frankfurt

FRANKFURT
A COVETED HIGH STREET
AND LUXURY RETAIL LOCATION
JUNE 2016
IN FIGURES
Federal state:
Located on the River Main, Frankfurt is an international
financial and service hub that is central to the dynamic
Frankfurt-Rhine-Main economic area’s status as one of
Europe's top business regions. Frankfurt is one the
leading cities in Europe as a result of its central location,
its excellent infrastructure with one of the continent’s
biggest airports, its concentration of forward-looking
enterprises and its international orientation. As the seat
of the European Central Bank, Frankfurt also has
international significance from a monetary policy
perspective.
Hessen
Inhabitants:
717,624
Population development:
+ 2.3 %
Employees:
541,709
Unemployment rate:
6.7 %
Purchasing power:
113.3
Centrality parameters:
104.6
Relevant shopping centres:
Skyline Plaza (C), MyZeil / Palais Quartier (C),
Zeilgalerie (C), NordWestZentrum (S), Hessen-Center
(S), Main-Taunus-Zentrum (Sulzbach) (P)
C=City
S=District P=Outskirts
Source: state statistical offices, GfK GeoMarketing GmbH, Federal
Employment Agency
Prime retail rents
The high diversity of companies located in the city
provide it with dynamism, stability and crisis resistance.
Although famous for its financial sector, Frankfurt is also
home to many other key industries such as the creative
sector, IT and telecommunications, biotechnology and
life sciences, logistics and the industrial sector. Fast and
simple market access is guaranteed by the city’s
institutions and educational establishments.
from 2005 - 2015 in EUR/m²
80-120m²
As a result of its excellent infrastructure, Frankfurt isn’t
just easily accessible, it is also excellently networked. It
is actually one of the world’s most important data traffic
hubs and a city known and loved for its urban planning
concept that minimises the distances people have to
travel.
300-500m²
350
300
250
200
150
100
50
0
05
06
07
08
09
10
11
12
13
14
15
City centre area
Frankfurt
Ø 500T - 1 Mio. Inhabitants
Proportion of
sales in %
Proportion of
retail space
in %
0
10
20
30
40
Frankfurt’s strong international orientation makes it an
attractive place to work for high quality employees, and
the city also has an international and business-oriented
education sector. Frankfurt is the German city with the
highest level of commuters - 265,700 on a daily basis and, according to forecasts published by the Regional
Statistical Office, Frankfurt’s historic strong population
growth trend is likely to continue (16.5% growth by
2030).
Around 30 percent of the lecturers at the Goethe
University are foreign and the city has numerous
international nurseries and schools. This international
character obviously has an impact on Frankfurt’s
cultural life. The city’s diverse cultural scene includes
something for everyone, and it also offers excellent
living quality, with numerous recreational parks and a
continuous increase in high-quality residential space.
Eight million overnight stays every year reflect this.
Source: COMFORT Research & Consulting
COMFORT City Report Frankfurt 2016
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THE CITY'S SIGNIFICANCE AS
A RETAIL LOCATION
PURCHASING POWER AND
CENTRALITY PARAMETERS
Purchasing power
Centrality parameters
It isn’t surprising, then, that demand from a German and
an international clientele for retail space is high, and that
this demand exceeds supply both in Frankfurt and at
other prime locations in the Rhine-Main region. There is
also a high level of interest in retail properties from
investors according to COMFORT’s Managing Director
Jürgen Kreutz.
Berlin
Düsseldorf
Frankfurt am Main
Hamburg
Cologne
Munich
Stuttgart
0
25
50
75
100
125
150
Source: GfK GeoMarketing GmbH
FASHION CENTRALITY
Berlin
Düsseldorf
Frankfurt City currently has turnover of around EUR 1.4
billion. That accounts for 32.7 percent of Frankfurt’s total
turnover, which is an impressive contribution.
COMFORT emphasises that the city centre’s retail
space productivity is among the highest in Germany at
EUR 5,100/m², which is only topped by Munich and
Hamburg.
Frankfurt’s retail purchasing power is significantly higher
than the national average. Its centrality ranking in the
Rhine-Main conurbation is, however, slightly less
impressive as a result of strong competition from other
cities, especially Wiesbaden, Mainz and Darmstadt.
