Although a leisure area, the Old Town is slowly attracting major retailers, be they in the fashion, cosmetics and computer and electronics business. The first to arrive were Adidas and H&M. Most retailers, however, are complaining that the space is not renovated and owners will not cut rent that may be as high as EUR70 to EUR100 per square meter for small spaces.
“Bucharest’s Old Town has already attracted fashion stores and has the potential to become a retail hub, but needs to balance the rents with the space offered. We are already in talks with owners but supply is low,” says Violeta Luca, chief executive officer of Romania’s second largest computer and electronics retailer Flanco by revenue in 2012, which stood at EUR137 million.
She would like to open a store there tailored to the Old Town customer, which means carry gadgets and computer products and no home appliances.
Rent in the area stands at about EUR50 per square meter of renovated space. The price is only valid for the ground floor, and the tenants who rent more space in the basement or above the ground floor get a discount.
Small spaces come with the highest rent, according to market data, of as much as EUR100 per square in some cases. That part of Bucharest is full of small spaces of tens to several hundred square meters, so H&M opened its 1,800 square meter store in a new building. It is the newest tenant of the Old Town and also its most important. Its coming there should attract other fashion big names.
Other important stores on Lipscani (the main shopping street of the Old Town) are Adidas, Lashez (clothing) and Be in Time (watches and jewelry). Real estate consultant Colliers says the first store of fashion retailer Cato and a store of fashion retailer Koton are due to open in the spring of 2014.
Bucharest is following in the footsteps of London, Paris or Rome, where the biggest fashion names vie over spots in the Old Town.
Bucharest’s Old Town takes up 50 hectares bordered by Elisabeta Boulevard to the north, Hristo Botev Street to the east, Corneliu Coposu and Splaiul Independentei boulevards to the south and Calea Victoriei to the west.
The number of buildings in the area is 520 but not all of them have been refurbished and cannot be used. A report of Colliers shows the area was included in rehabilitation project of the Bucharest City Hall that started in 2003. The City Hall has so far rehabilitated the utilities and infrastructure, turning the area into an almost completely pedestrian-only zone.
Colliers’ officials say the area has many buildings that have not been renovated, while others are entangled in legal issues, and therefore Lipscani will be the first to attract retailers for the time being, especially those in the fashion business.
“In a few years, Lipscani will be the place to be in Bucharest as a retailer,” says Philippe Besadoux, chief executive of Kenvelo, Tom Tailor, Mim, Lee Cooper and TimeOut in Romania.
The question, however, he added, is how many years it will take, as owners are not willing to agree to rent cuts and moreover, a mall provides guaranteed traffic and it costs less to arrange a store there.
The spaces in Bucharest’s Old Town range from several tens to 2,000 square meters, and most of them cover 200 to 500 square meters.
“There are about 200 food service businesses in the area, most of them restaurants, bars and coffee shops. The rest are fast-food places and kiosks. The number has been relatively constant in the past year because those that closed were quickly replaced,” says Octavian Dura, the executive chairman of the association of Old Town shopkeepers.
Although some 70% of the restaurants in this area go out of business within three months, it remains the go-to destination for people looking to have fun in Bucharest.
The number of customers of the restaurants and bars in the area stands at 10,000 per day on weekends and 3,000 to 4,000 per day on weekdays, Octavian Dura said.
The Colliers survey shows Smardan and Selari streets (near Lipscani) accommodate mostly bars and restaurants, 50% of the total space there, while Lipscani accommodates more clothing stores, 38% of the total space.
Restaurants, bars and coffee shops are usually small local businesses.
However, big chains like Pizza Hut and KFC are looking at it, too, according to Mark Hilton, who runs the group that operates KFC, Pizza Hut, Pizza Hut Delivery, Paul, Hard Rock Cafe and Cinnabon restaurants in Romania. The executive said his company was looking for a space in the Old Town but has not found one yet.
(English version by Loredana Fratila-Cristescu)