Developers expand retail space by 106,000 sqm in H1 2024 Romania

The first half of 2024 saw a dynamic increase in the delivery of new retail projects, adding approximately 106,000 sqm to the total retail stock - more than three times the amount delivered during the same period last year, according to Colliers' report on real estate market trends for the first six months of the year. The second half of the year also looks promising, with around 250,000 sqm currently under construction. After years of new supply being dominated by retail parks in medium and small towns, Colliers' consultants anticipate a shift in the retail market towards projects with larger investment volumes.

The largest openings in 2024 were Argeș Mall (51,400 sqm), the new Prime Kapital/MAS REI project in Pitești, followed by Aurora Mall in Giurgiu (13,500 sqm) developed by one of the most active local developers, Cometex, and OK Shopping Center Bistrița (9,200 sqm), also developed with Romanian capital. Overall, the distribution appears much more balanced than in the past, both in terms of the types of projects delivered and the categories of cities targeted. Colliers' consultants also note an increase in the proportion of local capital investmentscompared to foreign capital.

“It is a dynamic period for the retail market, with a considerable number of projects in various stages of development, many of them under construction. By the end of 2024, the stock of projects could exceed 4.6 million square meters. Analyzing consumption trends, after years of high inflation, the situation is improving. Employment and wages are once again growing faster than inflation, and consumer confidence, according to Eurostat, is approaching pre-pandemic highs. The Consumer Confidence Index surpassed its historical average in June 2023, indicating a high level of optimism in the market. The labor market context is strong enough to sustain consumption at a high level,” explains Liana Dumitru, Director Retail Agency at Colliers.

The increase in consumer appetite over the past few quarters has been reflected in the performance of retailers, who are enjoying a prosperous period despite more cautious expectations for 2024 at the beginning of the year. Following the inflationary cycle of 2021-2023, households are slightly more cautious with their spending and are looking for products with the best value for money, making mass-market and discount brands the most attractive. The food segment remains the most dynamic, with a strong appetite for expansion in 2024, including the entry of new players into the market, such as the Polish retail chain Zabka, which plans a rapid expansion with its Froo concept. Colliers consultants emphasize that there is still development potential in most retail segments, with gross margins in Romania being among the highest in the European Union.

The new projects were well received by the market, with continued strong interest from tenants looking to open new stores. Vacancy rates remain low in the dominant projects, with waiting lists in some of the most popular malls.

A preliminary estimate for 2025 predicts around 200,000 sqm of new deliveries, including the expansion of Mall of Moldova in Iași by Prime Kapital/MAS REI, which will add 62,000 sqm. As a result, Romania could surpass the 5 million sqm mark in retail space by the end of 2026, signaling a significant shift in the market from an investor's perspective.

“We are seeing increasing interest from developers in large-scale mall or mixed-use projects in the coming years. Assuming there are no major external crises, the Romanian consumer appears to be in good shape to support the continued growth of the retail market. However, given the recent rise in inflation and global uncertainties, we expect households to be more cautious, which means that mass market brands and discounters will continue to perform well. Compared to other European countries, Romania does not have an oversupply; on the contrary, there is a deficit in many segments and a greater need for diversity", concludes Simina Niculita, Director | Partener | Retail Agency la Colliers.