FRANKFURT A VERY POSITIVE OVERALL FRAMEWORK WITH CONTEMPORARY PROJECTS FOR MODERN SHOPPING

Transcription

1 FRANKFURT A VERY POSITIVE OVERALL FRAMEWORK WITH CONTEMPORARY PROJECTS FOR MODERN SHOPPING JANUARY 2018

2 IN FIGURES Federal state: Hessen Population: Population development: + 2,1 % Employees paying social security contributions: Unemployment rate: 5,7 % Retail purchasing power: 114,2 Retail centrality: 102,7 Relevant shopping centres: Skyline Plaza (C), MyZeil/PalaisQuartier (C), NordWestZentrum (S), Hessen-Center (S), Main-Taunus-Zentrum (Sulzbach) (P) C=City S=Suburb P=Periphery Source State Statistical Offices, GfK GeoMarketing GmbH, Federal Employment Agency PRIME RETAIL RENTS from in EUR/m² m² m² CITY CENTRE AREA Frankfurt Proportion of sales in % Proportion of retail space in % Ø 500T - 1 Mio. Inhabitants Quelle: COMFORT Research & Consulting The city of Frankfurt in the German federal state of Hessen, and the neighbouring state capital of Wiesbaden (population approx. 276,000 in 2016), are located right at the heart of the flourishing Frankfurt/Rhine-Main metropolitan area (population approx. 5.7 million). According to the latest forecasts by Hessen Agentur, Frankfurt (population in 2016: approx. 730,000) can expect sustained high population growth (+ 9.7 percent) up to the year A similar development is also a realistic prospect in other parts of the metropolitan area. Frankfurt s central location within the metropolitan area and in Germany, plus its excellent infrastructure, make it a very well-connected city with excellent accessibility and transport links. It is a European financial centre of global repute and a significant international air traffic hub. As home to the European Central Bank, the Frankfurt Stock Exchange and major European enterprises, this city can be counted among the world s leading financial and services metropolises. It is also the reason why Frankfurt is such an important part of the German macroeconomic framework. After Brexit, Frankfurt is likely to get a boost from companies and institutions relocating from London/UK and demand for properties in the city could soar to a level that is impossible to predict. The region s economic fabric is additionally reinforced by the future-oriented enterprises in the creative industries, IT and telecommunications, biotechnology/life sciences and logistics, as well as manufacturing companies, that are based in Frankfurt alongside the financial industry. Almost 264,000 people travel into Frankfurt to work each day, making it the city with the highest level of commuters in Germany. Frankfurt has international educational institutions, an international cultural programme, attractive leisure facilities and a growing supply of high-quality residential space that underline its cosmopolitan flair, set it apart from other major cities and allow it to attract and retain top talent from Germany and abroad. The city s four shopping destinations (the city centre, Hessen-Center, NordWestZentrum and Skyline Plaza) are in a class of their own in the region. The Frankfurt hotel and restaurant scene is also making a positive and sustainable contribution to the city s very international orientation and economic strength, and this is reflected by a sharp increase in the number of overnight stays. Between 2010 and 2016, the annual number of overnight stays rose by 45 % from 6.1 million to 8.8 million. COMFORT City Report Frankfurt am Main von 11

3 PURCHASING POWER AND CENTRALITY PARAMETERS Purchasing power Berlin Düsseldorf Frankfurt am Main Hamburg Cologne Munich Stuttgart Source: GfK GeoMarketing GmbH Centrality parameters FASHION CENTRALITY Berlin Düsseldorf Frankfurt am Main Hamburg Cologne Munich Stuttgart Source: COMFORT Research & Consulting THE CITY`S SIGNIFICANCE AS A RETAIL LOCATION Demand is still high for prime location retail space, both from German and international clients, and neither Frankfurt nor its rival cities in the Rhine-Main region are currently able to adequately meet that demand, summarised COMFORT Managing Director Jürgen Kreutz. In the year taken as the basis for the comparison of the Top 7 German cities on the next page - Frankfurt city centre s retail sales revenue was around EUR 1.4 billion. That figure accounts for approximately one-third of the city s total revenue. Frankfurt s impressive retail space productivity of EUR 5,200 per m² is only surpassed by the Top 7 cities of Munich and Hamburg. The purchasing power index rating for Frankfurt (approx. population 733,000) and for the entire inner city catchment area (approx. population 2.3 million) is significantly higher than the German average (100.0) and still increasing. The city is ranked fourth in terms of fashion centrality in the Top 7 comparison. Frankfurt s retail centrality index rating is naturally far lower because it faces strong competition from other cities in the region such as Wiesbaden, Mainz, Darmstadt and Sulzbach (Main-Taunus-Center). CATCHMENT AREA Source: COMFORT Research & Consulting, base map RegioGraph COMFORT City Report Frankfurt am Main von 11

