STUTTGART - Start | COMFORT...2.5 million it is the fourth largest metropolis in Germany and therefore even larger than cities that generally have ... It has a new, urban, clean and

STUTTGART

A VERY ATTRACTIVE CITY WITH A TOP RETAIL LANDSCAPE BUT A HIGH LEVEL OF INTERNAL COMPETITION

AUGUST 2017

COMFORT Städtereport Stuttgart 2017 2 von 11

IN FIGURES Federal state Baden-

Württemberg

Population 623,738

Population development + 1.8 %

Employees paying social security contributions 389,562

Unemployment rate 5.2 %

Retail purchasing power 112.3

Retail centrality 119.6

Relevant shopping centres Königsbau Passagen Stuttgart (C), Das Gerber (C), Dorotheen Quartier (in Planung; C), Milaneo (S), Cannstatter Carré (S), Schwabengalerie (S)

C=City S=Suburb P=Periphery

0

50

100

150

200

250

300

06 07 08 09 10 11 12 13 14 15 16

Prime Retail Rents

2006 - 2016 in EUR/m²

80-120m² 300-500m²

0 10 20 30 40 50

Verkaufs-flächen-anteile

Umsatz-anteile

CITY CENTRE AREA Stuttgart Ø 500 - 1 Mio. Inhabitants

Baden-Württemberg’s state capital, Stuttgart, is the sixth

largest city in Germany. It is clearly the centre and focal

attraction in one of the country’s largest and economically

powerful metropolitan areas. Stuttgart has an interesting

topography with hills, valleys and green areas spanning

heights above sea level that differ by up to 350 metres.

At the same time, the city has a very good level of

accessibility that will improve even more when the (rail)

infrastructure project “Stuttgart 21” is implemented.

The region’s strong economy is founded on a diverse

industry mix with global brands such as Daimler, Porsche

and Bosch alongside a lively and healthy SME sector and a

diverse service sector that extends from retailers and

restaurants to banks, insurance companies, and the state

capital’s public sector.

THE CITY’S SIGNIFICANCE AS

A RETAIL LOCATION

Stuttgart's above average purchasing power and centrality

ranking make it a traditionally very popular location for

national and international retailers. It is no coincidence that

the second city in global retail brand UNIQLO’s German-

wide expansion strategy after Berlin is Stuttgart. The city’s

high streets have been supplemented over recent years by

several shopping centres that have attracted quite a bit of

attention. Two examples of these are the Milaneo, which

opened in 2014 (as a key component of the central “Europa

Quarter”), and the Gerber Shopping Centre in the central

district of the same name.

These projects alone have added some 57,000 m² of new

retail space to the city, which certainly enhances the city’s

regional appeal as a shopping location, but also intensifies

competition between the retailers themselves and between

owners for tenants. This competition situation is unlikely to

improve after the opening of the new Dorotheen Quarter

surrounding the Breuninger department store in May!

Sources: State Statistical Offices, GfK GeoMarketing GmbH, Federal

Employment Agency

Source: COMFORT Research & Consulting


CATCHMENT AREA

75 100 125

Einzelhandels- zentralität

Einzelhandels- kaufkraft

Stuttgart Ø 500 Tsd. - 1 Mio. Inhabitants

PURCHASING POWER AND CENTRALITY PARAMETERS

0 50 100 150 200 250

FASHION CENTRALITY

Stuttgart Ø 500 Tsd. - 1 Mio. Inhabitants

Source: COMFORT – Research & Consulting, base map RegioGraph

In 2016 Stuttgart city centre realised retail sales of EUR 1.6

billion on a sales area of approximately 354,000 m². That

corresponds to average retail space productivity of around

4,600 EUR/m², a value which clearly emphasises the

strength and attractiveness of the city centre as a retail

location. (The average retail space productivity of German

cities with populations of between 500,000 and 1 million is

far lower at around 3,600 EUR/m².)

Stuttgart’s strong performance in this respect is partly due

to the size of its catchment area. With a population of

2.5 million it is the fourth largest metropolis in Germany

and therefore even larger than cities that generally have

higher populations such as Cologne and Frankfurt.

This large catchment area is also reflected in Stuttgart’s

extraordinarily high retail centrality index ranking of almost

120. That’s around 5 index points higher than the normal

ranking for a city in the category of 500,000 – 1 million

inhabitants. Stuttgart also has a far higher than average

fashion centrality index ranking of 204.6, reflecting the

city’s attractive core retail sector of fashion (clothing,

textiles, shoes, leather goods), as compared with 185.0 for

other cities of a comparable size!

