16 Septembrie 2009
Retail market stands at crossroads
The local retail market is facing a new reality: the vacancy rate in shopping centers ranges between 5% -60% while nearly 40 high street retail spaces are vacant, according to a research report of The Advisers research company affiliated to UK-based Knight Frank.
What is the proportion of vacant retail spaces?
“At this point, Calea Victoriei road has approximately 20 void units. A year ago, you could find two, three at the most. Between Romana Square and Unirii Square, there are over 14 vacant units and 4 between Perla and Dorobanti”, said Gabriela Nicolae (photo), senior broker at The Adviser’s retail department.
Moreover, the shopping centers in Bucharest have seen an increase in the vacancy levels to 5-10% in case of large shopping areas but it may very well climb to 60%.
“The reality is that the visibility remains low, landlords don’t have a clear forward-looking strategy. Many have to seek means and solutions that could help them fill the void floorspace or increase the number of visitors”, the consultant said.
How to let void units?
“The lessor will thus have flexibility in changing tenants and minimizing the amount of time required to change tenants. The next step would be the demarcation of the space in small units, because this kind of transactions calls for smaller surface.
Both shopping centers owners and those owning street retail spaces should focus on attracting brands or local designers and retailers.
“If we look at the Romanian designers having their own retails paces, their number is decreasing. For example the store of Mihai Albu on Magheru Street was shut down few months ago. Retailers should certainly take advantage of the low rents to try new concepts”, said the consultant.
Landlords should forget about the ten-year lease agreement
The major change both landlords and tenants need to make is the change of approach. The sooner retail market players realize things are no longer as they used to be, the faster solutions will emerge.
“The factors underlying the differentiation of a retail space are the interior design, or the number of events aimed at promoting the center and at increasing number of visitors. Retail spaces should tell a story, should lure you to spend more time in there”, The Advisers’ consultant added.
The retail department of The Advisers is headed by Monica Barbu, the former director of Colliers International’s retail business.