Frankfurt am Main
Hamburg
Cologne
Munich
Stuttgart
0
50
100
150
200
250
Source: COMFORT – Research & Consulting
CATCHMENT AREA
Source: COMFORT – Research & Consulting, base map RegioGraph
COMFORT City Report Frankfurt 2016
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In terms of its fashion centrality, Frankfurt is ranked fifth
in a direct comparison with other German cities.
The inner city population is just under 718,000 and the
inner city catchment area has around 2.3 million people
living there. It essentially comprises the conurbation and
the Frankfurt-Rhine-Main region, which extends from
Frankfurt via Bad Nauheim, Hanau, Darmstadt, Mainz
and Wiesbaden to Bad Camberg.
Zeil: a high street where some of the highest footfall figures
in Germany are recorded
PRIME LOCATIONS
ZEIL
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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
A vertical shopping centre, MyZeil, with around 47,000 m² of retail space
Very wide pedestrian zone lined with plane trees and food pavilions
New tenants: Tezenis, Samsung
Current rent EUR 300/m²
STEINWEG
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Relatively short street in a prime location with average footfall
High quality/fashionable location
Links Hauptwache to Goetheplatz
New tenants: Thomas Sabo, & Other Stories
Current rent EUR 145/m²
BIEBERGASSE / AN DER HAUPTWACHE
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Links Zeil to Fressgass
Footfall has increased as a result of the traffic-calmed link to Zeil
Current rent EUR 190/m²
GOETHESTRASSE
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Clearly defined luxury location with genre typical footfall
Road runs parallel to Fressgass
A high concentration of high end luxury retailers, such as Chanel,
Tiffany & Co. and Hermès
New tenants: Chopard, Etro, Hublot, MCM, Mulberry, Berluti, Hackett
Current rent EUR 245/m²
COMFORT City Report Frankfurt 2016
PRIME RETAIL RENTS
in EUR/m²
80-120 m²
300
300-500 m²
170
80-120 m²
145
300-500 m²
76
80-120 m²
190
300-500 m²
65
80-120 m²
245
300-500 m²
125
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FRESSGASS (GROSSE BOCKENHEIMER STRASSE)
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Predominantly cafes and restaurants (with outdoor seating) and small
units as a result of the “Food Alley Charter”
Change as a result of the increasing numbers of fashion retailers, some
with newly developed large-scale stores
Connects the banking/opera districts to Zeil
Higher tenant demand and therefore above-average increases in rents
during recent years
New tenants: Coffee Fellows, Seiko, Cadenzza, Patrizia Pepe (summer
2016), Tesla
Current rent 205 EUR/m²
80-120 m²
205
300-500 m²
105
AN IN-DEMAND LUXURY LOCATION
Developments in the Frankfurt retail scene are still very dynamic. The final tenant at ONE Goethe Plaza,
Bottega Veneta, moved into the premises in 2014, and new projects are already underway and in the
pipeline.
Groß & Partner and Peakside Capital Advisors are hoping to follow up on their success with ONE Goethe
Plaza and are planning to enlarge the luxury district at the end of Goethestrasse with the Ma’ro complex. It
remains to be seen whether this building and its impressive tenants will attract the necessary footfall to
ensure that the luxury district actually will grow. Munich-based bar and pizzeria chain H’ugo’s and leather
goods retailer Picard, which is currently on Goethestrasse, were announced as tenants at the beginning of
the year.
Ma‘ro - Extending the luxury mile into the Opera District, source: Groß & Partner / Peakside Capital Advisors
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A shopping circuit extending from Goethestrasse, via Neue Mainzer Strasse into Neue Rothofstrasse and
then back to Goethestrasse via Luginsland, is planned.
Both Ma’ro and another building complex which is
being constructed by FGI on Luginsland, the side
street connecting Rothofstrasse and Goethestrasse,
with Brunello Cucinelli and Etro as tenants,
complete this circuit. The foundations are now in
place for the exclusive extension of the luxury
district, impressively demonstrating the surplus
demand from luxury retailers for retail locations in
Frankfurt.