Source: GfK GeoMarketing GmbH

Source: COMFORT – Research & Consulting


PRIME RETAIL RENTS in EUR/m²

PRIME LOCATIONS

KÖNIGSTRASSE

Classic prime location with established retail chains

One of the most attractive shopping streets in Germany with very good footfall

Consumer-oriented shopping street with an interesting and balanced mix of

retailers

Very good location quality along the entire length of the pedestrian zone

Considerable tenant turnover, particularly among large tenants (over 1,000 m2)

and compared to Germany’s other “Big Seven” cities, with new tenants TK

Maxx, Reserved, UNIQLO and soon Primark

New tenants: TK Maxx, Reserved, Kickz, Decathlon Connect, Calzedonia,

Uniqlo, Rituals, Vorwerk, Apollo Optik, Pylones, Feinkost Böhm, van Laack and

Primark, Vodafone and dm-Drogeriemarkt in the building previously occupied by

Karstadt

Rents: approx. EUR 260/m² (small), approx. EUR 140/m² (medium-sized)

260

80-120 m²

140

300-500 m²

TK Maxx has found a new home here on Königstrasse

A view of Stuttgart’s top prime location: Königstrasse


SCHULSTRASSE / MARKTPLATZ

Schulstrasse is the short connecting axis between the traditional prime

location of Königstrasse and the large Marktplatz with the Breuninger

flagship store

Schulstrasse: high footfall, partly due to the narrowness of the street, and

most stores are small-scale retail units with a high proportion of

restaurants and cafés, so it’s a real “gourmet street”

Marktplatz: Extension of both Schulstrasse and the luxury shopping

streets of Stiftstrasse and Kirchstrasse, supplemented by the new

Dorotheen Quarter

New tenants: the Osiander book store on the corner of Marktplatz and

Schulstrasse

Rents: approx. EUR 155 EUR/m² (small) especially on Schulstrasse,

although this top rent hasn’t been achieved on Marktplatz yet

STIFTSTRASSE / KIRCHSTRASSE

Stuttgart’s "small“ luxury high street which now has the new Eckerle

flagship after it moved from the corner of Königstrasse (new tenant

UNIQULO) to Stiftstrasse

The former international mix of premium to luxury retailers is changing,

partly due to Breuninger’s new DOQU quarter in the area between City

Hall and Schlossplatz, which is both expanding and enhancing this prime

location

New tenants: Eckerle (relocation) and Michael Kors, and in the DOQU:

Louis Vuitton, Woolrich, Zadig & Voltaire, Ikks, American Vintage, as well

as Hugendubel, Hallhuber, Gant, Diesel and BoConcept, plus a Hit-Markt

store and trendy restaurant concepts such as Oh Julia and Enso-Sushi

Stuttgart will soon be getting its first Rolex store in one of the Breuninger

department store's new shops and Sansibar is moving into Karlspassage

opposite DOQU

Rents: approx. EUR 180/m² (small), approx. EUR 110/m² (medium-sized)

110

300-500 m²

155

80-120 m²

180

80-120 m²

The Dorotheen Quarter opened on 30 May 2017. It has a new, urban, clean and stylish look that appeals to shoppers.


Stuttgart has had a new Bauhaus store since October 2016

STUTTGART IS BUILDING AND BUILDING AND BUILDING…

Stuttgart is still expanding! One thing that can’t be said

about Stuttgart is that the city has too few developments.

Baden-Württemberg‘s capital remains committed to

improving the city centre’s attractiveness for visitors and

tourists. Despite Stuttgart’s relatively compact size,

visitors encounter a very diverse retail landscape and

currently three – soon to be four – distinct shopping

centres. The Milaneo is the northernmost one. From

there, the Gerber Shopping Centre in the south can be

reached via the prime location of Königstrasse – which is

both a connecting axis and a shopping destination in its

own right. A new Bauhaus store with approximately 1,500

m² of retail space opened in the same block of buildings

in mid-October 2016. Königstrasse, at the heart of

Stuttgart, has been able to retain its status as the city’s

number one shopping destination despite competition

from the two new shopping centres and it continues to be

very popular with shoppers.

Thomas Sabo has moved to Marktplatz


These two shopping centres alone have increased retail space in Stuttgart city centre by almost 20 % – the

largest-scale expansion that any German city has experienced. And that’s not all. Stuttgart’s famous department

store Breuninger has been developing the Dorotheen Quarter (DOQU) between Marktplatz and Schlossplatz since

2014. DOQU has around 11,000 m² of retail space, approx. 28,000 m² of office space and approx. 3,000 m² of

residential space.

This project cost over EUR 200 million to develop and the DOQU opened in May 2017. It is expected that this new

shopping district will transform and enhance the entire area surrounding Markthalle and Karlsplatz, contributing to

its fast transformation into a new prime location. Despite the exponential growth in retail space as a result of the

new shopping destinations, new tenancies in the pedestrian zone are not declining. However, negotiations are

tending to take longer and top rents have come down slightly.

A distinctly high number of large retail units with sales floors larger than 1,000 m² have changed hands over the

past two years. TK Maxx moved into the former C&A store, Reserved secured the building formerly occupied by

Hugendubel, and in autumn 2016, UNIQLO opened a store in the prominent corner building formerly occupied by

Eckerle.

