Retail rents slump in Q1 as available space increases

Retail rents continued to fall in Q1, especially in decentralized shopping centers, new research by DTZ Echinoz has found. Prices fell 10-15 percent in prime locations and 15-20 percent in peripheral premises from 2009, while asking rents plummeted 30-50 percent from the peak of 2007. Rents for premium properties on the main thoroughfares of Bucharest declined by up to 15 percent quarter-on-quarter, varying between EUR 70 and 90 per sqm per month for Magheru-Balcescu Boulevards, followed by Calea Victoriei where asking rents range between EUR 55 and 75.

Industry players hope rents will stabilize from 2011. The volume of modern retail stock (retail schemes in the form of urban malls, retail parks, commercial galleries, outlet stores and strip malls) rose by 106,500 sqm gross lettable area (GLA) during Q1, a 29 percent increase in new supply quarter-on-quarter and a 91 percent increase year-on-year. At end-March Romania’s modern retail stock reached 1.34 million sqm. 

At the beginning of 2010 two shopping centers were delivered on the market – firstly, Sun Plaza (Bucharest) which totals 76,500 sqm of GLA, and which is anchored by Cora, Baumax and Mobexpert. The second delivery, Atrium Center Arad, a 30,000-sqm shopping mall anchored by a Billa supermarket, is the first modern retail scheme in the western city. At the opening date the mall was 92 percent leased.

According to developers’ plans, four projects should open by end-2010, mainly in secondary cities (with around 300,000 inhabitants). However, advanced construction works are being undertaken only at Gold Plaza, in Baia Mare. Most of the schemes announced for this year are actually projects initially planned for 2009, but postponed due to the economic instability and likely to remain shelved for even longer. 

In March the volume of retail turnover sales rose to 3.7 percent month-on-month and decreased by 4.8 percent year-on-year, whereas for the whole quarter turnover sales sank by 8.3 percent year-on-year. Vacancies rose in Bucharest, mostly in decentralized locations and with a major impact on newly delivered shopping premises. The availability of prime units in long established shopping centers in Bucharest still remains limited.

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