Retail Market Overview. Germany 3rd quarter 2017 Published in October 2017

Transcription

1 Retail Market Overview Germany 3rd quarter 2017 Published in October 2017

2 JLL Retail Market Overview October Germany s economy is still in good shape Germany s economy continues its high-altitude flight, remaining in good shape at the end of the second quarter. The gross domestic product was 0.6% higher than the previous quarter s result. Consensus Economics expects growth of 1.9% for 2017 as a whole, and a similar rate for In the three months of the second quarter of 2017, most impetus came from the domestic market, with a 0.8% rise in private consumer spending and a 0.6% rise in government spending compared to the previous quarter. There was also a sharp increase in investment. Conversely, net exports, i.e. the difference between exports and imports, subdued growth by 0.3 percentage points following a significant rise in imports of 1.7% compared to exports of 0.7%. Consumer prices rose by 1.8% in September 2017 compared to the previous month. Although there was a significant growth of 2.7% in energy prices, the greatest increase was recorded for food, which was 3.6% more expensive year-on-year. Retail also benefited from this. According to provisional results, German retailers increased their like-for-like sales by 2.8% compared to the previous month; in nominal terms, the increase was 4.7%. In the food sector, the increase in real terms was 2.5% and for non-food retail, 3.1%. The GfK Consumer Climate Index has grown significantly over the past twelve months, due mainly to the sharp rise in economic expectations. However, over the past three months, the improvement has been less pronounced due to falls in both income and economic expectations, while there has been little change in the high level of consumers propensity to buy. Retail trade confidence in Germany Retail lettings Germany in inner city locations 80 Indicator points, balances 700,000 sqm Source: GfK, ifo-institut GfK economic expectations GfK propensity to buy GfK income expectations Ifo business climate for retail (balances) GfK consumer climate index Q Retail lettings Average annual take-up ( ): 531,000 sqm

3 JLL Retail Market Overview October Caution in the letting market in the third quarter In the third quarter of 2017, the retail letting market showed a moderate result. At 345,100 sqm, the total take-up for the sector in the first three quarters almost corresponds to the previous year's result (348,800 sqm); however, this is the first time since 2013 that it has fallen below 100,000 sqm during a quarter, with just 98,000 sqm registered in 235 deals. Retailers are exercising more caution before securing a longterm letting, often initially opening pop-up stores to test the respective market or location. Examples include Dorothee Schumacher at Neuer Wall in Hamburg and the online designer fashion label Fashionette at Königsallee in Düsseldorf ahead of their domestic counterparts. Share of the Big 10 fails to meet expectations It will be difficult for the Big 10 locations to make up for their weak letting performance at the start of Despite two relatively steady quarters, just 89,100 sqm has been let here so far this year. Looking to the end of the year, it will be difficult to match last year s total take-up figure of 180,000 sqm, and a yearend result of 120,000 sqm for Germany s Big 10 retail markets appears more realistic. This is also evident from the results for the individual cities, where even Berlin has registered a weaker performance of 16,800 sqm. Although the federal capital is leading the field, it will be unable to match the outstanding results of previous years due to the delayed starts or abandonment of development projects such as the Volt and Mall of Kudamm. Hamburg has reported a take-up of 15,200 sqm, which has included a number of important lettings such as Foodsky in the newly designed Europa-Passage. Cologne (11,600 sqm) assumes third place thanks to a comparatively strong third quarter. Fourth place was secured by Düsseldorf with a satisfactory result of 11,500 sqm. Here, most lettings were concluded in the Schadowstrasse mass-market retail zone, not least due to Number of deals Total Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Contractsbysizeclass Share Big 10* Share international concepts Take-up % 45% 33% 45% 36% 57% 53% 57% 53% 64% Q3 16 Q4 16 Q1 17 Q2 17 Q % 80% 60% 4 % 8 % 15 % 18 % 2,000 sqm 1,000 to < 2,000 sqm 500 to < 1,000 sqm 250 to < 500 sqm Total (,000 sqm) Share Big 10* Share international concepts 35% 44% 18% 28% 33% 67% 65% 63% 59% 72% 40% 20% 31 % 24 % 100 to < 250 sqm < 100 sqm * Berlin, Düsseldorf, Frankfurt, Hamburg, Hanover, Cologne, Leipzig, Munich, Nuremberg, Stuttgart 0% Pool: 768 lease contracts, Q

4 JLL Retail Market Overview October an announcement of plans for its pedestrianisation. Stuttgart and Frankfurt follow, but have fallen short of expectations with 9,500 sqm and 5,600 sqm, respectively. While Stuttgart's exceptionally good result in 2016 was due mainly to the large rental by a textile discounter, Frankfurt only managed to register lettings in the small and medium size categories. Traditionally, Leipzig and Hanover are considered markets with a low level of fluctuation and therefore registered fewer letting activities. Analysing take-up by retail segment, the textile segment maintained its position, albeit with a somewhat weaker result compared to the previous year when it registered a share of 33%. Textile discounters and Young Fashion retailers are in firm control of activities, accounting for 60% of the space leased. With a total of 21 new leases, KiK (7), Ernsting's Family (8) and TK Maxx (6) were particularly expansive but even here, competitive pressure is increasing, as the discounters Aldi and Lettings by business sector Lidl try to improve their market shares in the fashion segment through their offers of so-called Celebrity Collections. The health/beauty segment (18%) is the second most active retail tenant, securing a 5-percentage point improvement in their market share. Of the 61,000 sqm of retail space leased, half was secured by fitness providers, mainly from the low-cost segment. But even new concepts such as the lifestyleconscious, higher priced McFit fitness concept, John Reed, are trying to establish themselves in prime locations. Conversely, the share of lettings held by the food/restaurants sector has fallen from 20% to 18% between 2016 and Around a third of the space is occupied by chain restaurants and another third by food retailers. Department stores achieved 9%, improving by three percentage points since 2016, with twothirds of the retail space alone attributable to the Woolworth department store chain, which was particularly expansive in the third quarter. Evaluation of textiles sector by rental area Textiles Discount retailers Health/beauty Young fashion 9% 28 % Food/restaurants, etc. Department store Furnishings/décor 11 % 6 % 6 % 33 % Clothing stores Ladieswear 7% 9% 18% Pool: 345,100 sqm, Q % Sports/outdoor Shoes/leather goods Telecomm./home electronics Books/stationery Banks/insurance Others 12 % Pool: 94,900 sqm, Q % Menswear Ladieswear/menswear Excl. fashion Kidswear