International retail chain Primark has already secured its second (!) store in Stuttgart city centre. It will be moving

into the SIGNA development at the building formerly occupied by Karstadt at Königstrasse 27 alongside dm

drogeriemarkt, Vodafone and another undisclosed tenant. The building has also been sold to a Union Investment

fund. Smaller retail units on Königstrasse are also in high demand and new tenants there include Rituals,

Calzedonia, Vorwerk and Decathlon. Decathlon has developed a small-scale system for city centres and now has

Calzedonia has opened a store on Königstrasse

The impressive-looking new Reserved store in the building formerly occupied by Hugendubel on Königstrasse


one of the first two Decathlon Connect stores in Germany at Königstrasse 10a on a space of around 50 m2. The

French sports goods retailer’s modern and simple concept combines online and greenbelt retailing with city centre

stores. Customers can have items purchase online delivered free of charge to the Connect store. When they pick

their product up they can test it out, try it on and exchange it if they don’t like it.

UNIQULO opened its first store in Germany outside Berlin on Königstrasse last autumn

Schlossplatz plaza on Königstrasse with the art museum looking resplendent in the evening sun – this is a great place to be!


0 10 20 30 40

KAUFPREISFAKTOR

INVESTMENT

Stuttgart continues to be a very attractive investment location for both

national and international institutional investors and family offices.

Several buildings changed hands last year in addition to the SIGNA

development with Primark as the main tenant mentioned earlier.

Significant deals include the sale of Königstrasse 10 to Aachener

Grundvermögen, the sale of Europe Plaza by FAY Projects GmbH to

Real I.S. and the sale of the Kronprinz building to Hines Immobilien.

Both transactions were in the high two-digit-million range. It is

estimated that an even higher price – in the region of EUR 120 – 130 million – was paid for the SchwabenGalerie

in Stuttgart Vaihingen. Swiss Life bought it from DFH-Fonds.

The fact that Baden-Württemberg’s regional capital also interests family offices is evident by the sale of HIH’s City

Plaza to a Spanish family office. These impressive transactions underline just how dynamic the Stuttgart

investment market is. Whenever investors are offered the opportunity to purchase a property in Stuttgart city

centre they immediately pounce on it.

25,0 - 27,0

The new Rituals store at the prime location of Königstrasse

A view of Königstrasse with impressive footfall!


COMFORT CITY RANKING 2017

The assessment of the city is based on the following parameters: • 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])

The German-wide COMFORT City Ranking 2017 on the basis of 35 retail and city centre-relevant parameters,

again confirmed Stuttgart’s top ranking as a shopping destination. Scoring 87 out of 100 possible points, Stuttgart

is a genuine TOP 7 city ahead of Cologne (86) but slightly behind Munich (92), Berlin (90), Hamburg and

Düsseldorf (both 89) and Frankfurt (88). The Swabian city’s performance in the macro and retail data sub-indices

is very impressive, although it performs less well in the dimensions of location and real estate. The reason for this

is the slightly weaker development of rents in the city and shows that Stuttgart’s recent retail space expansion

needs time to grow into the market and to be geared to the market.

SUMMARY AND OUTLOOK In conclusion, the capital of Baden-Württemberg offers an extraordinarily wide range of shopping opportunities. It

is a compact and genuinely first-rate city catering to all the needs and preferences of consumers. Stuttgart is very

popular with both German and international retail chains and almost all retailers who secure retail space in the city

become long-term tenants.

There is considerable interest in the Dorotheen Quarter and the re-opening of the Signa/Union Investment

development at the former Karstadt building on Königstrasse because they will further enhance the city’s

attractiveness. In connection with the latter development, it will be interesting to see what impact the Primark store

opening there will have on the existing Primark store in the Milaneo shopping centre and the Milaneo shopping

centre itself.

From an investment perspective, Stuttgart is extremely popular with both institutional and private investors.

Demand for good properties is high and will remain high in coming years.

Demography / (socio-)economy

Retail trade

Location and real estate

Pylones is another new tenant on Königstrasse


CONTACTS:

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 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)

RESEARCH & CONSULTING

OLAF PETERSEN

COMFORT Research & Consulting

Phone: +49 40 300858-22

Mobile: +49 175 7217720

E-mail: [email protected]

INVESTMENT

THORSTEN SONDERMANN

COMFORT Munich

Tel: +49 89 219988-80

Mobile: +49 175 7217722


LEASING/ INVESTMENT

MANFRED SCHALK

COMFORT Munich

Phone: +49 89 219988-10

Mobile: +49 175 7217706


Published by 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. Furthermore, the retail specialist COMFORT is exclusive partner of Cushman & Wakefield for letting of rental properties in Germany. 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 Daniela Reimertz, Corporate Communications Kaistrasse 8A, 40221 Düsseldorf / Phone: +49 211 9550-144 / E-Mail: [email protected]

http://www.comfort.de/

mailto:[email protected]

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STUTTGART - Start | COMFORT...2.5 million it is the fourth largest metropolis in Germany and therefore even larger than cities that generally have ... It has a new, urban, clean and