Kemper’s expects clear rental appreciation in Germany’s prime retail locations in 2008

The increase of rents for retail space in prime city locations continues to gain momentum in 2008. Kemper's, the German property advisor specialising in retail properties, projects an increase by about 5.1 percent (2007: +2.5%) on the national average.

In the Big 7 metropoles, rents have risen by up to 40 €/m² compared to the previous year, providing for an average rent increase in this group by 11% (2007: +5%). From a total of 185 cities analyzed in west and east Germany, 56% (2007: 36%) experienced rising, 43% stable and only 1% falling rents.

Kemper's determined top rents of more than €100/m² in 24 cities (2007: 21).

Retail rents range between €50 and €100/m² in another 50 locations.

West Germany average retail rent to rise by 5.4% – 60% of the 160 western locations analyzed show rental increases

Kemper's projects an increase of the average prime rents by 5.4% (2007:

+2.5%) for the 160 west German cities analyzed. This means that the upward trend from the previous year continues to gain momentum. Particularly in the Big 7 metropoles, the prime rents are considerably higher than in the previous year. Kemper's expects growth rates of 15% both for Munich
(€300/m²) and Frankfurt (€260/m²). In Düsseldorf (€225/m²), Berlin (€220/m²) and Hamburg (€215/m²), top rents are set to rise by 10 to 12.5%. In Stuttgart (€230/m²) and Cologne (€215/m²), the growth rates will be 9.5 and 5%, respectively.

East Germany: average rent rises by 3.0% – top 25 cities record highest average rent since 1998*
In the 25 east German cities analyzed (excluding Berlin), the average rents are 3.0% higher than in the previous year. This is the highest average value since 1998. The top scorers Leipzig (€115/m²) and Dresden (€100/m²) have retained their high level. Rostock (€90/m²) has reinforced its standing, leaving Erfurt (€85/m²) behind for the first time. Average rents of €85/m² give Potsdam a position among east German top 5.

Munich is Germany's most expensive retail location - Frankfurt ranks second, clearly ahead of the rest - Stuttgart completes the top trio

Munich remains Germany's priciest retail location; potential tenants must reckon with rents per square meter of up to €300. Such rentals rank the Bavarian capital among the international top 10. Second in the list is Frankfurt where rents are as high as €260/m², which is clearly ahead of the rest. On ranks 3 to 7, Stuttgart, Düsseldorf, Berlin, Hamburg and Cologne are on a consistent level with top rents between €215 and €230/m². In 2008, rents in Dortmund will increase from €190 to €210/m², edging up to metropolitan price levels. Hannover (€180/m²) and Münster (€150/m²) complete the top 10.

Increase in rents irrespective of the city size

The strong rent increases in the metropoles reflect retail chain stores' focus on prime locations. However, Kemper's expects rents to increase also in medium-sized and small towns. In the 15 towns with 250,000 to 500,000 inhabitants that were analyzed by Kemper's, the average shop rents rose 4.1%to €98 during the previous year, missing the €100 mark only slightly. In the category of 100,000 to 250,000 inhabitants (55 towns), Kemper's expects an average growth by 4.3% to €63/m². In the 115 towns with less than 100,000 inhabitants, rents will increase by an average of 3.1% to €35/m².


Outlook for 2008: Kemper's expects stable demand for space

At the bottom line, Gerhard K. Kemper, Managing Partner of Kemper's Deutschland GmbH, is optimistic: "The mood in the letting market continues to be characterized by strong competition for space and ongoing relocation activity. Demand for retail space focuses exclusively on prime locations and is dominated by chain stores. A growing number of international concepts are preparing their market entry in Germany. For 2008, we expect stable demand for space and slightly increasing space turnover."

Source: Kemper's