The letting volume in the third quarter of this year is 91,800 square meters. Looking at the first nine months, this results in a total letting volume of 282,800 square meters – results that suggest that the retail letting market appears to be stabilizing towards the third quarter of 2020.
JLL Retail Market Overview
The current ‘Retail Market Overview’ from the service, consulting and investment management company Jones Lang LaSalle (JLL), which mainly operates in the real estate sector, provides information: The retail rental market shows clear signs of stabilization in the third quarter of 2020.
The total rental volume to date for the first nine months of this year is 282,800 square meters, the result of the third quarter is 91,800 square meters – results that suggest a stabilization of the retail rental market, although the consequences of the COVID-19 pandemic are clearly noticeable. For comparison: In 2019, the rental volume was around 25 percent higher in the same period. However, according to JLL, this is not a cause for concern as the retail property rental market in general tends to recover quickly after a period of crisis.
German shopping metropolises continue to be popular with international retailers
The ten largest German shopping metropolises – also known as the Big 10 – leveled off at around a third of the total rental volume. That means Stuttgart, Frankfurt, Munich, Dusseldorf, Cologne, Nuremberg, Leipzig, Hanover, Berlin and Hamburg achieved a total letting volume of 95,400 square meters. An improvement in the individual results compared to the previous quarters was clearly noticeable, although the share of the Big 10 in 2015 was still 40 percent of the total rental volume. Nevertheless, Berlin was able to stand out with a result of 24,200 square meters, followed by the city of Düsseldorf, which even exceeded its previous year’s result with 18,300 square meters. Leipzig and Stuttgart were largely on par with their results for the same period last year, with Leipzig making up 6,100 square meters and Stuttgart 4,600 square meters of ground. The reason why the effects of the Corona crisis did not have a more significant impact on the results is due to the continued popularity of German shopping metropolises, which international retailers regard as attractive expansion targets even in times of pandemic.
Sector distribution of rented space
If you look at the retail trade, the textile industry has the largest share of space, around 30 percent. This is followed by retail locations in the “department store” category with 23 percent of the total area, followed by the sports and outdoor equipment sector, which currently accounts for 7.3 percent of the available space.
In the gastronomy and food sector, with an area share of 35 percent, i.e. 98,700 square meters, the take-up of space was achieved in relation to the previous maximum. In addition to restaurants, this also includes food providers. The latter achieved two thirds of total sales, with ALDI leading the way with a peak of twelve new rentals. With 24 percent or 68,000 in terms of take-up, the textile industry only ranks second in terms of new rentals – a development that can be traced back to an oversupply of textiles in stationary shops resulting from the lockdown restrictions.
The top rents in the Big 10 remain stable due to the quarterly results and their continued attractiveness; the rents in all other cities have fallen by two percent. Rent developments depend heavily on the further course of the year and the further course of the current crisis situation. The question arises as to whether there will be vacancies in the retail property sector and how these can be used as effectively and efficiently as possible.
Image sources: Deutsche Asset Management