4 CITY RETAIL DATA Strukturdaten Structual data Berlin München Munich Hamburg Köln Cologne Frankfurt Stuttgart Düsseldorf Einzelhandelskaufkraft 2017 Retail purchasing power 2017 (Deutschland/Germany = 100,0) Einzelhandelsverkaufsfläche 2017 Retail sales area 2017 in m² / sqm 96,8 129,8 109,7 108,8 114,2 112,8 117, Anteil der Innenstadt in m² Share of the city centre im sqm Anteil der Innenstadt Share of the city centre 13,3% 27,1% 12,9% 19,9% 23,7% 37,2% 34,3% Einzelhandelsverkaufsfläche pro Einwohner Retail sales area per inhabitant 1,4 1,3 1,5 1,5 1,6 1,6 1,7 Flächenproduktivität in pro m² Space productivity in per sqm Flächenproduktivität Innenstadt in pro m² Space productivity of the city centre in per sqm Einzelhandelsumsatz 2017 in Mio. Retail turnover 2017 in million , , , , , , ,4 Anteil der Innenstadt in Mio. Share of the city centre in million 2.530, , , , , , ,0 Anteil der Innenstadt Share of the city centre 13,8% 30,2% 17,4% 23,0% 32,9% 40,0% 38,6% Einzelhandelszentralität 2017 Retail centrality 2017 (Deutschland/Germany = 100,0) Modezentralität 2017 Fashion centrality 2017 (Deutschland/Germany = 100,0) 106,7 114,4 113,2 121,4 102,7 117,3 114,4 156,3 221,9 173,6 198,9 202,4 209,8 224,3 Einzugsgebiet / Catchment area Einwohner in Mio. / Inhabitants in mill. 5,3 3,1 3,5 2,4 2,4 2,6 2,0 Quelle / Source: COMFORT - Research & Consulting, GfK GeoMarketing GmbH COMFORT City Report Frankfurt am Main von 11

5 PRIME LOCATIONS PRIME RETAIL RENTS in EUR/m² ZEIL Traditional consumer-oriented location with one of the highest footfalls in Germany All major goods and clothing stores are represented here, as are numerous famous chainstore operator flagship stores MyZeil shopping centre with approx. 47,000 m² retail space Very wide pedestrian zone with plane trees in the middle and food pavilions New tenants: Five Guys, Hugendubel and Dji, soon to be joined by the new Foodtopia food court (MyZeil), Hallhuber Rents: approx. EUR 290/m² (small), approx. EUR 165/m² (medium-sized) m² m² STEINWEG Relatively short prime location with average footfall Upmarket/fashionable area Connects Hauptwache to Goetheplatz New tenants: Franck Muller Rents: approx. EUR 140/m² (small), approx. EUR 72/m² (medium-sized) m² m² BIEBERGASSE / AN DER HAUPTWACHE Connects Zeil and Fressgass Footfall has increased as a result of the traffic-calmed connection to Zeil New tenants: Saks OFF 5TH (Kaiserstrasse / Hauptwache) Rents for Biebergasse: approx. EUR 185/m² (small), approx. EUR 100/m² (medium-sized) Rents for An der Hauptwache: approx. EUR 115/m² (small), approx. EUR 62/m² (medium-sized) m² m² GOETHESTRASSE Clearly defined luxury location with genre-typical footfall Road with vehicle traffic running parallel to Fressgass High density of high-end luxury brands such as Chanel, Tiffany and Hermès New tenants: Rimowa, Peter Kaiser, IWC, Chopard Rents: approx. EUR 275/m² (small), approx. EUR 140/m² (medium-sized) m² m² FRESSGASS (GROSSE BOCKENHEIMER STRASSE) Predominantly cafes and restaurants (with outdoor seating) and small shops due to restrictions imposed by the Fressgass Charter Changing as a result of the increasing number of fashion retailers, some with newly developed large-scale stores Connects the banking district /opera to Zeil Growing tenant demand and thus above-average increases in rents over recent years New tenants: Moleskine and Sandro Paris Rents: approx. EUR 200/m² (small), approx. EUR 100/m² (medium-sized) m² m² COMFORT City Report Frankfurt am Main von 11

