Retail Market Overview Germany

H2 2023

Upward trend in the retail market continues

January 31, 2024
Remarkable letting take-up result

The retail market ended 2023 with a remarkable letting take-up volume of 449,500 sqm in 878 deals. This exceeded the previous year's result by around 7.0%, with the strong final two quarters of 2023 in particular contributing to the good result. At 4.0%, the number of deals is slightly down on the previous year.

There was strong demand for the >2,000 sqm size category throughout the year, with this category registering 44 individual deals, its best result over the past five years. International concepts continued on their quests to secure expansion opportunities in the German market, accounting for 54% of the deals. Brands represented in the German market for the first time include the Inditex Group's Stradivarius label, Byredo, an international luxury supplier of fragrances and accessories, and the Danish fashion label, Mads Norgaard. International car brands such as the BYD Group from China which recently secured space in Stuttgart are continuing to rent space in prime locations.

Consumer sentiment in Germany brightened somewhat at the end of the year and there has been an improvement in the economic outlook. The high inflation rate of 8.7% at the beginning of 2023 fell to 3.7% by December. Nevertheless, there are still burdens such as the fiscal deficit and the associated cutbacks which are causing uncertainty among consumers and weakening a sustained upturn in consumer confidence.

Good letting take-up result in the Big 10

Germany’s Big 10 cities achieved a take-up of 216,300 sqm, improving their previous year's result by around 42%. Hamburg (54,500 sqm) confidently led the field, mainly through further lettings in the Westfield Überseequartier, which now has an occupancy rate of 90%. Berlin (46,200 sqm) in second place also registered one of the best results of the last five years. Frankfurt (42,100 sqm) completed the leading trio with several lettings of over 1,000 sqm having a particularly positive impact. Düsseldorf, Munich, Cologne and Stuttgart formed the midfield with take-ups of between 12,000 sqm and 14,000 sqm. There was no shortage of lettings in the cities on the Rhein, although these were mainly in the smaller size category of up to 250 sqm. Munich’s performance was on a par with the previous year and therefore only slightly below its five-year average. Stuttgart was able to make up significant ground after a weak letting year in 2022, with Königstrasse in particular seeing a stronger demand again. The final group showed mixed results, with demand picking up in Nuremberg and Hanover, while Leipzig fell short of expectations due to a lack of large-scale lettings.

Clothing & Textile segment confirms leading position

At 41%, the Textile segment topped the sectoral ranking, improving its take-up result by eight percentage points compared to the previous year. Clothing stores and young fashion providers were again strongly represented, accounting for 139,000 sqm of the rented space. In addition to Sinn and C&A, the online retailer Zalando was active with three new outlets. In the Young fashion segment, Zara and New Yorker expanded with large-scale lettings. The Restaurant & food segment assumed second place with a share of just 22%, four percentage points below the previous year's result. With 296 individual deals, the segment outperformed the Textile sector (254), but in the Restaurant & food segment almost 70% of deals were in the two smaller size categories, <100 sqm and 100 - 250 sqm. Health & beauty retained its traditional third place with 8.0%, almost on a par with the previous year. The shares of 10% and more, which were achieved three years ago, for example, are currently not in sight. Drugstore chains especially were reluctant to rent space in the city centre. Sports & outdoor improved by two percentage points thanks to a number of lettings by the Intersport Group. The shares held by the other six segments analysed were mostly unchanged from the previous year at between 1.0% and 4.0%.

JLL Space Availability Rate falls

The JLL Space Availability Rate fell for the first time in the Big 9 since the second half of 2020. Compared to the first half of 2023, the rate fell from 19.7% to 16.5%, while the rate by number of shops remained stable at 15.5%.

All cities showed declining values, with Leipzig leading the way in terms of space availability and the number of available shops, with the lowest rates of 7.4% and 11.0%, respectively. This positive development in the Big 9 cities benefited from the current trend towards large-scale lettings.

It remains to be seen how the rate will develop in the first half of 2024 with the prospect of the renewed insolvency of Galeria department stores. Much will depend on whether the retail group, which currently has 92 shops, can find an investor so that the company as a whole can be preserved. If this is not successful, further closures of department stores, including in the Big 9, would have immediate consequences that would be difficult to cope with.

Prime rents fall only slightly in the Big 10

There are signs that prime rents have bottomed out in the Big 10 locations since the previous year. Rents remained stable in four cities, namely Berlin, Leipzig, Munich and Stuttgart. The other six locations recorded a slight decline of around 3% on average. Rents are expected to remain stable in the ten most important retail locations in the first half of 2024.

Outside the Big 10, stable values were registered in just 18 of the 66 locations analysed by JLL, including Bonn, Bielefeld, Wiesbaden and Dresden. Across Germany, prime rents fell by an average of 5.4% compared to the previous year. In the 250,000 - 500,000 and 100,000 - 250,000 population brackets, prime rents fell by a further 7.4% and 6.4%, respectively. The locations with fewer than 100,000 inhabitants performed best, losing just 5.8%. In this segment, rents are inherently at a lower level and could therefore remain stable for longer.

Demand for high street retail properties was subdued in 2023, although sales multipliers remained at a high level. Prime yields for the Big 10 rose only slightly in Berlin and Nuremberg during the second half of 2023. Yields in the other eight cities were relatively unchanged at between 3.2% - 4.25%, with the lowest yield being achieved in Munich and the highest in Hanover and Leipzig.

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

Helge Scheunemann, Head of Research Germany


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