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Business Intelligence CBRE: Bucharest can accommodate another 100,000 square meter mall

CBRE: Bucharest can accommodate another 100,000 square meter mall

by CBRE July 5, 2022

Website www.cbre.ro

International retailers are interested in entering the Romanian market and demand for large areas has been increasing. 140,000 sq m modern retail spaces to be delivered by the end of 2022

The stock of modern retail spaces will reach approximately 4.2 mln. sq m in 2022, including 140,000 sq m that will be delivered by the end of the year, according to the Romania Retail Destinations 2022 research special report, launched by CBRE Romania, the leader of the real estate consultancy market. It could sound impressive still it is not enough, as many international retailers are interested in entering the Romanian market, and the demand for large areas has been increasing,

Romania is an attractive market for the international retailers, with numerous advantages, such as: increased purchasing power, retail spending (11% in Romania, which places our country second after Poland in the CEE region), big interest for new brands, educated workforce, and very low vacancy rate (below 3%). With 165,800 sq m under construction, over 60% of the total retail stock is in the biggest regional cities, and a major part of it is dedicated to retail parks. Additionally, 180,000 sq m are planned to be added to the existing modern retail stock all over the country due to the increasing demand.

“Once the pandemic is over, Romania has become a very attractive market for foreign retail companies, which are interested in leasing large areas, often above 1,500-2,000 sq m. Moreover, local retailers plan to extend their business by opening new stores in commercial centers, which indicates a huge appetite for renting retail spaces. Analyzing the demand evolution, we see clearly that another mall has room to grow in Bucharest, especially in the North-West part of the city, and it could easily occupy 100,000 sq m, says Carmen Ravon, Head of Retail Occupiers CEE at CBRE.  

The CBRE report shows that, by under-construction area, Bucharest is the leading city, with 66,222 sq m under construction, which representing 40% of the total under construction surface. Next comes Craiova, with almost 60,000 sq m under construction, followed by Timișoara (21,400 sq m), and Iași (13,300 sq m). Regarding the planned retail space, Iași leads the market, with approx. 57,000 sq m, followed by Cluj-Napoca (55,000 sq m), Bucharest (approx. 34,000 sq m), Craiova (23,000 sq m), and Brașov (11,600 sq m).

From the point of view of total existing retail stock, Bucharest ranks first, with over 1,2 mln. sq m, which is approx. 47% of the total retail spaces in Romania. The Capital city is followed by Timișoara (199,200 sq m), Constanța (183600 sq. m), Cluj-Napoca (157,600 sq m), and Iași (156,100 sq m).

At the same time, regarding the cities with the largest shopping centres surface, Bucharest occupies the largest surface (773,300 sq m), which is 4.5 times bigger than what exists in the following city, Brașov (171,000 sq m.). Next comes Timișoara (170,000 sq m), followed by Cluj-Napoca (over 123,000 sq m), and Constanța (118,000 sq m).

By shopping centres-retail parks proportion, Brașov is on the first place, with 97% of the retail surface dedicated to shopping centres. It is followed by Timișoara (85%), Cluj-Napoca (78%), Ploiești (70%), Iași (67%), Bucharest (64%), and Constanța (64%), according to the CBRE Romanian Retail Destinations report. Craiova has the biggest rate of total surface dedicated to retail parks, followed by Oradea (46%), Suceava (46%), Bucharest (36%), Constanța (36%), and Iași (33%). Retail parks currently represent almost 36% of the total retail stock in Romania, which is 4 mln. sq m right now.

Romania ranks 5th in terms of retail density in Central Eastern Europe, with 205 sq. m per 1,000 inhabitants, after Slovakia (413 sq m), Czech Republic (386 sq m), Poland (276 sq m), and Hungary (231 sq m). We are only half of the first country in the ranking, which translates into growth potential of the local retail market, and in the next couple of years, the country’s average retail density is expected to increase by a minimum of 25%.” explains Daniela Gavril, Head of Research at CBRE Romania

Romania has the potential to attract other big international brands in the near future. Although the eCommerce industry registers year-on-year growth, it is still emergent in Romania, and only 10% of retail is online. Companies continue to focus their business on shopping centers or retail parks, opening more stores. Romanians have a huge appetite for fashion, which puts our country on the retailers’ list that want to expand their business regionally. Therefore, 14 new brands, such as Primark, JD Sports, Foot Locker, Tedi, Bath & Body Works, Cyberjump or Poke House entered the market this year,

International retailers are willing to enter the local market as they consider Romania a reliable market, putting it on their priority list, which shows that the retail segment has a tremendous potential in Romania. If during the pandemic the retail park business format registered very good turnovers, now the large shopping centers register better traffic and sales figures, with a value of the shopping bag even higher than the equivalent pre-pandemic period, since customers are interested again in the shopping experience. Hypermarkets are downsizing, retail parks are the main developments of the year, but shopping malls are the most advantaged model business nowadays. In the coming years, the hypermarket model business will reinvent itself – the downsize phase will continue and the non-food area will be replaced by a fresh food area. Moreover, the surface of hypermarkets in the malls will be reduced with an average of 5,000 sq. m, and the new area will accommodate new stores.”, says Carmen Ravon, Head of Retail Occupiers CEE at CBRE. 

Approximately 70% of the current retail stock is built before 2013, and only 500,000 sq m were refurbished in the last two years, but the refurbished stock rate will increase soon as both developers and tenants are interested to meet the ESG requirements.

In a recent study on retail occupiers conducted by CBRE in EMEA region, a percentage of 45% of retailers either agree or strongly agree that green leases will be included in lease negotiations within the next three years, and 38% either agree or strongly agree that moving forwards, brands will place a greater emphasis on the ESG credentials of a property when considering expansion.

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