The Future of German High Streets: Why the Highstreet Is Reinventing Itself

*Prime rents under pressure, food service as the new anchor function, mixed-use as the future model: why the German high street is fundamentally reinventing itself – and what opportunities this creates for owners, investors and tenants.*

German high streets face a fundamental realignment. The current Highstreetreport 2025 delivers one of the most comprehensive analyses of the future of inner-city shopping locations in Germany – with a central question: what usage functions should the high street fulfil in the future? For owners, investors and retailers, the study provides a data-based basis for strategic decisions in a market that is changing faster than ever.

The report was created in cooperation with the City of Hanau, the German Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR), cima Beratung + Management GmbH, ecostra, Aachener Grundvermögen Kapitalverwaltungsgesellschaft, Völkel Real Estate GmbH and further partners. This breadth of contributors underlines: the future of the high street is not a pure real estate question – it concerns urban planning, economic development and society equally.

The transformation of the high street: from pure retail to multi-functional urban space

German inner cities are undergoing their deepest transformation in decades. What began before the Corona pandemic as slow erosion has accelerated into a structural transformation. Current industry analyses show: the high street of the future is no longer a pure sales location – it is a multi-functional urban space that must combine retail, food service, services, culture and living.

Prime rents under pressure: the new reality of retail properties

Prime rents for inner-city commercial buildings in Germany’s top locations have declined significantly since the pandemic. In cities such as Munich, Frankfurt, Hamburg and Düsseldorf, top rents exceeded EUR 300/sqm. Since 2019, BNP Paribas Real Estate has recorded significant declines especially in Munich and Hamburg, while Düsseldorf and Frankfurt remained relatively stable. (Source: BNP Paribas Real Estate 2019–2025)

According to JLL, prime rents in cities of 250,000+ inhabitants declined only slightly by 0.5 per cent versus the previous year 2024. In smaller cities of 100,000 to 250,000 inhabitants, the decline was significantly stronger at 2.8 per cent. Across all 66 cities surveyed by JLL, the prime rent fell 1.8 per cent on average. (Source: JLL, Retail Market Overview 2024)

At the same time, yields are rising: net initial yields, which stood below 3.0 per cent in top cities before the pandemic, have risen significantly as a result of higher interest rates and financing costs. For 2025, the average prime yield for commercial buildings in top-city locations is around 4.7 per cent. (Source: JLL Investment Market Overview 2025)

> “Net initial yields of around 4.7 per cent in top city locations offer more attractive entry levels than in the past ten years – provided investors choose their locations selectively.”

Food service as an anchor function: the most important demand category

The largest demand for vacant retail units in German inner cities comes from food service. According to a survey by cima Beratung + Management GmbH and the German Federation of City and Regional Marketing (bcsd), 47 per cent of the municipalities surveyed report strong or repeated demand from this segment. Food service is no longer a secondary use – it is the frequency driver number one. (Source: NRW Vacancy Report 2024, cima/bcsd)

The report also shows what residents want: 85.9 per cent want more green in their inner city. 47.6 per cent support inner cities serving less for shopping and more for leisure and experience in the future. 77 per cent say retail offers should have stronger regional relevance. (Source: cima Germany Study 2022)

These figures document a fundamental shift in mindset: the inner city as a pure retail location is a model of the past. The future lies in the experience space – a mix of consumption, culture, food service and dwell quality.

Mixed-use as the future model: from department store space to multi-functional property

Vacant large floors of former department stores such as Karstadt or Galeria are increasingly being converted into mixed-use assets. This transformation is, according to PwC and the German Retail Federation, no longer an emergency scenario but a deliberate strategy: retail on the ground floor, food service, offices and living on the upper floors create resilient rent structures and significantly reduce single-tenant risk.

A good example is Cologne’s Schildergasse, where a former shoe store was converted into a mixed-use asset with retail and a bouldering lounge – a model that shows how creative re-use can work.

What businesses demand: parking, cleanliness and attractive retail

The perspective of businesses reveals clear priorities. When asked for improvement suggestions for their location, 42 per cent name the parking situation first. 29 per cent demand better cleanliness and dwell quality. 17 per cent wish for the settlement of attractive retail and vacancy reduction. (Source: ExWoSt research study, BBSR 2024)

The discrepancy is interesting: while residents want more experience and food service, businesses prioritise accessibility and infrastructure. The challenge for municipalities and owners lies in integrating both perspectives.