The conversion and extension of the “Goethe 34”
building between Goethestrasse and Grossen
Bockenheimer Strasse was also completed in 2015.
Both Twin Set and luxury leather goods retailer
MCM have opened stores there. Jil Sander relocating there from another address on
Goethestrasse - and exquisite shoe manufacturer
Berluti complete the tenant list.
Since november in Luginsland 1: Etro (400 m²)
Massimo Dutti is still waiting for building permission
at Goethestrasse 3. At the end of 2015 the Spanish
fashion label leased the former Airfield store so that
it could enlarge its own store. The unit has now
been sublet until planning permission is granted and
the conversion can commence. In March 2016,
British luxury leather fashion brand Belstaff opened
its second store in Germany after Munich and, at
the beginning of April, True Religion opened a popup store for three months.
Other developments on Goethestrasse are the
enlargement of the Chanel and Ferragamo stores,
and the opening of a Lagerfeld pop-up store in the
former Jil Sander unit. It will be retailing bags,
sunglasses, watches, fragrances, books and
fashions in the designer’s typical black and white
designs until the end of the year.
There have also been some changes on Zeil. The
final tenant to move into the new building at Zeil 123
„Goethe 34“
in summer 2015 was Swiss watch retailer Swatch.
The big Swatch store is located in the building’s prominent corner unit, which offers approximately 150 m² of
retail space. Fossil had originally intended to lease this unit, but it then decided to open a smaller store than
planned. Although the first floor was originally designed to be retail space, it is not currently being used for
that purpose.
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Now that dm-Drogeriemarkt, Fossil, Swatch and the Turkish Isbank have moved into Zeil 123, all retail units
are leased and open for business.
The next big construction project at this prime Frankfurt location is already in the planning phase. It involves
the transformation of the Zeilgalerie into “UpperZeil”. The gutting of the interior of the building and its
conversion will commence in the second quarter of 2016. The project is scheduled to close out in 2018. A
new building in the space between the Galeria Kaufhof department store and the “MyZeil” shopping centre
will have retail areas extending from the basement to the seventh storey, divided into four retail units. This
new building will have a total leasable area of around 14,800 m² and the four retail units on the ground floor
will be accessed directly from Zeil.
“UpperZeil“, source: RFR Management/KSP Jürgen Engel Architects
Galeria Kaufhof will be extending its adjacent retail areas to a size of around 10,700 m² up to the seventh
storey. Reserved will also be leasing around 2,600 m² and Vodafone and Benetton are opening flagship
stores in UpperZeil. This project puts and end to the Zeilgalerie’s problematic history, which was plagued by
design flaws and the credit fraud affair involving property mogul Jürgen Schneider.
The current 24,000 m² Kaufhof store, which serves around 10 million customers a year, is one of the Kaufhof
Group's most profitable stores. It attracts a vast number of international shopping tourists, most of them from
China, a fact which is reflected by the store information signs at the escalators having both English and
Chinese translations.
A Samsung pop-up store recently opened at Zeil 119. The operators had been forced to move from the
Zeilgalerie as a result of the conversion plans. This property with the most prominent position on Zeil stood
empty for a long time after HAKO, a Leiser shoe brand, ran into difficulties and closed its store at the end of
2014.
COMFORT City Report Frankfurt 2016
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The commercial building at Zeil 111, location of
the Hirsch-Apotheke pharmacy - the parent
establishment of healthcare group Fresenius will be replaced by a new building at a cost of
around EUR 14 million. The original building
dating back to the 1950s will be demolished
with the exception of the Hirsch-Apotheke
pharmacy. Four to five smaller retail units will
be incorporated in the new building, and the
passage will be retained. This provides central
Zeil with an upmarket link to Holzgraben and
Kleinmarkthalle.
Zeil 119 with new tenant
The new building is scheduled to open in autumn 2017. All these developments plus the new retailers that
have moved to the city have enhanced its attractiveness, and the trend continues. The buildings that are still
under construction and the planned optimisations and extensions to the retail landscape will continue to
enhance the location’s value. Zeil gives Frankfurt one of the pedestrian zones with the highest footfall in the
country, and Goethestrasse gives it one of the most prominent luxury retail districts in Germany. These are
clearly the reasons why investor demand is high and property prices have risen sharply again recently.
