For some time now, estate agents, property owners and industry experts have been observing that commercial properties in prime locations in major cities are becoming increasingly difficult to let. Retail space and the associated office space are particularly affected by this. Whilst a few years ago this trend was initially only evident in smaller and medium-sized towns with pedestrianised areas that appeared outdated, prime locations in Germany’s major cities – such as Hamburg – are now also affected. According to an analysis carried out by JJL, around 7.7 per cent of the approximately 246,000 square metres available for retail use in these areas remains unlet over the next 18 months, whilst there are as yet no plans for 8.1 per cent of the 209 sites identified as prime locations.
For Dirk Wichner, Head of Retail Leasing at JJL Germany, the reasons are clear: “The impact of online retail and the resulting shift in consumer behaviour is profound. The days when there was virtually no vacancy in the retail sector are a thing of the past.” The textile retail sector, in particular, is under pressure. Mario Litta, Team Leader Retail Leasing at JLL Hamburg, adds: “In the current market situation, a prime location such as the Neuer Wall is seeing an oversupply of space coupled with declining footfall.”
Dr André Helf, CEO of the Collection Group, has also observed this trend. He offers retailers a cost-effective alternative: “We keep a constant eye on market developments, and naturally we are very familiar with the upheaval taking place in Hamburg, amongst other places. However, our Business Centre in Hamburg is situated in the immediate vicinity of the Neuer Wall, in a prime location. There, retailers who manage their sales and administration online can continue to benefit from one of Hamburg’s best addresses – whilst continuing to run their business digitally. High costs for large storage spaces, for example, are eliminated, as goods are dispatched directly from the import port or the production facility. Our packages are designed so that customers only rent the office space they actually need – and only pay for the time they use it. The traditional models of long-term commercial lease commitments do not apply here. Furthermore, our COLLECTION Business Centre in Hamburg naturally features prestigious, wonderfully functional conference rooms that can be booked at very short notice if required – for meetings with suppliers, for example.”
Mario Litta of JJL sums it up: “The Hamburg market is facing major challenges – retail lettings are currently generating just over half the turnover seen in 2014.” The cost pressure is enormous – and can be significantly reduced through digitalisation and by moving into a business centre.
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