In a Nutshell Q4 2021

Retail letting market Germany

Retailmarkt Deutschland 2020

Letting dynamics on the German retail market in 2021: nationwide above the previous year, in the top cities even at pre-Corona level  

The letting figures registered for German city centre locations in the last 12 months underline that the mood on the retail market in the second Corona year was very different from that in 2020: Although the result from 2019 is still clearly missed by almost a quarter, the latest volume of just under 465,000 m² implies a respectable rise by around 12 % year-on-year. Even if further lockdown phases cannot be completely ruled out, particularly in the gastronomy sector, the increased confidence of retailers has noticeably revived market activity. They feel now way more confident to assess the risk of medium- or long-term rental decisions.

An important trend that has emerged in the past year is the increasing focus on the top markets. When deciding on a location, many players opt for the top markets in the  continuing difficult market environment as these markets offer  very good framework conditions: Consequently, the A-cities account for around one third of take-up, which is also by far the highest figure in a long-term comparison (2013-2020: around 24 %). Overall, the letting volume of the largest shopping metropolises adds up to almost 150,000 m², which means that the previous year's result was topped by 29 % and the volume from 2019 by 11 %. It is pleasing to note that all seven cities participated in this very good result and were able to exceed their take-up from 2020 without exception, and in some cases even their average values of the past five years.

The best example of the fact that the supply of retail space has increased as a result of the Corona crisis, particularly in the large-space segment, is Berlin: with 52,000 m², the 50,000 m²-mark in central locations was broken again in the capital for the first time since 2016. However, while around 110 lettings and openings were required for this in 2016, only 65 deals were necessary to surpass this mark in 2021. Consequently, the average space size per letting was a good 800 m². Düsseldorf (23,000 m²) and Hamburg (20,000 m²) followed in second and third place. However, Cologne (18,000 m²), Frankfurt (16,000 m²) and Munich (12,000 m²) also made gains, each with results of between 10,000 m² and 20,000 m². Stuttgart contributed a further 8,000 m² and, like the other locations, thus had more space newly let or opened than in the previous year.

However, the dominance of the A-cities should not blind us to the  fact that the B-cities also have an above-average share of take-up (105,000 m²) with a share of around 23 %. Particularly striking in this city category is the high share of the food & beverage sector of a good 33%, while in the A locations the gastronomy (22%) and the fashion segment (24%) almost balance each other out. On the one hand, the B-cities benefit from the fact that they include numerous student cities, whose young population structure plays into the hands of concepts geared towards socialising. On the other hand, system caterers such as Five Guys and Peter Pane, which have already increased the density of their branch networks in the top cities, are pushing their expansion plans to B-cities.

In summary, it can be stated that the restructuring process of the highstreet-retail landscape is in full swing. On the user side a wide range of tenants can be found, from well-known brands struggling with the effects of the pandemic to newcomers eager to expand. Against this backdrop, the letting result in 2021 can certainly be seen as a positive indication for the months to come, but overall the retail market will continue to have to prove itself year after year.