Only 60% of mall projects will be delivered

The tenant mix is expected to play a major role in new shopping centre developments, with land already acquired and project designs already set.
At present, the domestic market is flooded with commercial projects (approximately 100, according to the latest estimates), and could include around 10,000 stores in the coming years. The success of these projects depends on how fast developers manage to attract a list of tenants, and more importantly, on tenants’ names, reads Business Construct monthly, distributed for free to ZF subscribers.
“Considering the way things are moving on the Romanian real estate market, one can definitely say 60% of projects will be completed, while 40% will not be. If competition proves too tight and analysis points to a more efficient use of land in sectors other than retail, developers will cease to build,” considers Luiza Moraru, in charge with the retail department at Eurisko real estate consultancy.
Officials at Colliers International are equally as cautious regarding the number of completed shopping centres, and indicate the importance of renting a significant margin of retail space during the projects’ very first stages.
“Around 60% of these projects have the necessary foundations to be developed in time and be successful (…),” states Monica Barbu, in charge with the retail department at Colliers International.
Investors’ plans started with Bucharest, the largest market, with the highest incomes per capita, before their attention gradually shifted towards big cities, followed by middle-sized cities. The importance of smaller markets is also supported by the strategies embraced by international retailers, which are no longer set on launching their first stores in Bucharest, partly because of the limited availability of space.
Targu-Mures, Pitesti and Cluj-Napoca are among cities whose inhabitants can or will be able to shop in stores that are still not present in Bucharest.
The rising volume of modern shopping areas is also tightening up competition among retailers, which are seeking the best spots in the most popular malls.
However, retailers are not the only ones who have to worry about rising competition, as the balance of power between them and mall owners is set to change in the coming period, as the amount of retail space increases.
The most aggressive expansion plans on the shopping centre market have been announced by companies such as Immoeast, BelRom, Mivan, GTC, RED Management Capital, Dawnay Day, Iulius Group, Sonae Sierra and Matrix Investments – all of which have at least 3 shopping centres each in their portfolio or under various stages of development.