Malls becoming confined in inner city centres.

Despite the general oversupply in retail space, new shopping malls are still mushrooming in Germany. On average, more than one shopping mall is opened every month. The malls are getting smaller in confined inner city spaces, which promotes "vertical shopping" concepts familiar to Hong Kong architects and developers. That's likely to be in demand from investors in the sector.

A study by EHI Retail Institute revealed that 51 new shopping centres will be opened in Germany up to 2011, with the average size at 31,600 sqm, well below the average in other EU countries.

German shopping malls are now returning to the high streets in inner cities. Some 65% of newly or recently established centres are in city centres, with 33% in urban districts and only 7% in green field locations. It suggests a "renaissance" of inner city shopping, with the mix of brands and presentation of merchandise more carefully thought out for this style of retailing.

While in Hong Kong and other vertically-organised Asian city centres the concept of multiple stores is common, such stores have been rare in Europe and the US. Indeed, experience has shown that it's difficult to overcome customers' tendency to move horizontally, rather than upwards or downwards to shop.

New way of presenting shopping in Germany.

The landscape just changed.

The recently-opened, six level shopping mall MyZeil in Frankfurt saw the Dutch real estate developer MAB Bowfonds engage Italian architect Massimiliano Fuksas to design a new vertical shopping landscape.

To encourage people to circulate vertically, Fuksas designed the building so that the sky is visible even from ground level: the spectacular glass roof converges into a glass funnel dispersing natural daylight on all levels of the shopping centre down to the basement.

A fifty metre express elevator induces shoppers to move up to the top as a "second" ground floor.

Backbone to the roof.

To make vertical shopping work, a mix of anchor stores and small shops as well as a mix of retail and lifestyle users are essential, apparently. The stores are arranged along a vertical bone, with large magnet stores in the basement and at the top.

The Frankfurt vertical mall is managed by DTZ, a UK-based property management company experienced in managing vertical malls in Asia.

The trend is likely to migrate to medium-sized cities. One example is Braunschweig with a population of 240,000. Here, ECE, the top German centre management company, reconstructed the old castle destroyed in World War Two to provide 30,000 sqm in the new shopping centre, Schlossarkaden.

In Darmstadt (140,000 inhabitants) recently opened the Louisenforum (20,000 sqm). In Fürth (115,000 population) the Portuguese investor Sonae Sierra plans to integrate 25,000 sqm with 90 shops.

For Hong Kong companies considering entering the German or European market with retail operations or flagship stores, the German high street and inner city shopping malls are likely to be particularly attractive.

Most frequented high streets in Germany:

Source: Kemper's Jones LaSalle Retail GmbH, http://www.kempers-jll.net/index.php?spath=1000

Most frequented high streets focused on luxury goods:

Source: Kemper's Jones LaSalle Retail GmbH, http://www.kempers-jll.net/index.php?spath=1000

from Peter Staab, Frankfurt Office