Discount Real estate A new Berlin landlord: Aldi

The giant food discounter is helping out urban planners in the German capital by building low-cost apartments on top of new mega stores.
Hey, I live at Aldi.

Why go around the block to buy groceries if you can just pop downstairs?

Food discounter Aldi Nord, in an unprecedented move into the housing market, plans to build apartment buildings with integrated supermarkets in home-squeezed Berlin. The company is the latest player in the grocery business to follow a trend toward putting apartments on top of their stores to ease the process of building bigger outlets in crowded cities.

Over the next five years, Aldi Nord, which operates supermarkets in the northern half of Germany, plans to build 2,000 apartments with basement parking at 30 of its 130 branches in the capital. The housing will follow the so-called “Berlin model,” requiring up to 30 percent of the units to be rented to students and others requiring affordable accommodations. It so happens that both groups are frequent Aldi customers.

The push into housing comes as Aldi and other budget grocers including rival Lidl see an opportunity to launch bigger branches by agreeing to build affordable apartments in Berlin, where a housing shortage has sent prices surging. Aldi aims to expand its sales floors in stores up to 1,400 square meters (15,000 feet).

The Berlin city-state government estimates that nearly 195,000 new apartments will be required by 2030 to accommodate a population that is growing by nearly 40,000 people per year. With demand soaring, rents in some parts of the city have been rising as much as 10 percent per annum.

Finally, the supermarkets are serious about doing something. Andreas Otto, Green Party parliamentarian

The city has nearly 1,000 supermarkets, of which 330 sites can be converted into apartment buildings with an integrated supermarket, according to urban planning officials. The Green Party has been pushing hard for retailers with own one-level stores and parking lots to make greater use of the space and add housing to their retail mix. “Finally, the supermarkets are serious about doing something” to help overcome the city’s growing housing crisis,” Green parliamentarian Andreas Otto told Der Taggespiegel newspaper.

Aldi Nord said it intends to retain ownership of the apartments and rent them out, with its primary goal to secure more sales space rather than to make significant returns. The lower-cost units will be rented out for €6.50 ($8.00) per square meter, which is equivalent to the current tariff for social housing excluding heating costs.

Two pilot projects are already underway in the city’s Neukölln and Lichtenberg districts. The company also plans a smaller integrated supermarket-apartment complex in Hamburg.

The Berlin project follows moves by British supermarkets Tesco and Sainsbury’s to enter the real estate business in London with a similar strategy of building large supermarkets with affordable apartments on top.

John Blau is a senior editor with Handelsblatt Global. To contact the author: [email protected]