The retail sector has lost interest from investors in recent years to the detriment of office and industrial projects and the Romanian investment market has been no exception, being dominated by office transactions over the last six years. In 2019, retail spaces accounted for 23% of transacted volumes, and in 2020 the share decreased to a mere 4%.
“The success of food retail networks and therefore of the schemes anchored by these types of stores can also be seen in retail sales data, which grew by 2.2% in 2020 mainly due to a 5% increase in food sales. At the same time, the last year has marked the rise of retail formats operated by local companies, such as DCN EU or La Cocos, which have successfully positioned themselves in a market authoritatively dominated by international players. The excellent performance of these stores will certainly attract the attention of investors who have funds available for retail projects,” said Andrei Văcaru, Head of Capital Markets JLL Romania.
A report from JLL & Union Investment highlights growing grocery real estate market, with the share of European grocery real estate investment as a proportion of total retail real estate investment reaching 22% in 2020, up from 6% in 2016.
The grocery real estate market, which attracted EUR6.7 billion of the capital flows targeting retail real estate in 2020, is set to continue to flourish through 2021.
The sector’s resilience during the pandemic has led net initial yields for quality grocery stock in Europe’s key retail markets continuing to see compression, demonstrating increased investor appetite.
Although there is still uncertainty around the long-term implications of the pandemic, the report seeks to identify longer term trends that will affect the grocery real estate market.
Despite growth in online food sales during the pandemic, this growth rate is expected to slow post-pandemic. Grocery anchored real estate investment has proven one of the most resilient parts of the retail investment environment.