Mixed-use high-rises: the trend has hit Germany

It is one of the last sites in Frankfurt’s banking district that is suitable for high-rise development: the location of the former Metzler bank on Große Gallusstraße. The 183-metre Omniturm is scheduled for completion in early 2019. The skyscraper, developed by Tishman Speyer and designed by the Bjarke Ingels Group, is exceptional not only for its architectural merit but also because of the proposed mix of uses. It is not just going to be an office tower but will combine three different uses: in addition to 44,000 square metres for offices, it will also have over 8,000 square metres of residential space and an area with shops and restaurants accessible to the public.

And it’s not the only project of its kind: clearly the mixed-use high-rise trend has hit Germany. Another example is Upper West, a 118-metre office and hotel tower completed in 2017 in a location formerly in the heart of West Berlin. Construction of the 200-metre Elbtower is slated to start in 2020 in Hamburg’s Hafencity and will include offices, a hotel, exhibition and event venues, and possibly apartments. And the trend has also arrived in smaller towns: the office and residential high-rise Stuttgarter Tor is shooting up in Reutlingen, a town with 116,000 inhabitants. “Project developers no longer shy away from mixed-use high-rises,” notes Frankfurt-based architect Magnus Kaminiarz. “That is the clear direction we’re heading in right now,” says Kaminiarz, one of Germany’s leading high-rise designers.

Investors are starting to re-think

Germany is catching up with a development that has already taken hold internationally. “The US and Asia have had mixed-use high-rises for many years,” says Matthias Leube, CEO of real estate services company Colliers International Germany. But for a long time the high-rise debate in Germany focused on single-use projects. Apart from a few restaurants and shops on the ground floor, the skyscrapers that dominate Frankfurt’s skyline, for example, consist almost exclusively of office space. The public debate in more recent times has been mainly about residential tower blocks – if only because of the trend towards increasing the density of development in towns and cities as land becomes ever scarcer. Prominent examples of projects of this kind, which usually consist of very expensive apartments, are the Grand Tower in Frankfurt and the Hines Tower on Berlin’s Alexanderplatz – the latter not yet built.

This type of monofunctional use traditionally appealed to property investors. “As a rule, investors want to put their money in only one asset class,” Matthias Leube explains. “However, we are now gradually beginning to see mixed-use being accepted as an investment product.” Sven Carstensen, manager of real estate consultants bulwiengesa’s Frankfurt office, agrees. He points out that, in light of the high demand for properties, investors today are “far less choosy than before” and more prepared to invest in mixed-used properties. Frankfurt-based Groß & Partner, a project developer specialising in high-rises, believes there are good reasons for that: “Investors are realising that although a mixed-use building may be more complex to manage it also promises more reliable yields and greater appreciation in value over the long term,” says Philipp Cronemeyer, the company’s spokesperson.

Upper West in Berlin proves that investors can get onboard with hybrid high-rises. The tower comprises a Motel One hotel, office and retail spaces, and a sky bar on the top floor. Although it was only recently completed, Upper West has already seen two changes of owner: the original developer, Strabag Real Estate, sold the project to RFR Holding, who then sold the completed building on to the Austrian Signa Group at the end of 2017 in a package with other prestigious properties in German cities. 

Mixed use equals lower risk

The asset management company Commerz Real is also convinced of the potential offered by mixed-use high-rises. It is working with Groß & Partner to jointly develop One Forty West, a 140-metre-tall tower in Frankfurt am Main, which has a four-star hotel on its lower storeys and apartments to buy or rent from the 24th floor upwards. Andreas Muschter, Commerz Real’s CEO, believes this is a winning combination – not least because “the residents use the hotel’s services and can house their guests in the hotel.” But that is not the only benefit in his eyes. “Exclusively residential high-rises are a bit boring,” he says. “And the problem remains that prospective tenants find apartments on the lower storeys less attractive than those on the higher floors.”