6 DEVELOPMENTS IN FRANKFURT CITY CENTRE Frankfurt city centre has 277,000 m² of retail space and generates retail sales revenue of some EUR 1.4 billion, making it by far the most significant retail location in the city overall. The retailers there sell on-trend product ranges and are completely in tune with the contemporary consumer spirit. Numerous new developments and new tenants have evidently enhanced the city s attractiveness. Current and future projects to optimise and expand the retail scene are likely to fuel this positive trend for several years to come. Zeil gives Frankfurt a pedestrian zone with one of the highest footfall levels in the country, and Goethestrasse gives it one of the most outstanding luxury retail districts in Germany. Some of the biggest changes on Zeil, Frankfurt s traditional high street, include the restructuring of the MyZeil shopping centre, where several tenant reshuffles have taken place (including Hugendubel moving into the former Promod store). A brand new food court concept called Foodtopia will also be opening in MyZeil in the near future. Other significant changes are the establishment of G-Star Raw in the refurbished Zeil 111 and the arrival of Dutch department store chain Hema (Zeil 115, formerly Madonna). Samsung has now taken over its Zeil 119 branch itself and is developing it into a Galaxy Studio. Perfume retailer Kobberger has moved from Zeil 127 to the Thurn und Taxis Palais and been replaced by a newcomer to the German market, US burger chain Five Guys. Swiss chocolatier Läderach has taken over the former Yves Rocher store at Zeil and will be opening a new shop there when the conversion work is completed. Hallhuber now has its second city centre store at Zeil 83. dm-drogerie markt and Depot, two well-known tenants, are the next occupants of the units vacated by Strauss Innovation in 2016 (Zeil and Kaiserstrasse 6). The project timeframe and utilisation concept for the new building at Zeil 107 (formerly New Yorker) is still unknown. Luxury retailer Saks OFF 5TH has opened an outlet in Frankfurt just off the southern end of Zeil formerly occupied by Sportarena. In the summer of 2017, Saks OFF 5TH opened an outlet on the former Sportarena premises Zeil will be experiencing a burst of sustainable development in The new UpperZeil retail building on the former Zeilgalerie shopping centre site is already fully let, even though it hasn t yet opened. The new building will have approximately 14,800 m² of retail space in total. The majority has been let to the neighbouring Galeria Kaufhof department store, although it is not known whether Kaufhof intends to use it as own retail space or to market it COMFORT City Report Frankfurt am Main von 11

7 as attractive office space. UpperZeil will also have Reserved, Vodafone and Benetton flagship stores, each with a prestigious entrance leading off Zeil. The Flare of Frankfurt development project on Grossen Eschenheimer Strasse is expected to commence by the end of STRABAG Real Estate and RFR Frankfurter are planning serviced apartments and hotel, plus upmarket retail and food units on this former Rundschau site. The positive trend continues on Kaiserstrasse between Rossmarkt and Kaiserplatz. New tenants include Depot and Swedish shirt specialist Eton. Wellensteyn has moved out of its store on Rossmarkt (Rossmarkt 15) and into Skyline Plaza, but there has also been a new fashion retailer arrival, Edited (Rossmarkt 17). The famous traditional bookstore, Zweitausendeins, closed its last store on Kornmarkt in March The Kornmarkt Arkaden development project (including a Motel One and approx. 950 m² of shops and restaurants) will begin in POPULAR LUXURY LOCATION Massimo Dutti has now opened its extended store on Goethestrasse. Bulgari, Chopard, IWC and Rimowa signed new lease agreements in 2016/2017 and have now also moved into their stores. Peter Kaiser and Vertu are the new occupants of the two units formerly housing Lalique and Vallverde at Goethestrasse 37. Rolex will be taking over Juwelier Friedrich s store (Goethestrasse 9) when it moves to its new premises at Neuer Rothof. Fressgass, the street with the third-highest rents after Zeil and Goethestrasse, has only experienced moderate changes. Three retail units at Grosser Bockenheimer Strasse 29 have found new tenants in Kids Glam & More, Sandro Paris and Moleskine. French hi-fi company Devialet took over the Cadenzza store (Grosser Bockenheimer Strasse 24) in autumn Tesla, Patrizia Pepe and Biogena moved into their shops during the course of Maro has been completed, primarily acquiring premium-segment tenants COMFORT City Report Frankfurt am Main von 11

