Malls, not walls, in Germany's capital, but can it compete with the Internet?
BERLIN — Fashion outlets, a chain bookshop, drugstores, bakeries, fast food joints: Shopping centers in Germany are all pretty similar, inside and out. Most of these temples of consumerism have also aged, and are in urgent need of a facelift.
Even as the economy evolves, and part of it moves online, the goal is still the same: to fuel a desire to buy. The trend in Germany has been to move malls and outlets into downtown, like the Skyline Plaza and MyZeil in Frankfurt/Main, in an attempt to target wealthy city dwellers. Still, most feature similar mixes of leaseholders and mainly sell uniform mass-produced goods.
Berlin, however, is the exception. The new Mall of Berlin is set to open this fall, and it will be a shopping center that doesn't look like one.
Instead, it's really a business quarter, a city within a city, built in and among old structures and demolished buildings in an expanse between Friedrichstrasse and Potsdamer Platz. In a first phase there will be 270 shops and 30 restaurants on 76,000 square meters (818,057 square feet), plus a hotel on 12,000 square meters (129,167 square feet) along with offices and 250 luxurious apartments in a prime location.
In a second phase to be completed next year, another 50 shops are planned. This is only possible in Berlin where, because of the war and the post-war division of the city, there is still enough land for new construction.
And only in Berlin does such an investment make sense. The city is becoming a metropolis with a growing population and an expanding stream of tourists. The area of the city known as Berlin-Mitte is a popular destination for shopping and cultural opportunities for residents and tourists alike, and there will soon be a new stop on the itinerary: The Mall of Berlin located on historical ground, the old death strip of the Berlin Wall.
Developer Harald Huth is, according to his company's figures, shelling out one billion euros to build the center.
Arab money, American look
Huth and his High Gain House Investments (HGHI) have already built the "Gropius Passagen" shopping center in Berlin-Neukölln and "Das Schloss" (The Castle) in Steglitz — the one sober and business-like, the other elegant. He plans two further shopping complexes in Berlin.
Huth's co-investor in the Mall of Berlin is Arab Investments, in for 30%. Huth has collaborated on other projects with Arab Investments.
Andreas Kogge, a trade expert at real estate consulting firm JLL says we shouldn't think of the Mall of Berlin as a shopping center. "We're talking about the complete rebuild of an inner city neighborhood," he says. "Because of its sheer size, the project is unique in Europe. What's also unique is that a developer undertook such a massive project alone."
Kogge notes that many of the leaseholders would never take space in a shopping center — companies such as fashion firms Armani, Liu Jo, Wormland or Hollister. Peek & Cloppenburg department store has leased 8,000 square meters of space.
But Stephan Jung, chairman of the trade association German Council of Shopping Centers, notes the real challenge. "Customers can reach the biggest shopping mall in the world via Apple and Samsung. It's open 24/7 and is located in their jacket pocket or handbag," he quips. "This doesn't bring enough innovation to this bright, creative, fast world, nor does it sufficiently use all the possible channels."
Neither producers nor retailers have given enough attention to the immense increase in single-person households and the fact that women manage 65% of global consumer spending, Jung adds.
But Kogge says there is still space for the right mix of bricks and mortar. "We don't need more quantity, we need more quality," says the JLL trade expert. "The Internet has given consumers a whole other set of expectations and they're much better informed. New shopping galleries also have to offer more entertainment, and follow the Asian and American example of having larger food courts."
The Berlin Mall nonetheless continues the trend of building centers in the inner city, says trade expert Marco Atzenberger.
And since new spaces are rare, developers tend to go for former department stores that they then restructure. The results are significantly smaller shopping centers. In 2000, an average center had a total surface of some 33,000 square meters, but that's now down to 31,400 square meters.
Indeed, the centers themselves must also be about quality, not quantity. And as developer Harald Huth has shown, future shopping centers may no longer even be called shopping centers.