Chic Streets Get Pricier

When names like Gucci or Hermes, Leysieffer or Godiva grace the shop signs, rent prices are bound to go through the roof.

In Germany, that's particularly true on Kaufingerstrasse, Munich's most glamorous shopping boulevard. The Bavarian metropolis is traditionally the most expensive location for retailers in Germany, said Gerhard Kemper of Kemper's, one of the country's most successful property management companies.

"In Munich, one square meter of retail property costs about 260 euros per month (about $36 per square foot), not including tax or utilities," Kemper said. "In comparison, one square meter in Paris costs about 750 euros and in London it's about 500 euros per square meter."

Though they're still well below the major European capitals, Frankfurt, Düsseldorf and Berlin trail closely behind Munich as the most expensive German cities for retailers.

Fifth Avenue in New York City, however, still takes the cake for being home to the world's priciest real estate, with an average monthly shop rent of 999 euros per square meter.

Shops go urban to find customers

Germany has recently been making a concerted effort to draw businesses back to downtown, following the previous trend of setting up shop outside the city, Kemper said.

"We're starting to see that shopping centers, which several years ago were being built at the edge of town or even in rural areas, are returning to the cities," he said. "Shopping center development is definitely focusing on downtown locations."

And for good reason: The new malls are proving to be customer magnates.

"It was important for us to find a nice location in Düsseldorf that was central and seen in a positive light by the city's population and is also accessible to international customers," said Martin Kurz from a well-known jewellery designer on Düsseldorf's trendy Königsallee.

The shop's customers represent a cross-section of the city's population, Kurz added.

After all, the shops on Germany's priciest streets can't afford a shortage of customers. Kemper estimated that, in general, monthly revenues of 8,000 to 20,000 euros are necessary for a retailer to keep its head above water.

"In the short-term, a shop can take an initial loss, but in the middle and long-term it has to pay off -- and it does," he said, adding that the economic upswing has finally arrived in Germany.