8 After getting off to a slow and very unsatisfactory start in 2016, the project to extend Frankfurt s luxury high street Goethestrasse by connecting it to a circuit encompassing Luginsland, Neue Rothofstrasse (pedestrian zone) and Neue Mainzer Strasse, and to the Maro and Junghof developments, which now go by the joint name of Neuer Rothof, is gradually gaining momentum. Initially, some of the units were only let temporarily. The necessary adjustment phase then commenced in 2017 when Allure / Pinko (not open yet), Hogan, Tara Jarmon, Juwelier Friedrich and Woolrich were secured as new tenants. In November 2017, home living accessories retailer Depot opened a new store opposite Rigby&Peller. Now it remains to be seen whether this fledgling location can be effectively integrated in the city s established high street scene and, more importantly, if it can attract adequate footfall. Patrizia Pepe adds another upscale retail concept to Fressgass Peter Kaiser and IWC on Goethestraße DEVELOPMENTS IN OTHER CITY DISTRICTS Competition is likely to become tougher in the districts outside the city centre over coming years because two more reputed, ECE-managed shopping centres within the city (NordWestZentrum and Hessen-Center) are planning restructuring and expansion projects. In terms of size, the NordWestZentrum will be extended by an additional 4,000 m², and the Hessen-Center by 14,000 m², whereby the latter project has not yet been finally approved. In terms of competitive relevance, the planned internal restructuring work to the shopping centres will give them a much stronger profile. Another competition-relevant factor is that Kauhof will be giving up its store at the NordWestZentrum in 2019, which will put an additional 10,000 m² of retail space on the market. COMFORT City Report Frankfurt am Main von 11

9 INVESTMENT Frankfurt s international profile and excellent rankings expose it to an extraordinarily high level of demand for investment properties that the market cannot even come close to meeting. Surplus demand in such a magnitude is the reason for the high to exorbitant prices in special locations such as Goethestrasse. At the moment, there is no end in sight to this trend. PURCHASE PRICE FACTOR 31,0-33,0 Over the past twelve months Frankfurt has seen several transactions, including the biggest retail property deal of the year, a recent package deal in which Signa acquired the UpperZeil development (together with Upper West in Berlin, Kaufmannshaus and the Alster-Arkaden in Hamburg and a 50 % stake in Karstadt s Munich Central Station store) from RFR. Extremely high surplus demand for high street properties in Frankfurt - as in other cities - is reflected by initial returns of 3.0 to 3.5 percent. The collector s prices on Goethestrasse offer a return of up to 3.0 percent, which is a further indication of the city s profitability, its unique locations, and confidence in the luxury retail segment s strength. Upper Zeil Source: RFR Management COMFORT CITY RANKING 2018 Demography / (socio-)economy Retail trade Location and real estate Using a scoring model, the parameters cover three major areas, within which individual sub-indicators are also analysed. In detail these are as follows: Demography/(socio-)economic index (Parameters for population/development, GDP, employment, unemployment, tourism, retail purchasing power) Retail trade index (Parameters for the catchment area: population size and level of demand, retail centrality, fashion centrality, as well as city centre sales, sales areas and sales-area productivity) Location and real-estate index (Parameters for the rents of small/medium-sized spaces, location / retail space structure of the city centre, industry/operator mix in the city centre, rental demand, intensity of demand [Overall rental space demand in m2 in relation to the available retail spaces in the city centre]) As a result of the city s positive retail developments, Frankfurt is still one of the highest-ranked German cities in the COMFORT City-Ranking. Scoring 88 out of a maximum of 100 points, it is among the Top 7 ahead of Cologne and Stuttgart. On the other hand, it has not (yet) achieved the status of Munich, Berlin, Hamburg and Düsseldorf. COMFORT City Report Frankfurt am Main von 11

