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Berlin seeks to keep rents down on commercial properties to save small shops

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Berlin seeks to keep rents down on commercial properties to save small shops
Costume and magic shop Zauberkonig in its former location in Hermannstraße, Berlin. Photo: DPA
11:08 CEST+02:00
Rents in Berlin are not only rising excessively for private apartments – but also in commercial properties. Here’s how the local government wants to take action.

When it comes to the debate about rising rental prices in large cities, one area is often overlooked: shops and businesses. 

While there are already regulations limiting rents for apartments in large German cities, such as the Mietpreisbremse (rental price brake), there are no comparable laws for commercial premises. 

But prices are undoubtedly increasing. In so-called "1-B locations" in Berlin, rents on large retail spaces went up by more than 260 percent between 2009 and 2018. For smaller spaces the increase was 200 percent.

In prime sites (so-called I-A locations), rents have risen by around 50 percent.

The Berlin Senate wants to limit this, and on Tuesday it is launching an initiative in the German Bundesrat, the upper house of parliament, for regulation of commercial rents.

The aim of the application, which was seen by the Süddeutsche Zeitung, is to "introduce a brake on commercial rental prices in strained commercial-space markets".

Markets are deemed to be strained if “there is a particular risk that small and medium-sized companies will no longer find commercial leases with reasonable terms’.

The senate states that commercial rents have "exploded” and that “exorbitant price increases" have led to small and medium-sized businesses being pushed out, or no longer being able to gain a foothold in some locations.

For this reason, Berlin authorities say laws should be introduced to make it possible "to limit the permissible rent at the start of the lease".

READ ALSO: What Germany is doing to keep rents down

Save neighbourhood shops

Berlin senator of justice Dirk Behrendt, of the Greens, said the focus was on saving small neighbourhood shops and stop them being displaced by large chain firms.

"Traditional shops, family-run butchers and bookstores" are being replaced by large chains, he said. "We want to stop this negative trend with our commercial rental price brake."

Dirk Behrendt at a packaging free supermarket in Berlin.

At this stage the proposal states that the Bundesrat should ask the government "to examine the introduction of a commercial rent brake in tense commercial space markets".

In October 2018, the Bundesrat had already pointed out in a resolution "with concern" that "against the backdrop of considerable increases in commercial rents, a structural change is emerging in inner-city locations in recent years that is also characterized by the displacement of small owner-managed commercial enterprises and social facilities". 

At the time, however, the Bundesrat did not call for the introduction of a brake on commercial rental prices. It just asked the government to "examine measures in commercial tenancy law, economic development and urban development law".

READ ALSO: Berlin opts to freeze rental prices for five years

However, the federal government has so far shown no great interest in bringing in a brake on commercial rental prices.

In an answer to a question from Green MPs, the government said introducing protections for commercial properties similar to private housing regulations did "not appear to be advisable".

In their question, the Greens said that due to high commercial and residential rents, there was a development towards inner cities serving "as a backdrop for tourists and their needs" and becoming "one-sidedly inhabited by wealthy households".

 
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