Most retail units are formed out of the lower floors of what were once government residential buildings, with low floor to ceiling heights, restricted floorplates and in many cases split floor levels with restricted shopfronts. Delivering modern retail space in this area, suitable for the development of a state-of-the-art showroom was going to be a challenge.The area has always been a trendy location for young people. The residential environment is an affluent mix of old and new. The location is hip and very fashion and lifestyle oriented. The location is also increasingly establishing itself as a place for showrooms and cutting-edge technology due to the opening of Apple. Tourists, Berliners and influencers like to spend time here.

Landlord details

A Family Office (Swedish) represented by a national independent asset manager.

TIMING

We had identified very early on, Neue Schönhauser Straße as one of the few suitable premises in the area. We were also aware that the occupier, clothing brand Mavi, did not intend to renew their lease. Many fashion brands were struggling in the Hackescher Markt area but the arrival of Apple who had just committed to a new store to be developed on Rosenthaler Strasse changed this, with the profile and mix of the area moving from a more eclectic fashion-based location to one focused on cutting edge technology.

We engaged with the landlord through the asset manager and presented Polestar not as a motor company, but as a cutting-edge technology and lifestyle brand, more akin to Apple than a traditional car company. Initial engagement commenced in May 2019, a full 18 months before the transaction was completed.

Construction or other building issues

Several technical issues arose during the detailed negotiating phase, principally around vehicle access through the shopfront openings and power supply. These were dealt with practically once onsite meetings could be arranged.

The principal issues that emerged were securing permits for the building works required, the user and it transpired changes to the pavement areas to the front of the building.

As is normal in Germany, shop fitting works require a building permit. In this instance a change of use permit to vehicle sales was also required. The initial plan was for the display vehicles to be brought into the building to the rear via an adjoining car park. A subsequent survey of the building showed that the car park entrance was considered too narrow and that the display cars would have to be brought in through the front of the store. This was possible with some practical amendment to the shop front. It was identified however that several fixed pillars on the pavement would either have to be removed permanently or converted to a type that could be removed as required. These were the property of the local authority and therefore needed their consent and an additional permit.

During negotiations the local authority required that the height of the pavement kerb also be dropped to facilitate car access. This also needed to be added to the permit application.

These permitting issues caused significant delay to the transaction.

Car parking and test drive access

The neighbouring site has an adjoining small surface car park to the rear. The initial plan was to use this as the test drive hub however issues around initial power supply and then the quality of access meant that alternative arrangements had to be found. The Savills team found a number of solutions within a reasonable 5 to 10 minute walking distance which were ranked on accessibility, availability of power supply and quality of garage. A selection was made, however the delay in securing permits for the property led to a serious timing issue as the car park owner was looking for a lease commitment whilst the store deal was still unconditional. Ultimately a solution was found through an option payment.

Key learnings

• Presenting Polestar as a lifestyle and technology brand, was more fitting with the future of the evolving Hackescher Markt area.
• This was particularly important here where the landlord’s commitment and patience was majorly tested due to the permit delays.
• Car parking became an issue. As the landlords were not connected, the car spaces had to be acquired separately. Being able to deliver these negotiations in parallel was vital to the successful acquisition.

For more information, contact Larry Brennan.