10 COMFORT CITY RANKING 2018 METROPOLITAN COMPARATIVE SCORING (IN %) Munich Stuttgart Hamburg Berlin Frankfurt Düsseldorf Cologne SUMMARY AND OUTLOOK Frankfurt is an international city with international residents and international guests. As such, it is still a key location for German and international retailers, and a popular testing ground for new retail concepts. It s no coincidence that US chain Five Guys opened its first restaurant and Saks OFF 5TH (luxury off-price segment) opened one of its first German stores in this city. The Zeil high street has a footfall of almost 15,000 pedestrians every hour and it did beat Kaufingerstrasse in Munich and Schildergasse in Cologne again in However, there are diverse shops on the market in Frankfurt s prime locations as can be said also for other German cities. Although tenants are not letting owners dictate the rents to them, vacancies are unlikely. There is still high demand for premises from retailers with new high street concepts. High street rents are only increasing in a few cases at present. Most are stagnating and, in some buildings, historical rents are being overturned. The investment market has not been linked to the rental market for some time now, which is why sellers are securing top prices. According to the analysis by COMFORT s retail and property experts, Frankfurt is still one of the most coveted locations in Germany for both retailers and investors. This is impressively documented by the new projects mentioned in this report. COMFORT City Report Frankfurt am Main von 11

11 CONTACT LEASING / INVESTMENT JÜRGEN KREUTZ COMFORT Düsseldorf Fon: Mobil: kreutz@comfort.de INVESTMENT EGON MEINERS-HAGEN COMFORT Düsseldorf Fon: Mobil: meiners-hagen@comfort.de Editor: COMFORT Holding GmbH Kaistraße 8A Düsseldorf RESEARCH & CONSULTING OLAF PETERSEN COMFORT Research & Consulting Fon: Mobil: petersen@comfort.de About the COMFORT Group: Since it was founded in 1979, the COMFORT Group has specialised in the sale and letting of commercial properties, specialist stores and retail units. As a proven retail property expert, COMFORT makes its know-how available via a consultancy services portfolio which includes expertises, second opinion appraisals and third party due diligence reports. It also provides shopping centre consultancy services and has a separate Luxury Retail unit. The retail specialist is also exclusive partner of Cushman & Wakefield for retail property letting in Germany. The COMFORT Group is headquartered in Düsseldorf, and has offices in Berlin, Düsseldorf, Hamburg, Leipzig, Munich, Vienna and Zurich. Platz Media Contact: Karolina Müller, Unternehmenskommunikation Kaistraße 8A, Düsseldorf / Fon: / mueller@comfort.de DEFINITIONS Rents in prime locations All statements pertaining to rents are to be read with the following in mind: New rent contracts drawn up in absolutely prime business locations for fictive, purely ground floor sales areas; ideal shop space has ground-level, step-free access, is fitted out to a high standard and, as far as possible, its layout is at a right angle to a shop window with a minimum length of 6 m (for a size of m²) or 10 m (for m²); peak rents in EUR per m², per month, plus statutory VAT and service charges Purchase price factors The purchase price factors, shown in their full range, serve as a general orientation for the currently achievable purchase price for commercial buildings (rental income from retail > 60%, current rent at around market level) with a typical sales volume in the prime location of the respective city. Technically, the purchase price factor represents the multiplier for calculating the purchase price of a commercial building without a maintenance backlog, when multiplied with the respective annual net rent. Share of city centre Figures in percentage. This value indicates the share of the city center in sales revenue or in the sales space of the entire city area. Purchasing power, Centrality parameters The purchasing power index complements the information on population size for a given location with qualitative criteria. The average value has been standardised nationwide at 100. A value above 100 signals that a location has above average purchasing power potential. However, the purchasing power index does not provide any information as to whether the available capital is in fact spent in the location in question or not. The centrality indicator shows whether, on balance, purchasing power is flowing into or away from a particular location. A value over 100 indicates that the inflow of purchasing power from the surrounding area is higher than the outflow from the city. The centrality indicator thereby sheds a special light on the attractiveness of a location for the retail trade. Fashion centrality Analogous to the industry-wide centrality parameters (= retail centrality), the fashion centrality indicator sheds light on the situation in an important sub-sector the key city-centre segment fashion, which in turn comprises the two product segments clothing/textiles and shoes/leather products. Catchment Area Cartographic representation of geographic areas in terms of the city s importance to their resident population as a shopping destination. Blue represents the core city area (zone 1) and red represents the immediate and extended catchment area (zone II). COMFORT City Report Frankfurt am Main von 11