Bucharest has room for two more large shopping malls says Sonae Sierra

This year Romania is expected to extend its now existing GLA (Gross Lettable Area) , by about 300,000 sqm to a total of roughly 3,3 million sqm, but even so, the shopping center penetration lags far behind the European average, shows the ‘Success Formulas for Shopping Centers in Romania’ report put together by PwC and Sonae Sierra Romania.

“Romania does have room for more shopping malls. If you compare Bucharest with cities like Warsaw, it is far behind them in terms of retail stock. There is room for two more large malls and smaller neighborhood ones in the capital,” said Ingo Nissen, managing director of Sonae Sierra Romania. And Bucharest is not alone. There are other cities in Romania with potential for shopping center development such as Timisoara, Sibiu or Brasov while others like Arad and Iasi are saturated. Overall, investments in retail space will intensify over the next five years, he thinks.

The European market shows that there is a strong correlation between a country’s GDP and it GLA, countries with higher GDP per capita showing a higher shopping center penetration. Romania ranks 12th in Europe in terms of expected growth of retail space, but only 27th in terms of available shopping center space per 1,000 inhabitants, which reflects a still very low degree of modern shopping center space penetration, according to the PwC and Sonae Sierra analysis.

The report argues that even at the current GDP level, the GLA per capita is somewhat lower in Romania than it should be; the overall medium and long-term potential is even bigger, because of the expected gradual alignment of its GDP with peer countries.

Read more about

Raionul de Pește Floreasca relaunches the Chef Table concept

read more

Bucharest leads the way

The Romanian shopping centers market continues to be in an “opening” phase and as a result it remains very fragmented. The report shows that out of 40 top-ranking shopping centers analyzed, 5 account for approximately 38 percent of the total turnover, but only for 21 percent of the GLA. Moreover, the largest share of modern retail space in Romania – about half – is located in Bucharest.

According to the report, the decisive criteria in differentiating best in class from the average pool of shopping centers are the existence of professional management, the completeness and diversity of the tenant mix as well as marketing and online presence.

Competition has been historically low, ensuring financial success in most cases, despite a relatively low focus on relevant success criteria such as location, accessibility for all means of transport, tenant mix, management experience, catering and leisure components or marketing.

Simona Bazavan