Munich remains clearly the most expensive German retail sales metropolis

This places Munich clearly ahead of Cologne, Berlin, Hamburg, Frankfurt am Main, Stuttgart and Dusseldorf. For smaller shop premises with areas between 80 and 120 square metres, rents for new businesses on the Kaufinger Strasse or Neuhauser Strasse totalled an average of 300 Euro/sq. m. this year. Last year, corresponding areas could be leased for an average of 15 Euro less. The rental prices increased by around 5.3%. Although admittedly, the price compared to store size is also dropping in Munich. However, even for shop premises with sales areas between 300 and 500 square metres, rental prices are still around 200 Euro/sq. m., which is clearly more than in most German metropolises for small (and therefore more expensive in comparison) shop premises.

Manfred Schalk, CEO of COMFORT München GmbH, says this was a result of a number of factors which, when happening together, ensure that retail traders in Munich do not only pay the highest rents for shop premises in top locations, but can also clearly do the best business. Because, Schalk continues, rents exclusively revolve around the sales potential available on site, and are less dependent on the fantasies of homeowners or real estate agents than is commonly thought.

According to Schalk, the purchasing power of the Munich locals of more than 121 is thus clearly above the national average of 100. Added to this are the no less purchase-powerful populations from the surrounding area, as well as the large number of tourists who visit Munich. So, Schalk continues, it is no wonder that several tenants with good credit ratings compete for vacated premises in the Munich inner city, which, according to the laws of the market, leads to increasingly higher offers from the consumer. Even given the current financial crisis, Schalk does not believe this will mean a reversal of this trend in Munich. During these sorts of phases, Schalk says that retail traders instead concentrated themselves more intensively on retail sales locations which have been proven to ensure good business. In Munich, this is relatively independent of the current business activity.

In second place on the current COMFORT metropolis rankings is the cathedral city of Cologne with a rent of 255 Euro/sq. m. for shop premises on the Schildergasse. In 2008, prices once again increased by 2% compared to the previous year. In 2007, retail traders had to pay around 5 Euro/sq. m. less for a new rental. Shop premises on Hohe Strasse are valued somewhat lower, at 220 Euro/sq. m., than those on the Schildergasse. Benefits which Cologne can traditionally offer are, according to Jürgen Kreutz, CEO of COMFORT Düsseldorf GmbH, primarily high frequency of passers-by and high visitor numbers, resulting from the city’s tourist attractiveness. He says international retailers are also interested in testing innovations and new retail concepts in Cologne before the other retail metropolises in Germany get involved. This once again results in increased demand for premises in the cathedral city.

In third place in the rankings is the federal capital, Berlin, where rents increased significantly in the last year after five years of stagnation and decline. Absolute top rents up to 250 Euro/sq. m. are achieved at Tauentzienstrasse. The rent here once again increased by 8.7% over the last twelve months. Shop premises on the Kurfürstendamm are currently recording rents of around 220 Euro/sq. m. and have become significantly more expensive by 22.2% compared to the previous year. But, according to COMFORT data, rents in central Berlin also increased dramatically. Ronald Steinhagen, CEO of COMFORT Berlin-Leipzig GmbH, reports of rental increases of sometimes 50%, for example at Alexanderplatz, which benefited massively from the opening-up of the more recent past. Rents also once again increased by 16.7% on Friedrichstrasse, and now reach top values of 140 Euro/sq. m. on average for smaller shop premises.

Hamburg, with 235 Euro/sq. m. on Spitalerstrasse and its variety of expensive shopping streets, comes in fourth place ahead of Frankfurt am Main (230 Euro/sq. m. for shop premises on the Zeil), and Stuttgart (230 Euro/sq. m. for shop premises on Königsstrasse). With the Jungfernstieg, Mönckebergstrasse, Neuer Wall, Poststrasse and Gerhofstrasse, Hamburg, unlike most other metropolises, has six shopping streets, almost all of which operate at a similarly high level. According to Günter Rudloff, CEO of COMFORT Hamburg GmbH, rents only range from between 175 Euro/sq. m. at the Jungfernstieg and 235 Euro/sq. m. at Spitalerstrasse.

In seventh place comes the second Rhine metropolis, Dusseldorf, with a current rent of 215 Euro/sq. m., ahead of Dortmund, where retailers have to pay a monthly rent of 200 Euro/sq. m. for smaller shop premises in a top location on the Westenhellweg. While rents in Dusseldorf once again rose by 2.4%, they remained unchanged compared to the previous year in Dortmund.

Following in ninth place is Hannover, currently the most attractive city for retail trade in Lower Saxony. This year, retailers had to pay rents of around 180 Euro/sq. m. for shop premises in the best locations of Bahnhofstrasse and Georgstrasse. The two other A1 locations in Hannover are rated somewhat better. On the Grosse Packhofstrasse and Karmarschstrasse, rents are only slightly lower at 175 and 170 Euro/sq. m. respectively.

In tenth place on this year’s COMFORT metropolis rankings list is, like last year, the Franconian city of Nuremberg. Here, noticeable improvements in location and services led to clear increase of rents. Even in the last year, rents once again increased by around 8%. In the top A1 location, Karolinenstrasse, the rent for smaller shop premises is now 140 Euro/sq. m. - an increase of around 8% compared to the previous year.

Places eleven to 15 are (in this order) taken by Bremen, Leipzig, Dresden, Essen and Duisburg, meaning the Ruhr cities of Essen and Duisburg, shaken by a retail agglomeration unheard-of in Germany, are now again peacefully at the bottom of the rankings. The close competition resulting from an ECE mega-centre at Limbecker Platz with around 70,000 sq. m. of sales space in Essen, the CentrO in Oberhausen and the Rhein-Ruhr-Zentrum at the Essen-Mulheim border is pressing down on both inner-cities. In Duisburg, rents of 70 Euro/sq. m. are now paid for smaller shop premises in A1 locations - well exceeded by many cities with less than half the number of inhabitants.

The two important eastern German shopping metropolises of Dresden and Leipzig, from which Alexander Folz, CEO of COMFORT Berlin-Leipzig GmbH continues to report of increases demand, proved to be stable. Rent also once again increased by 4.3% in Bremen in 2008 after a long period of stagnation - despite the threat of competition from a newly designed Space Park renamed Waterfront Bremen.

According to Manfred Schalk, the results of this year’s rankings primarily show that the present success of retail properties in inner-city A1 locations has solid foundations, and will confidently be able to counter the challenges which will arise in 2009 given the current financial crisis in retail trade and the real estate industry. For this reason, Schalk believes that the probability of stagnation or even a lowering of rental prices can be excluded for next year, unless unexpected economic factors massively aggravate the current crisis situation. If everything goes as is presently forecast by most predictions, one can assume that the rents will remain at a comparable level in view of the currently consistently high demand, following a national increase of 4.4% in 2008 compared to the previous year, and could even increase in individual cases.