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Retail must convince both offline and online

Ulrich Schüppler
Editor at Immobilien Zeitung
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The general conditions for an investment in German retail properties are still good, albeit not outstanding. This is the central outcome found by the GfK market research institute for the spring report of the Rat der Immobilienweisen (Council of Real Estate Experts) 2017.

For this year the GfK researchers expect a total nominal increase in retail sales of 1.6 percent (including mail order business) and 1 percent for stationary retail. According to GfK calculations total sales area in Germany increased by only 0.3 percent to 118.6 million square meters in 2016 and only just made it above zero. During the period between 2007 and 2011, however, growth rates were still regularly around 1 percent per year – apart from 2009, the year when the financial crisis hit. The demand for areas still exists, particularly for drugstores, furniture and hardware stores, and food chains are also continuing to expand their store networks. But due to the shortage of suitable areas, fewer new large retail properties enter the market.

Berlin remains dynamic

Among the top cities in Germany Berlin remains one of the most dynamic locations and benefits from both a growing population and growth in tourism Thus, last year retail sales in the capital increased by a nominal 3.1 percent, compared to the national average of just 0.8 percent. Bigger new shopping centers will not open in Berlin until 2018, but there are also some revitalizations and extensions coming up. GfK expects competition between the centers in the capital to pick up considerably, which might well step up the pressure on older center locations.

Munich at the top: Up to 370 euros per square meter

In terms of shop rents and purchase prices Berlin was recently only just behind the front-runner Munich. The top rent for a square meter of shop area in the capital was 350 euros in the capital at the end of 2016 (Munich: 370 euros), the initial net yield dropped to 3.4 percent (Munich: 3.1 percent). The GfK researchers only see scope for rising peak rents in the capital. Hamburg, Munich, Düsseldorf and Frankfurt, however, should maintain their high levels, whereas consumption specialists expect a slight decrease in Cologne and Stuttgart.

Online and offline must go hand in hand

E-commerce continues to grow, but according to GfK the future belongs to those retailers who are successful both online and offline and can serve the more demanding requirements of consumers through all channels. Apart from the choice and the price customers are increasingly focusing on functionality and the experience. While shopping supplies should be mainly quick and expedient, consumers expect other retail formats to mainly provide an environment inviting them to spend time in. This benefits the catering industry among others.



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