30% more retail spaces were delivered in 2018 versus 2017
30% more retail spaces were delivered in 2018 versus 2017
| March 4, 2019
The national modern retail stock has reached 3.6 million square meters, with 115,000 m2 that were delivered in 2018;
Out of this stock, 32% is situated in Bucharest and the rest of 68% in the regional cities;
28% more retail spaces were delivered in 2018 in comparison with 2017;
270,000 m2 of retail spaces are announced for completion in 2019, out of which 11% will be located in Bucharest.
CBRE, the world and local market leader in real estate consultancy, announced the conclusions regarding the development of the retail sector in 2018 and the announced deliveries for 2019. Thereby, 115,000 m2 were delivered in 2018, with 28% more than the total surface finalized in 2017. The majority of the new retail spaces are being situated in small and medium sized commercial parks. According to CBRE’s representatives, one of the strongest trends on the retail market is the increase in the share of the online component. In 2018, there were 30% more sales made through online channels than in 2017, but Romania is still far behind Western markets. The growth of the online sales component is responsible for many stores expanding their spaces in order to function as showrooms as well. Out of the total national stock of modern commercial spaces, 32% are located in Bucharest, and 68% located in the rest of the country. Shopping centers account for 58% of the total space, and remain the developers favorite retail format, and 42% are commercial parks. Another trend observed in 2018 is the investors focus on smaller, secondary or even tertiary, regional cities such as Satu Mare, Baia Mare, Roman or Bistri?a.
The largest three retail projects of 2018 were delivered in the second half of the year and comprise a leasable area of 71,000 m2, as follows:
• The shopping center Shopping City Satu Mare with circa 29,000 m2 GLA - developed by NEPI Rockcastle;
• The retail park Value Center from Baia Mare with approximately 22,500 m2 GLA - developed by Prime Kapital;
• The retail park Value Center from Roman with 19,500 m2 GLA - developed by Prime Kapital.
The commercial projects completed last year are small and medium sized. The main trend was the development of small projects, most of them delivered in 2018 with sizes ranging from 1,500 m2 GLA to 9,000 m2 GLA. Other major development directions noted in 2018 include the opening of micro-centers within cities and operated by hypermarket networks, which are thus trying to be closer to their customers. In the second half of 2018, Auchan reached 19 units with its MyAuchan brand, and this trend is likely to be followed in 2019 by other big chain stores.
In terms of the category penetration, counted for cities with more than 300,000 inhabitants, the ranking is lead by Constan?a with 582 m2 commercial spaces per thousand inhabitants, followed by Bucharest ( 545 m2 / 1,000 inhabitants), Cluj-Napoca (488 m2 / 1,000 inhabitants), Timisoara (461 m2 / 1,000 inhabitants) and Iasi (420 m2 / 1,000 inhabitants).
2018 was also a year of intense activity in terms of new companies that entered the retail spaces sector. Twenty-three new brands became tenants on various retail projects in Romania, such as: the German brand Hugo Boss, the well-known Swiss watch brand Tag Heuer that opened in 2018 in Bucharest the only one Eastern Europe monobrand store, the Japanese retailer of home and accessories Miniso, the German clothing retailer KiK, the international fashion retailer Comma, or Camicissima, the Italian men's shirts brand. Among the brands that entered for the first on the Romanian market, 79% preferred shops located in shopping centres, while only 21% opted for street locations. In addition to the many openings, in 2018 we also witnessed the exits of three brands from the local market: Lancel, Armani Jeans and Gusto Dominium.
In 2019 it was announced the completion of circa 270,000 m2 of commercial spaces, out of which 11% will be situated in Bucharest, and 70% will be located in shopping centers. Of the 12 commercial projects currently under construction, the largest in terms of the developed area are: Openville Timisoara with 47,000 m2, Festival Centrum Sibiu with 43,000 m2, Shopping City Târgu Mures with 32,600 m2 , Târgoviste Mall with 31,300 m2, DN1 Balotesti with 28,000 m2, the extension of Electroputere Parc from Craiova with 22,100 m2, and the expansion of the Colosseum project in Bucharest with 20,000 m2.
"2018 was a good year for the retail spaces segment, which is going through a fast-paced period, mainly driven by the increase of consumption. The growth of the online component has one of the strongest influences that has prompted the sales growth and the way stores look and function. Thereby, the stores enhances their space and use it not only as a physical point of sale but also as a showroom, thus supporting online shopping. The shops also try to provide a more user-friendly, and user-centric environment with a high emphasis on the services provided. Another trend that has been manifested for several years is the large number of expansions of shopping centres or retail parks. For example, 24% of the commercial spaces that are currently under construction and scheduled for delivery in 2019 are extensions of existing projects", said Carmen Ravon, Head of Retail Leasing of CBRE Romania.
In 2018, the prime shopping centres rent (the benchmark rent for 100 m2 for Class A projects located in the best areas) was 80 euro/ m2, and 8 – 15 euro/ m2 for retail parks. The prime rent for high street retail units was 55 euro/m2. CBRE’s representatives expect the leasing prices to remain stable over the next period, enabling the players on the retail spaces segment to absorb new projects that are soon to be developed or are under construction. Among the most active developers in terms of number of projects delivered was Prime Capital, responsible for six retail spaces projects, completed in 2018.