Sentiment in the retail market is considerably more positive and nuanced than the latest news from the retail sector would suggest. This is the conclusion of an analysis by BNP Paribas Real Estate covering the first three quarters of 2026.
The latest headlines concerning the high-street retail landscape highlight the complex supply-and-demand situation in the lettings market. For instance, the Inditex Group is poised to take over Peek & Cloppenburg’s ‘Weltstadthäuser’ and significantly boost the take-up of high-street retail space. Furthermore, further expansion of supply cannot be ruled out following Galeria’s latest insolvency. Whilst this once again presents major challenges for owners, landlords and cities, it also offers the potential to create space for new, sustainable concepts in city centres. The fact that one tenant does not necessarily have to vacate for another to reposition itself is demonstrated by the increasingly common partnerships, which, in the best-case scenario, unlock important synergy effects.
One example of this is the French sports retailer Decathlon, which is now establishing a presence not only in former Galeria department stores, but also as a sub-tenant in several Mediamarkt branches and, soon, at IKEA in Hamburg-Altona. Whilst one retailer now requires significantly less floor space than it did five or ten years ago, these arrangements enable the other retailer to tap into entirely new locations. Ideally, both parties, as well as the town centre or the shopping centre, benefit from this arrangement.
The key findings of the BNP Paribas Real Estate retail market analysis:
Inner-city retail space take-up in Germany:
- 385,000 m² in Q1–3 2026 (an increase of 10 per cent compared with the five-year average)
- 150,000 m² in Q3 2026 alone (40 per cent of the total volume up to the end of September)
- Around 57 per cent of the space take-up in Q3 was accounted for by lettings of over 1,000 m²
Overview of shopping centres, former department stores and prime locations:
- Around 57 per cent of space take-up in Q3 came from lettings of over 1,000 m²
- Around 110,000 m² in shopping centres, just over 50,000 m² in former department stores
- A-class cities with around 125,000 m², a good 20 per cent above the five-year average
With around 150,000 m², Q3 2026 ranks among the strongest quarters of the last five years in terms of take-up
The already strong letting momentum in the city-centre retail market during the first half of the year accelerated even further in the third quarter: around 150,000 m² of the just under 385,000 m² were newly let or opened between the beginning of July and the end of September, representing almost 40 per cent of the total volume. This means that the current figure after three quarters is a good 10 per cent above the average for the past five years. A remarkable 86,000 m² of the very strong Q3 result (representing almost 57 per cent) is attributable to large-scale lettings of 1,000 m² or more, which – despite the numerous and, in some cases, very extensive re-letting processes following the coronavirus crisis – demonstrates that the market still has available retail space in this category.
The ideal balance between rapid re-letting and a sustainable utilisation strategy
Whilst this is a positive development from the perspective of new lettings, it also highlights the high level of turnover on the exit side, where the same space sometimes has to be re-let several times within a short period. A notable example in this context is the Karstadt property on Frankfurt’s Zeil, which was initially taken over by the insolvent fashion retailer Aachener. This was followed by the Inditex brand Bershka and the Asian supermarket Go Asia, and once refurbishment is complete, TK Maxx and C&A, amongst others, are set to move in. Meanwhile, Bershka has found a new retail space in Skyline Plaza, and Go Asia has moved into the former Depot branch on Kaiserstrasse. “These lettings are indicative of the enormous pace of change in the retail sector, both in terms of new tenants and market players on the exit side. It is always important here to strike the right balance – depending on the location and setting – between short-term re-letting and a sustainable retail mix for the relevant reuse concept. The decisive factor is usually the length of the letting period. The past has impressively demonstrated that waiting for the right tenant or tenants can pay off,” says Christoph Scharf, Managing Director of BNP Paribas Real Estate GmbH and Head of Retail Services, summarising the dynamic market developments in many respects.
Shopping centres are responding with new local retail, fashion and leisure concepts
In addition to the lettings mentioned in former department store premises, which have once again reached a high level at around 50,000 m², the transformation process has also continued unabated in city-centre shopping centres. With around 110,000 m² of space let, this segment accounts for almost 30 per cent of the total letting volume. Here, too, a large number of new anchor tenants were secured in the third quarter, meaning that over half of all letting activity took place during this period. Several deals were concluded with New Yorker (including the Mall of Berlin, Skyline Plaza and City Center Langenhagen), Kaufland at the Schloss-Straßen-Center in Berlin (4,000 m²), Lager 157 at the Ernst-August-Galerie in Hanover (2,500 m²), Smyths Toys in the Rhein-Galerie in Ludwigshafen (2,500 m²), as well as the increasing integration of new leisure, entertainment and experience-based concepts (including the Swedish leisure concept Boda Borg at Boulevard Berlin), illustrate just how diverse the sector is.
Almost all the top markets are contributing with strong letting results
The same applies to the seven top markets, each of which has performed around 20 per cent above its five-year average so far this year, both in terms of the number of lettings and new openings (around 220 deals) and in terms of space taken up (just under 125,000 m²). Berlin continues to top the ranking, with letting volumes in the city centre’s retail hotspots and centrally located shopping centres totalling just under 36,000 m² by the end of the third quarter. There is also plenty of news to report from Frankfurt city centre (just over 20,000 m²), where repeated changes in the tenant mix at the former Karstadt branch (including TK Maxx and C&A), the numerous new concepts at Skyline Plaza and the changes to the luxury tenant mix on Goethestraße are driving strong market momentum. The four retail markets of Düsseldorf, Hamburg, Cologne and Munich recorded comparable results with space turnover ranging from around 13,000 m² to 15,000 m², with an average of just under 30 lettings/openings per location indicating brisk letting activity. However, with around 25 deals and 11,000 m², Stuttgart, the capital of Baden-Württemberg, also remains within striking distance, whilst the two most important eastern German locations, Dresden and Leipzig, can likewise report good results of around 9,000 m². Deals struck with expanding brands such as Uniqlo, Victoria’s Secret, Stradivarius, Name it, Only & Sons and Coolblue underscore the fact that active international concepts are increasingly setting their sights on the retail landscapes of Leipzig and Dresden, beyond the major cities.
‘Golden Autumn’ boosts footfall
Footfall figures have also recently shown positive signs, rising by a good 0.8 per cent year-on-year in September across the approximately 50 high streets regularly analysed by BNPPRE (around 48.2 million potential customers in September 2026). For Q1–3, total footfall is estimated at around 681 million people (an average of around 8.7 million per prime location), representing a very stable trend compared with the previous year (-0.7 per cent).
The supply structure is also likely to boost take-up in the short to medium term
Whilst at the start of 2026 there was still a perception that the momentum in the large-format retail segment was bound to slow down again in the long term due to the extensive re-letting processes of recent years, the first nine months proved otherwise: In addition to the closures of Galeria properties, consolidation measures by major German retail groups – primarily C&A, Peek & Cloppenburg and Anson’s – are increasingly leading to significant expansions in the retail offering. Added to this are further drivers such as the closure of large-format clothing department stores (e.g. Wormland) and downsizing to optimise branch networks (e.g. MediaMarktSaturn or IKEA), which have a direct impact on the supply situation in city centre locations and shopping centres. “Against this backdrop, it is reasonable to assume that the strong demand from international retailers will continue to be met by a corresponding supply of retail space as the year draws to a close. From today’s perspective, we expect above-average take-up for the year as a whole,” says Scharf, outlining his forecasts for the final quarter. Nevertheless, new tenants must once again hold their own in the challenging competitive environment of the high-street retail market to ensure they do not themselves contribute to a further increase in supply in the future.
