The German economy is and will be fuelled primarily by consumer expenditure and has had to take up the slack left by the temporary decline in orders for machinery and manufacturing goods & services. The retail market remains strong as it benefits from plenty of disposable income in Germany.
There is strong demand for space by Germans as well as international retailers trying to enter the market, which clearly has a positive impact on rents and investment values for prime and to a lesser degree secondary retail property. There is still a clear focus on prime locations and new retail locations. The focus is on the mainstream cities with Munich, Stuttgart, Hamburg and Dusseldorf on the international retailers most wanted lists.
The investor demand for prime retail as well as shopping centres and out of town retail/supermarkets with long investment grade leases is significant. Prices are getting close to the absolute height of the market from 06/07, but this time investors are clearly analysing and scrutinising the quality of the investments! Hence we are seeing a demand for high quality investment analysts to assist with the due diligence process. The market for secondary grade investments is returning albeit more slowly.
In addition to the resilience of the German economy, investors are drawn in by the fact that Germany still has relatively speaking a low retail density compared to other developed markets. More shopping centres and factory outlet centres are obtaining planning permission although; the process is involved and labour intensive.
All of these factors are obviously good for the employment market and as specialist real estate recruiters with offices across Germany we are able to observe the trends and source the best people in the those markets. The majority of the major brokers are looking to bolster their retail agency teams with qualified leasing agents with a track record, however there is a definite lack of good talent, as quite often the best people move on into site acquisition and development management or are tempted to work directly for retailers or shopping centre owners for their in-house leasing teams. There is a similar story with Asset Managers – there aren’t enough qualified people in the market, resulting in salary increases across the board for the major disciplines of leasing, development management and asset management.
The certainty and long term commitment makes retail in Germany a good place to be and we see both the demand for property and property professionals to remain buoyant.
Written by Timothy Rowe, Managing Director, Cobalt Recruitment