Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/58695
ON THE GROUND: BERLIN Retailers save the best — Germany's capital — for last It is strange that expansion-minded retailers seem to treat Berlin, host to this month's ICSC European Conference, as a second-tier place, given that its population of some 3.5 million makes it Germany's largest city, and this is stranger still since Berlin has more enclosed malls than any other German city — an astounding 54. So why do retailers en- tering Germany typically open first in Düssel- dorf, Frankfurt or Munich before thinking to build in Berlin? The short answer is money. "Berlin is the capital city, and there is a lot of interest from an historic and touristic point of view," said Mark Burlton, head of cross-border retail at Cushman & Wakefield. "But it is by no means the wealthiest city in Germany, which is unusual for a capital city, yet understandable concerning its history." Others concur. "If you compare Berlin to Munich or Düsseldorf, it is sexy but poor," said Ruediger Thraene, who heads the Berlin office of Jones Lang LaSalle. "We still have a lack of big companies based here. What we do have is a lot of clerks." Germany today is the most interesting country in Europe for international retail- ers, because they can get to scale here quicker than anywhere else, says Burlton. "There's Berlin, the capital, then there are a large number of first-tier cities — Munich, Hamburg, Frankfurt, Düs- seldorf and Cologne — where there is a lot of wealth." BEING GERMANY'S CAPITAL DOES NOT MAKE BERLIN THE COUNTRY'S WEALTHIEST CITY. 54 SCT / APRIL 2012 How do new retailers spread business in Germany? Abercrombie & Fitch, which owns fast-growing teen-apparel chain Hollister Co., is a good example. "Everyone is talking about Abercrombie and Hollister," said Anke Haverkamp, head of Jones Lang LaSalle's shopping center in- vestment in Germany. "The company opened its first store in Frankfurt and started to roll out through Germany. At the moment, they are looking for a Hollister store site in Berlin." Ireland's Primark opened its first German store in 2009 in the city of Bremen, and this year the chain is set to open in Berlin. "We signed a deal for them in the Alexanderplatz, in the east part of Berlin, and I understand there are other negotia- tions going on," said Burlton. Among other retailers of note are Gap, which was once in the city, closed its stores and is now rumored to be returning; Urban Outfitters, which has found a location in the city; and Europe's H&M; and Zara, which are coming in with new concepts or brands. Apple is present in Frankfurt, Hamburg and Munich, and its first Berlin store is slated to open in the third quarter, on Berlin's most famous High Street, Kurfuerstendamm Bou- levard — which includes Tauentzienstrasse. The expectation of the Apple store has generated so much interest that a new retail development is in the planning for the op- posite street. Though that project is not set to break ground until 2016, it is one of the few being planned for the city. "Compared to the shopping center stock, new development is rather limited," said Haverkamp. In addition to the Boulevard Berlin, which is scheduled to open in April, one other major shopping center is under development, he adds. It will bring 50,000 square meters [about 538,000 square feet] of retail to Leipziger Platz in the city center. The highest rents in Berlin can be found around Tauentzienstrasse, mostly because it is home to such large department stores as Karstadt and KaDeWe (the latter being the second-largest department store in Europe, after the U.K.'s Harrods), says Haverkamp. "This is a major magnet for retail in Berlin," Haverkamp said. "All the shops that are located close to the Tauentzienstrasse are where you have the highest rents, at €240 ($317) a square meter per month. In com- parison, other High Streets might fetch €100 to €170 a square meter per month." In some regards, the rental market in Berlin is like that of most any other city in Europe at the moment — for the key High Street locations, the vacancy rate is nil, but everywhere else there is softness. "In all the 'B' locations," Thraene said, "you have a lot of empty shops." — Steve Bergsman