Fluctuation in prime retail locations in Germany’s 'Big 7' real estate markets – an empirical survey

Retail trade is always subject to a high degree of change. The dynamics of change in the retail sector is intensified by the massive growth of the online trade.Changes in the classic retail trade are followed by changes that are of highest importance for the real estate industry with a more or less pronounced time lag. That is changes of the tenant-mix, stores, or even vacancies of outlets in the retail real estate market. This paper analyses the changes and turnover of retail outlets in the retail real estate markets of the 'Big 7', i.e. Germany's most important real estate markets, for the time period 2008 to 2018. An important indicator of change in the retail sector is the level of change of retail-tenants, that is the retail fluctuation.The paper focuses on retail outlets in high streets, as these prime retail locations are of the utmost importance for retail markets. In high streets, the majority of retail sales are generated and the highest rents are achieved. Furthermore, this real estate type is the flagship of the retail, or even the commercial real estate markets. In this respect, as described above, the paper compares the retail fluctuation in the “Big 7”, and it examines the extent of these changes.Basically, a distinction can be made, whether a change was initiated by a tenant, or several tenants, the landlord, or real estate development. At the same time the reasons for undertaking real estate developments can also be complex and can be caused by a tenant or several tenants who terminate their leases, or construction activities which are triggered by the landlord.At the same time a very low fluctuation rate is also not desirable, as trade also needs a certain level of change. A very low fluctuation can indicate that necessary adaptation processes do not take place, are pent up, or - even more unfavorably - no new operators or concepts are willing to spearhead this drive to change. Such a situation can at a later point in time initiate the downturn of a retail location, and an increased vacancy rate.