5 JLL Retail Market Overview October Prime rents stable in the Big 10 Prime rents in the Big 10 will remain unchanged in the second half of 2017, but will have fallen by an average of 1.0% compared to the same period last year. The outlook for the first half of 2018 suggests stable development in Germany s Big 10 retail locations. However, across Germany as a whole, the average prime rent will continue its downward trend in the second half of the year and, at -2.6%, its fall is more than twice that recorded for the Big 10 locations. Contrary to the letting market, investor demand is particularly strong, especially in the case of city center retail properties. This and the scarcity of supply have caused yield compression to intensify once again. In the Big 10, the respective prime yields decreased by an average of 43 bps compared to last year. The greatest yield effect was observed in Berlin, where the prime yield fell by 70 bps. In Munich and Frankfurt too, 65 and 60 bps declines were recorded, which means that Munich has the lowest yield levels across Germany at 2.6%. The prime yield is unchanged only in Nuremberg. Prime rental index unit shops Index value 2000 = 100 H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 Average prime rent Big 10* Average prime rent Germany** * Berlin, Düsseldorf, Frankfurt, Hamburg, Hanover, Cologne, Leipzig, Munich, Nuremberg, Stuttgart, ** Basis 185 cities Prime yield unit shops % H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 Berlin Hamburg Düsseldorf Hanover Frankfurt/Main Cologne Leipzig Munich Nuremberg Stuttgart

6 JLL Retail Market Overview October Retail lettings (in sqm) City Q Q Change yoy Average Berlin 16,800 18, % 50,100 Hamburg 15,200 15,500-2 % 22,100 Köln 11,600 8, % 22,500 Düsseldorf 11,500 10, % 16,400 Stuttgart 9,500 22, % 18,800 München 7,700 9, % 19,300 Frankfurt/Main 5,600 24, % 23,100 Leipzig 5,100 5, % 9,200 Nürnberg 3,800 3,800 0 % 6,300 Hannover 2,300 1, % 6,500 Prime retail rents Big 10 City (street) H H Change yoy Forecast H Munich (Kaufingerstraße-Marienplatz) % 360 Berlin (Tauentzienstraße) % 330 Frankfurt/Main (Zeil) % 310 Düsseldorf (Königsallee) % 290 Hamburg (Spitalerstraße) % 280 Stuttgart (Königstraße) % 270 Cologne (Schildergasse) % 260 Hanover (Georgstraße) % 190 Nuremberg (Ludwigspl.-Hefnerspl.-Karolinenstr.) % 160 Leipzig (Petersstraße/Grimmaische Straße) % 120 Prime rent in Euro/sqm/month for a new letting, 100 sqm ground level with 6 m shop front

7 JLL Retail Market Overview October Deal Ticker Berlin 1 Snipes 2 Foot Locker 3 Red Wing Shoes 4 Gaastra 5 Only Deal Ticker Düsseldorf 1 20grad Restobar 2 Decathlon 3 Wilma Wunder 4 Luisa Cerano 5 Only

8 JLL Retail Market Overview October Deal Ticker Frankfurt 1 Adenauer & Co. 2 Eton 3 Hema 4 Dorothee Schumacher 5 Devialet Deal Ticker Hamburg 1 Sephora 2 Dorothee Schumacher (Pop-Up) 3 Rivièra Maison 4 PommStore 5 Rolex Boutique

9 JLL Retail Market Overview October Deal Ticker Hanover 1 TUI Deal Ticker Cologne 1 Das Werk 2 Claudie Pierlot 3 PicknWeight 4 Tesla Motors 5 Taschen Verlag

10 JLL Retail Market Overview October Deal Ticker Leipzig 1 Ulla Popken 2 Woolworth 3 Foodkurt Deal Ticker Munich 1 Céline 2 West Wing (Pop-Up) 3 Disney Store 4 dm-drogeriemarkt

11 JLL Retail Market Overview October Deal Ticker Nuremberg 1 Rossmann 2 Wicklein Lebkuchen Deal Ticker Stuttgart 1 Louis Vuitton 2 Tredy Fashion 3 Lapin House

12 Contacts Jörg Ritter Management Board Germany, Retail Frankfurt tel +49 (0) Dirk Wichner Head of Retail Leasing Germany Berlin tel +49 (0) Sandra Ludwig Head of Retail Investment Germany Hamburg tel+49 (0) Anke Kaukars-Haverkamp Head of Shopping Center Services Germany Frankfurt tel +49 (0) Helge Scheunemann Head of Research Germany Hamburg tel +49 (0) jll.de For further information about JLL please visit our Company website jll.de/research For further Research reports please visit our Research website jll.de/buero Online offers of office properties for lease can be found on our property listing website Copyright JONES LANG LASALLE SE, No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.