CBRE|Eurisko: 60% of the projects announced will be put on ice or put off

If last year, the stock of commercial structures in Romania climbed 50%, some 50-60% of all projects announced to be delivered this year will be put on ice or put off, or even completed for different purposes, reads the latter CBRE|Eurisko report.

In 2008, the commercial construction stock in Romania increased by 50% compared to a year-ago period, from 43.20 sqm for rent (gross leasable area – GLA)/1,000 individuals, to 70.88 sqm GLA/1,000 individuals. This calculation includes all modern retail units in Romania with over 10,000 sqm GLA (commercial centers, retail parks and retail projects anchored by hypermarkets).

Other ten well-positioned stores, partially or fully refurbished stores, previously held by the state, are operational in the entire country. These projects have not been taken into account because, except for Tomis Mall, they don’t meet the western standards of a commercial center.

“The year 2008 heralded a fiercer competition across the country in all sectors – commercial centers, retail projects, projects anchored by hypermarkets, but the level of completions fell short of expectation. We are convinced that at least 50-60% of all projects announced will be put on ice or put off or packaged for different purposes”, reads the CBRE|Eurisko report.

Since 1989, the rents in Romania skyrocketed. There is no logic progression of the starting prices, the storeowners being sensitive rather to particular incentives, rather than economic realities, reads the report. The improvement of tenants’ quality and prolonged lease periods didn’t lowered the rents as it was expected, but stabilized them at a higher level.

“The shaky economic conditions will dent even more the commercial spaces in secondary areas, where insiders expect lower rents than in 2008. For top locations, due to rising demand from consumers, we won’t see any downward price adjustment”, CBRE|Eurisko consultants explained.

As for the fashion segment, the retail market in 2008 was marked by a rapid development, with increasing appetite arising from international players, combined with the arrival and expansion of various international new brands, such as Next, Peek&Cloppenburg, New Yorker, Douglas Perfumery, Reserved, Cropptown, Humanic, Deichmann, Bershka, Stradivarius, and luxury brands Louis Vuitton, Massimo Dutti, Bally, Cerutti 1881, Baldinini and Marina Rinaldi.

“The delayed arrival of them was caused by the absence of purchase power, and also by the lack of a high-quality retail environment. Many retailers who entered the local market in the last four years are now seeking to assure premises inside the commercial centers, due to the high popularity and traffic , as compared to sidewalk spaces”, CBRE|Eurisko says.

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