore chains fell from 33,200 sqm in 2019 to the current level of 3,400 sqm. Apparently, the focus of expansion has shifted to locations outside the high streets and/or city centres. The shares in take-up held by the other segments analysed were almost unchanged compared to the first half of 2023, at between 1.0% and 5.0%.
JLL space availability rate stabilises
For the second reporting period in succession, the JLL availability rate for space in the Big 9 fell from 19.7% (H1 2023) to its current level of 15.9%, while availability by number of shops was unchanged at 15.5%. Most major cities were able to improve or maintain their space availability rates. The only city to record an increase was Frankfurt (+3.4 percentage points), triggered by the insolvency of the fashion retailer Aachener and the associated closure of its store.
The lowest rates were recorded in Leipzig, both in terms of space availability (6.2%) and availability by number of shops (6.8%). The successful redevelopment of the former Karstadt building into a multi-tenant mixed-use property (NEO) was a key factor in reducing the availability rates to their current levels.
A further improvement in the availability rate is expected for the Big 9 in the second half of 2024, especially as no further Galeria Departmentstore closures are planned.
Prime rents levelling off
On average, prime rents in the Big 10 fell by just 0.3 % compared to the first half of the previous year. Prime rents were unchanged in eight cities. Slight falls in prime rents were only recorded in Hamburg with 2.0%, and in Nuremberg with 7.0% where they fell to €130.00/sqm p.m. Across Germany, prime rents fell by an average of around 3.0% in a direct half-year comparison; in the first half of 2024, the decline in rents slowed to just 1.0%. The forecast for the third quarter assumes that prime rents will remain steady in the ten most important retail locations. Non-prime rents are expected to rise slightly in a few high-street locations by the end of the year.
Demand for retail property has picked up slightly overall. Yields have remained steady in all asset classes in the retail sector since the beginning of the year. Prime yields for high-street retail properties have remained stable at an average of 3.7% in the Big 10 over the past three quarters. The lowest yield of 3.2% was registered in Munich and the highest (4.25%) was recorded in Hanover and Leipzig.
Retail high streets with key data
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Berlin
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Dusseldorf
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Frankfurt
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Hamburg
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Hanover
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Cologne
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Leipzig
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Munich
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Nuremberg
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Stuttgart
Berlin
Berlin
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ Guess Jeans
➋ Arc'Teryx
➌ Bershka
➍ SportScheck
➎ H&M Home
Dusseldorf
Dusseldorf
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ Sorara (The Outdoor Home)
➋ Motel a Miio
➌ Leonidas
➍ Asservato
Frankfurt
Frankfurt
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ Bershka
➋ Coolblue
➌ Soccerbeat
Hamburg
Hamburg
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ Emma Sleep
➋ Vamenia Store
➌ V-Zug Studio
Hanover
Hanover
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ P&C Outlet (Pop_Up_Store)
➋Only
Cologne
Cologne
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ Footkorner
➋ Cabaïa
➌ Gabor
Leipzig
Leipzig
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ SportScheck
➋ Søstrene Grene
➌ Idee Creativmarkt
Munich
Munich
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ JD Sports
➋ 7 for all mankind
➌ Dondup
Nuremberg
Nuremberg
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ Cinnamood
➋ H&M
Stuttgart
Stuttgart
🟥 High Street with Prime Rent (€/sqm/Month) / % of retail-chains
Current lettings
➊ Suppa
➋ Picknweight
➌ 60 seconds to Napoli
Contact us
Our Retail Markets contacts:
Retail Leasing:
Aniko Korsos, Head of Retail Leasing Germany
Retail Investment:
Sarah Hoffmann, Head of Retail Investment Germany
Retail Tenant Representation:
Josefine Ulrich, Director EMEA Retail Leasing Strategy & Operations
Research:
Helge Scheunemann, Head of Research Germany
Do you have any questions or suggestions regarding the Retail Market Overview? Contact us:
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