Visit motives in change: shopping remains important, food service catches up

Shopping remains at 82 per cent the most important reason to visit the inner city. In second place come food-service visits, particularly strong in the 21-to-60 age group (68 to 78 per cent). Events, festivities and social occasions also gain importance – with highest values of 57 per cent in the 21-to-30 age group. (Source: ExWoSt research study, BBSR 2024)

For the younger generation, the inner city is less a shopping location than a social meeting place. Attractive food service offers and shopping options are named by 93 or 89 per cent as the most important attractiveness features – followed by cleanliness and safety as the second highest factor.

Funding programmes and municipal initiatives

Federal and state governments have set up extensive funding programmes. Under the Immediate Programme for Inner Cities and Centres in North Rhine-Westphalia, numerous projects were funded by the end of 2023: feasibility studies, interim acquisition of retail large-scale properties, disposition-fund leasing to re-let vacant assets and mobile urban green. The successor programme ZIO currently funds over 160 municipalities with around EUR 35 million in total. (Source: cima Beratung + Management / ZIO Programme NRW)

Value creation for inner-city retail properties

The report concludes with concrete recommendations for owners and asset managers. Central value drivers are: flexible floor division for mixed-use, investment in dwell quality (facade, ground-floor design), energetic modernisation (ESG conformity), and active tenant management with a focus on frequency drivers such as food service and services.

The message is clear: passive letting to retailers is no longer enough. Successful high-street properties require active management that considers changed usage claims of visitors and the economic realities of tenants equally.

International best practices: what Germany can learn from London, Vienna and Copenhagen

A look beyond the national borders shows how European high streets have successfully reinvented themselves. In London, Regent Street has kept its positioning as a prime address through active asset management by The Crown Estate – curated tenant mix, investment in public space, consistent focus on flagship concepts – while many British inner cities have suffered massively. Vienna has for years been betting on pedestrian zones with high dwell quality and a strong BID system along Mariahilfer Straße and Kärntner Straße. In Copenhagen, Strøget as one of Europe’s oldest pedestrian zones is a reference example for combining retail, food service and public space. What these examples share: consistent curation, long-term investment in dwell quality and active cooperation of owners, municipality and retailers. Exactly this triad is the template for the German high-street future.

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Frequently asked questions on the Highstreetreport 2025

What is the Highstreetreport 2025?

The Highstreetreport 2025 is an industry publication addressing the usage functions and economic viability of German shopping streets. The study analyses (re-)use structures and was created in cooperation with BBSR, cima, ecostra and further partners.

How have prime rents in German high streets developed?

Prime rents in top locations stood above EUR 300/sqm before the pandemic but have declined since. Across all 66 cities surveyed by JLL, the average decline in 2024 was around 1.8 per cent. For 2025/2026, a slight recovery of around 2 per cent annual growth is forecast.

Which use has the highest demand for vacant retail units?

Food service shows the strongest demand. 47 per cent of surveyed NRW municipalities report strong or repeated demand from the food-service segment, followed by services with public visitor traffic and owner-managed retail.

What do residents want for the inner city of the future?

85.9 per cent want more green, 47.6 per cent want less shopping and more leisure/experience, and 77 per cent demand a stronger regional relevance of offerings. The inner city is to shift from a shopping location to a life location.

What does mixed-use mean for high-street properties?

Mixed-use means combining different uses in one building: retail on the ground floor, food service, offices and living on the upper floors. This reduces vacancy risk and creates resilient rent structures.

What funding programmes exist for inner cities?

In North Rhine-Westphalia, the ZIO programme currently funds over 160 municipalities with around EUR 35 million. Before that, the Immediate Programme for Inner Cities and Centres supported projects such as feasibility studies, interim acquisition of large properties and disposition funds to re-let vacant assets.

How are yields for high-street properties developing?

Net initial yields have risen significantly – from below 3.0 per cent before the pandemic to currently around 4.7 per cent in top city locations. For investors this means higher entry yields, but also more selective location choice with a focus on frequency and stable anchor tenants.

For whom is the Highstreetreport relevant?

The report addresses municipalities, owners, investors, asset managers, retail companies and project developers. It offers data-based foundations for location decisions, use concepts and investment strategies in inner-city retail real estate.