BERLIN — One of Europe’s largest department store chains has revealed plans to build a 450 million-euro retail development in central Berlin.
The Karstadt-Kaufhof Galeria chain is Germany’s largest and Europe’s third-largest after a merger late last year of the German assets of Hudson’s Bay Co. and the Austria-headquartered Signa Group. This week, it was revealed that star architect David Chipperfield had been commissioned by Signa to design a replacement for what is currently a thriving but somewhat shabby Karstadt in the increasingly trendy neighborhood of Neuköelln. The old store, built post-war, will be demolished and in its place there will be a 1.35 million-square-foot building that will include a rooftop terrace, hotel and office space as well as community amenities like child care, a gym and a library. The design, with two towers and Art Deco styling, harks back to the original seven-story department store built here in the Twenties that was destroyed during the Second World War. Only 183,000 to 125,000 square feet will be devoted to retail.
Department stores in general are having a hard time in Germany and further afield, said Markus Preissner, the head of research at Cologne-based market and retail research institute IFH. But Signa is doing the right thing with this project in Berlin, he told WWD. “Research suggests location and accessibility are key. Additionally what customers want now is a comfortable, convenient experience. Instead of a mono-use facility, [Signa] are offering multiple functionality — so customers will go shopping on the way to the gym or the kindergarten.”
When the merger between the Hudson’s Bay-owned Kaufhof chain and Signa’s Karstadt, with 5 billion in revenues, was approved by German cartel authorities late in 2018, there were concerns about what might happen to the department store properties, some of which occupy prime real estate in German cities. But this latest announcement appears to indicate Signa is more interested in further burnishing its portfolio of premium retail outlets.
The other important factor for department store growth is experience and emotion that online shopping cannot offer and Preissner said the Chipperfield design, with its historical background, offers this. Work on the Neuköelln project is slated to start at the beginning of 2021, after the lucrative Christmas shopping period, and is expected to take three years to complete.
This isn’t the only Karstadt-Kaufhof Galeria project that Signa is undertaking in the German capital. The company also wants to build another skyscraper just behind its Kaufhof Galeria on historic Alexanderplatz and is still trying to get permission from city authorities to erect a 900 million-euro cluster of skyscrapers on the city’s iconic shopping street, Kurfürstendamm, behind its KaDeWe department store — the latter is often described as Berlin’s version of Harrods of London.
Signa declined to comment on the project.