Added to that is the additional benefit of risk diversification, explains Matthias Leube of Colliers International. Since higher rents can be achieved for office space on the higher storeys of a high-rise, a hotel on the lower floors can hold a certain appeal. And, says architect Magnus Kaminiarz, “You have to bear in mind that marketing a large number of apartments, particularly in very tall towers, can sometimes be a problem.” The low number of transactions in this segment make it difficult to put an exact figure on yields for mixed-use high-rises. But investors certainly can’t hope for a bargain, as evidenced by one transaction in Berlin: according to property consultancy JLL, Kudamm-Eck, a smaller-scale high-rise with a hotel and retail space, was recently sold for 33 times the annual rent.

A high-rise as low as 22 metres. When you think of high-rise buildings, you usually picture skyscrapers. But, to be classified as a high-rise, a building does not have to be anything like 150, or even 100, metres tall. The experts at bulwiengesa explain: “Germany’s state building codes define a building as a high-rise if the top edge of the finished floor of the highest storey that is inhabited or contains an occupied space is more than 22 metres above the designated fire engine access area at ground level.”

Circulation and security are challenges

It must be said that turning mixed-use ideas into reality is not without its problems. For example, it is important to make sure that office workers, hotel guests and residential tenants don’t get in each other’s way. But that is perfectly possible, says Magnus Kaminiarz. “For example, you can put entrances on two different levels, so the office part of the building has a separate lobby from the hotel and residential parts.” Philipp Cronemeyer of Groß & Partner property developers doesn’t see any potential conflict here either. “You make access and circulation separate,” he explains. “These concepts are standard practice for our internationally experienced architects, because mixed-use high-rises are the norm worldwide.” The same applies to the fact that offices need a different column grid from hotels or apartments: that obstacle can also be overcome, says architect Kaminiarz.

However, the question of how users get to their particular part of the high-rise still remains. After all, no firm of solicitors wants hotel guests who find themselves on the wrong floor suddenly bursting into their office. This is where technology comes in. “The industry has improved control systems in lifts,” Kaminiarz explains. “And the lifts’ access control prevents unauthorised entry to the office floors.” Florian Reiff, Senior Managing Director with Tishman Speyer agrees that “innovative technology is playing an increasingly important role in a mixed-use high-rise like Omniturm.” That is why Omniturm uses PORT, a system developed by Swiss lift manufacturer Schindler. It uses a smartphone app or RFID card reader to ensure that each user is assigned to a lift that will take them to their destination. The principle works for Omniturm’s 147 apartments: residents use the app to communicate with their visitors and open the door for them by pressing the invitation button. At the same time, they activate the lift that will take their guests to the right floor. The visitor management system for office tenants works on the same principle.

Good for the city

Advocates of mixed-use believe, as mentioned above, that it is also beneficial from an urban design standpoint, and not just because it is economical with land – a key concern when creating living space in cities where land is a precious commodity. “Mixed-use development is an essential element of a vibrant city,” says Berlin-based architect Christoph Langhof, who designed Upper West. That is why Langhof is a staunch supporter of mixed-use high-rises and opponent of using high-rises exclusively for residential or work purposes. “An exclusively residential high-rise risks creating the city-centre equivalent of a dormitory town,” he argues. “And that is just as wrong as a district with nothing but offices.” To reinforce his ideas, Langhof has designed a prototype high-rise called Epsilon, which has not yet been built anywhere. Epsilon is pyramid-shaped and at just over 60 metres on the small side for a high-rise. Not without reason: according to Langhof, high-rises up to this height are not much more expensive to build than lower buildings. It is only buildings taller than 60 metres that are subject to more stringent fire regulations, and that is what sends the costs soaring.

“Mixed use is definitely good for a city.” Sven Carstensen of bulwiengesa agrees. Nevertheless, his enthusiasm for mixed-use high-rises is restrained. He points out that many smaller apartments in high-rises are used by commuters and are empty at the weekend. Different uses, he believes, do not necessarily have to be concentrated in one building but can be distributed across an entire neighbourhood. This is precisely the approach taken in some cases by project developer Groß & Partner. “If we can operate mixed-use neighbourhood developments, it is not absolutely essential to go for mixed use within a building,” spokesperson Philipp Cronemeyer says. “The juxtaposition of a hotel and a residential or office building creates the same synergies.” This is the avenue Groß & Partner are pursuing with their Four project in Frankfurt: it too comprises several different uses – not within a single tower block, but distributed across four high-rises.