Real Estate News: Berlin City-West is booming

Berlin continues to exert an enormously high pull on retail traders and customers. “Virtually all known brands who are big players in retail, are represented with a shop space in Berlin,” reports Marcus Kötschau, Area Manager for Retail Services at Engel & Völkers Commercial Berlin. In addition, the prime business locations specifically, were focussed on by globalised retail.

Real Estate News: Berlin City-West is boomingAdditional retail spaces
Berlin alone, with nearly 700 businesses in the six top locations – Kurfürstendamm/Tauentzienstraße (241), Wilmersdorfer Straße (63), Schloßstraße (123), Friedrichstraße (107), Hackescher Markt (111), Alexanderplatz (49) – and more than 60 shopping centres, already has an enormous range of shopping options. “In the coming years, further extensive retail projects will be realised in the prime locations since there is still a lot of potential demand there,” says Kötschau.

Prime location with a new face
Three projects in particular are allowing the available retail spaces in the West to increase significantly. In addition to the existing 28,500 m² Karstadt building, 231 adjoining buildings should, for example, be integrated into the shopping centre on Kurfürstendamm and 200 new shop spaces should crop up. On the Breitscheidplatz square, there prominently stands the prime location’s largest construction site. Until 2017, the Upper West building is being built there with approx. 53,000 m² of office, retail and hotel space. Furthermore, the US American investor, Hines, is planning to complete a new build on the corner of Kantstraße/Joachimsthaler Straße of a business location with approx. 9,200 m² of retail space for the end of 2016. “The realisation of these retail projects is sure to decisively change the face of the prime location of Kurfürstendamm/Tauentzienstraße,” predicts Kötschau.

Fashion and trendy capital
One reason for the developments of Berlin retail is, according to an assessment by market experts, the growing purchasing power per inhabitant (€20,517, +3% compared to the previous year). Furthermore, countless tourists who continue to visit Berlin in record numbers, are providing increasing retail turnover. In 2014, the capital recorded approx. 12 million visitors and approx. 29 million overnighters. “The image as a fashion and trendy capital is, however, also being shaped by the unconventional ideas of the young, creative inhabitants so that the established market is constantly being complemented by new concepts and design labels,” according to Kötschau.

Increasing highest rents
The increasing demand among scarce supply in the West as well as in the Hackeschen Markt and Alexanderplatz has already led to increasing highest rents. In the next few years, Engel & Völkers Commercial sees the Berlin wide peak value as up to EUR 310/m² on Tauentzien street, followed by Ku’damm at EUR 235/m². In the rankings, Alexanderplatz takes up number 3 at EUR 210. “In the background is the lack of free space in the prime location which is confronted with high demand from retailers, above all, to cover consumerist and tourist needs,” explains Kötschau. In the Hackeschen Markt, the rent price in the core area of the location continues to rise and is currently EUR 150/m².

Retailers and manufacturers are rethinking
On the whole, demand always exceeds the scarce supply in Berlin’s coveted top locations. Competition by online providers like Amazon or Zalando has also not changed. “Nevertheless, many retailers are reconsidering their retail space concepts,” explains Kötschau. In the vast diversity of the internet, proper brand positioning in particular is becoming more important. In his opinion, this is especially true for international fashion concepts which are newly breaching the German market. “You are forced to rely on stores in the German retail hot-spots to make the brand known and to convey the lifestyle concept to the desired target audience.”

International fashion brands are betting on Berlin
For their German-wide flagship stores in Berlin, being in the West of the city on Tauentzien street or on the Kurfürstendamm is preferred. The Japanese fashion chain, Fast Retailing, has been trading its fashion brand, Uniqlo, in the old Nike Town on Tauentzien street since April 2014 in its only store thus far with a sales floor of 2,700 m², doubling as its largest store in Europe. Even the fashion brand Reserved, originating from Poland, has begun renting on Tauentzien street and is to open a large 2,000m² flagship store by autumn 2016 at the latest. “For these retailers, the most important thing is the high footfall which is necessary in order to be able to generate the correspondingly high turnover per square meter required by the high rent,” explains Kötschau.

Posted in Company.