Anyone who comes from Munich but has lived abroad for the past 15 years and is now strolling through Kaufingerstrasse on a visit home will rub their eyes in amazement. In the pedestrian zone there, tenants have changed in almost three quarters of all shops since 2006. This is shown by the new fluctuation analysis of the Real Estate Association Germany South (IVD) for the top shopping locations in Munich. According to this, the branches of large chains in particular are on the rise – and not only in Kaufingerstraße – while long-established retailers are finding it increasingly difficult.
The most striking example this year was the Kaut-Bullinger company, which closed its parent company near Marienplatz. At the end of 2020, another traditional business had to be given up with the Sport Münzinger in the town hall.
According to the IVD, 96 percent of all shops on Kaufingerstrasse are now owned by chain stores. Maximilianstrasse and Theatinerstrasse have similarly high values, while half of the retail space at Marienplatz has not yet been rented by large chains. But there, too, chain stores have increased, and Stephan Kippes takes a critical view of this development. “Because companies that do not have branches are the icing on the cake,” says the head of the IVD market research institute. “They give a retail location a specific profile and flair.” According to Kippes, the Corona crisis accelerated the trend towards chain stores because the difficult circumstances led to more business closures. “It was particularly difficult for concepts that weren’t going so well during this time.”
According to the IVD, rents in the most sought-after shopping locations have fallen significantly as a result of the pandemic. While a shop with an area of 80 square meters and five meters of shop window front still had to pay 410 euros per square meter in spring 2020, this value dropped to 280 euros in the following two years. The situation was similar for larger shops with an area of 200 square meters and eight meters of window front: Here the rent in the prime locations fell from 320 to 215 euros. “But you have to earn these sums first,” emphasizes Kippes.
Showrooms from manufacturers of electric cars are also a trend
The fluctuation in the past two years was particularly high in Sendlinger Strasse. Kippes sees the reason for this in its conversion into a pedestrian zone. “Rents have risen there, which has led to changes in store occupancy – and to an increase in the number of branches. Chains and franchisees are increasingly moving to such locations because they are more able to cope with the increased rents.” According to the expert, the same applies to so-called flagship stores of large companies, which can increasingly be found in top shopping locations. “Perhaps less attention is paid to whether this is carried out down to the last detail, because the companies also want to advertise their brand,” explains Kippes.
The toy company Lego recently opened a flagship store in XXL format on Kaufingerstraße. “I was a bit surprised that this happened on such a large scale and on two levels in this location,” comments Mark Goldmann from the real estate company Goldmann & Partner. He points to another trend, namely the increasing number of electric car manufacturer showrooms. One of these will soon be opening on Kaufingerstrasse across from the Lego store, by the US company Fisker. “It seems that these manufacturers are actually looking for inner-city locations to appeal to the public,” says Goldmann. “I’m very curious to see what effect such a marketing suite will have.”
The development in the valley, which will become a pedestrian zone next year according to the city council decision, is also interesting from the point of view of the real estate experts. This would make the situation more attractive for dealers, says IVD expert Kippes. “We will have a shift to the valley because some assume that it is a little cheaper than in Kaufingerstrasse.” This is likely to be accompanied by an increasing number of branches there, which is currently 67 percent.
Overall, after the difficult Corona years, people are experiencing “a certain recovery” in retail, Kippes sums up – although he also sees “dark clouds”. Tourism in Munich is not yet back to the level it was before the pandemic, and there is also the war in Ukraine. “People are afraid of the recession and the next energy bill,” says Kippes. “All of this slows down the mood to buy.”