December 07, 2016

Romanian retail market becoming increasingly attractive for new fashion brands

Romanian retail market becoming increasingly attractive for new fashion brands

The retail market in Romania was characterised in 2016 by a high volume of delivered spaces and entry of new brands, which opened their first shops both in already existing shopping centres and in recently opened projects. Further, we expect to see new names on the market, especially among Polish brands.

In 2016, over 200,000 sqm of retail space were completed on the Romanian market, being the year with the most deliveries after 2009. Almost half of the volume delivered was in Bucharest, where the stock of shopping centres reached approximately 1,16 millions sqm, out of which almost 40 percent are in districts 2 and 3, which have become the most crowded in terms of stock.

“Recent deliveries, like ParkLake Plaza and Verada Mall, have brought on the market new brands. Among mass market brands that have chosen to open their first stores in Romania in these projects, we mention: Forever 21 opened its first store in Parklake Plaza, while the French brand Tati chose Veranda Mall”, said Daniela Popescu, senior associate in the retail department at Colliers International. “On the other hand, many premium brands chose to open their first stores in Băneasa Shopping City, except for COS, part of the H&M group, which opened its firts unit on Calea Victoriei, in a deal in which Colliers was the intermediary.”

Among the premium brands that entered the Romanian market in 2016 are also: Max & Co, Cerruti 1881, Chopard and Boggi.

“Most retailers today expect to end the year with a sales’ growth between 20-30 percent compared to last year. The success of these retailers encourages players not yet in Romania, their performance directly reflecting our market potential”, explained Daniela Popescu.

International concepts such as TK Maxx, Primark or Toys ”R” Us, who are waiting to enter Romania, will most likely postpone the decision until a new economic cycle.

“The reason is relatively simple: most of these brands have only entered the Central and Eastern European markets in recent years, starting with countries like Germany, Poland, the Czech Republic and Austria, and now focus on serving these markets. Romania will certainly be part of the next wave, as soon as these countries will be saturated,” said Daniela Popescu.

In the short term, we expect to see new entries, a large part being from Polish brands who are looking at expanding in Romania, as they already cover very well the market in Poland.

“Also, for the next year we expect to see new retail concepts from Turkey at a local scale. These brands have a double motivation, Romania’s potential and trying to diversify markets in order to reduce the geopolitical risks and the depreciation of the Turkish lira,” concluded Daniela Popescu.

As far as rents are concerned, for modern shopping centers in Bucharest they vary between €14 – 22 /sqm/month for big spaces (1,000-2,000 sqm), destined to fashion anchors and between €17 – 25 /sqm/month for medium spaces (350-800 sqm).

For 2017, the volume of retail space expected to be delivered is estimated at 180,000 sqm, focusing on cities in the country, where there will be delivered a number of retail parks: Shopping City Satu Mare (18,000 sqm) and Prima Shops Oradea (10,000 sqm), as well as extensions of existing projects: Shopping City Sibiu (16,900 sqm - extension) and Shopping City Galaţi (27,000 sqm – extension).

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