The stock of modern retail spaces will reach approximately 4.2 million sqm in 2022, including 140,000 sqm to be delivered by the end of 2022, according to the Romania Retail Destination 2022 research special report, launched by real estate consulting firm CBRE Romania. Many international retailers are interested in stepping into 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 sqm 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 sqm 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 sqm. 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 sqm,” said 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 sqm under construction, accounting for 40% of the total surface area under construction. Next comes Craiova, with almost 60,000 sqm under construction, followed by Timisoara (21,400 sqm) and Iasi (13,300 sqm). When it comes to the planned retail space, the city of Iasi dominates the market, with approximately 57,000 sqm, followed by Cluj-Napoca (55,000 sqm), Bucharest (approximately 34,000 sqm), Craiova (23,000 sqm) and Brasov (11,600 sqm).
In terms of total existing retail stock, Bucharest ranks first, with over 1,2 million sqm, which is approximately 47% of the total retail spaces in Romania. The capital city is followed by Timisoara (199,200 sqm), Constanta (183600 sqm), Cluj-Napoca (157,600 sqm) and Iasi (156,100 sqm).
At the same time, as regards the cities with the largest shopping centers, Bucharest occupies the largest surface area (773,300 sqm), which is 4.5 times bigger than what exists in the following city, Brasov (171,000 sqm). Next comes Timisoara (170,000 sqm), followed by Cluj-Napoca (over 123,000 sqm) and Constanta (118,000 sqm), respectively.
“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%,” stated 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 has entered the market in 2022.
Approximately 70% of the current retail stock is built before 2013 and only 500,000 sqm were refurbished in the last two years, but the refurbished stock rate will increase soon as both developers and tenants are interested in meeting the ESG requirements.