INVESTMENT
Several deals have been celebrated in the Frankfurt investment
PURCHASE PRICE FACTOR
market over the past twelve months. Warburg HIH Invest
purchased the “TurmCarrée“ at the Eschenheim Tower for its
26,5 - 28,5 
open-ended special property fund “Top 7 Deutsche Metropolen
Immobilien Invest”. The former Woolworth building on Schweizer
Strasse in Sachsenhausen, whose current tenants are Müller
Drogerie and REWE, was sold by its private Dutch owner to a
10
20
30
40
fund. Invesco purchased the “maro” office and commercial 0
complex parallel to Goethestrasse from the developers Peakside
Capital and Groß & Partner. Over the next few years Groß & Partner will be creating quite a stir with their
new mega project at the Deutsche Bank‘s Rossmarkt site. The Gertler Estates Family Office purchased the
classic office and commercial building at Zeil 127 for its Aberdeen Asset Management portfolio.
Extremely high surplus demand for high street properties in Frankfurt - as in other cities - is reflected by initial
returns of 3.5 to 3.75 percent. 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.
COMFORT City Report Frankfurt 2016
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COMORT CITY-RANKING 2016
Demography / (socio-)economy
Retail trade
Location and real estate
The COMFORT City Ranking assesses the economic basis, power of attraction, and performance of the retail trade and retail properties in city centres. The index serves
as a factually substantiated basis for negotiating rental and purchase prices of city-centre retail properties in Germany. Technically, it is a weighted index of relevant key
data and parameters relating to demography and (socio-)economics, the retail trade, location and retail properties. For the most important 60 cities, which are represented
in this HIGH STREETS report with individual city reports, a total of 35 parameters determined topically and in the same manner for each individual city are entered. 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])
Frankfurt occupies an excellent fourth place in the current COMFORT City Ranking. Top population forecasts and
commuter rates have also contributed to the city’s productivity per unit area.
SUMMARY AND OUTLOOK
Frankfurt is still a focus of attention for German and international retailers, and a popular place for testing out
new concepts. As in other German cities, there are several anchor tenant stores available or “on the market”.
Although potential tenants aren't saying yes to every rent proposal right now, there won’t ultimately be any
vacancies. There is still high demand for high street retail space from new concepts.
High street rents are only increasing in a few cases at present. Most of them are stagnating, and in some
buildings historical rents are being overturned. On Goethestrasse and Fressgass some rents are rising
slightly, and demand still exceeds supply. The investment market has not been linked to the rental market for
some time now, which is why sellers are securing top prices.
Retail and property expert COMFORT summarises that Frankfurt is therefore one of the most attractive
locations in Germany, both for investors and for retailers.
COMFORT City Report Frankfurt 2016
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CONTACT:
LEASING
JÜRGEN KREUTZ
COMFORT Düsseldorf
Phone: +49 211 9550-140
Mobile: +49 175 7217701
E-Mail: [email protected]
INVESTMENT
FRANK KAISER
COMFORT Düsseldorf
Phone: +49 211 9550-134
Mobile: +49 175 7217710
E-Mail: [email protected]
RESEARCH & CONSULTING
OLAF PETERSEN
COMFORT Research & Consulting
Phone: +49 40 300858-22
Mobile: +49 175 7217720
E-Mail: [email protected]
Editor:
COMFORT Holding GmbH
Kaistraße 8A
40221 Düsseldorf
About the COMFORT Group
The COMFORT Group has specialised in the sale and letting of commercial properties and retail units in prime city centre locations since it was
established in 1979. 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. The portfolio also includes shopping centre consultancy
and management services. The COMFORT Group is headquartered in Düsseldorf and has offices in Berlin, Düsseldorf, Hamburg, Leipzig,
Munich, Vienna and Zurich.
www.comfort.de
COMFORT Group media contact
Frank Hinz, Corporate Communications
Kaistraße 8A, 40221 Düsseldorf / Phone: +49 211 9550-144 / E-Mail: [email protected]
DEFINITIONEN
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 80–120 m²) or 10 m (for 300–500 m²); peak rents in EUR per
m², per month, plus statutory VAT and service charges
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 2016
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