Developers are beginning to redesign their shopping centes into big box retail schemes as a result of increased big box tenant demand in particular by DIY retailers and hypermarkets who are aggressively fighting for expansion. In some locations, developers receive even four-five letters of intent from competing tenants for the same box.

Another reason is the fact that the land already exists in developers’ portfolios and thus needs to be developed. Before the crisis, Romania witnessed an unhealthy number of planned shopping centers, which resulted in proportionately far fewer big box retail schemes.

“Romania, compared to other regional markets, is under supplied in terms of big box retail investment product markets, particularly as in retail development more money was made by shopping center developers with large fashion galleries than pure big box developments”, says Blake Horsley (photo), Manager Investment Services within Colliers International.

Rents for the big-box units are seen as much more sustainable in the long term, generally €10-12/sqm which allows investors to be more confident in their financial modeling scenarios.

“The size of these schemes is also of a better size for the post crisis investor, generally between €5 to 50 million as opposed to some projects that are valued in the hundreds of millions. Most funds active in Romania today do not have the liquidity to go for a single asset of over €100m”, Colliers specialist said, adding that purchasers are now more confident in joint ventures and even forward purchases, which has resulted in some cases with competitive bidding, which we have not seen in Romania since Lehman Brothers.