We need to also point out that the local market remains largely uncrowded as far as brands go. We can surmise this because profitability/efficiency indicators for wide swaths of the local retail scene are significantly above other countries. Gross operational returns for major retail sectors like clothing, footwear, pharmaceuticals/cosmetical products or toys show Romania consistently at the forefront of the European rankings, sometimes even in the first position.

Indeed, 2024 continued the trend of new brands trying to crack the Romanian market, with regional brands (Polish, Czech, Turkish companies, but also from other countries) quite visible; that said, international brands from other parts of the world are also eyeing Romania. Arguably the most notable entry as far as expansion plans go is that of Polish proximity supermarket Froo (owned by Zabpka, the biggest such player in its native country). It has quickly expanded to over 50 affiliated stores as of late 2024 in just half a year since opening its first location. Other notable entries were Ritual Cosmetics and Kiko Milano for cosmetics, Budmil and Bogner for fashion as well as Happy Restaurants and Hesburger for food.

Rents & Vacancy

In general, occupancy remains solid for most shopping centers, with the newly delivered schemes generally well received by the market, including retail parks in quite small towns. Meanwhile, dominant malls still have virtually non-existent available spaces and waiting lists for potential tenants, allowing these locations to achieve a healthy rate of change of tenants to achieve an optimal mix. On the rent side, the re-acceleration of sales in 2024 is likely to improve the picture a bit as far as turnover rents go, while it is also important to note that overall sales remain comfortably above pre-pandemic levels.

Outlook

The outlook for the retail sector remains quite optimistic in the long run, but we cannot ignore the macroeconomic risks Romania faces currently. If the country were to enter a period of economic correction, it would undoubtedly hurt consumer spending. That said, if we were to keep track of the long-term outlook, it would be more like a step back, which would likely be followed by many more steps ahead: for instance, despite facing one of the steepest recessions in the EU in 2009-2010, the data suggest that the economy bounced back and outperformed most EU states since 2014 as far as retail sales go, as data quoted previously shows.

We still consider Romania to have a relatively small modern retail stock compared to even neighbouring peers, let alone Western European countries. After all, Romanians are already spending more on clothing and footwear than Poles or Czechs; meanwhile, the per capita stock in Poland is roughly 40% higher than Romania’s, while Czechia’s – over 70%. Given that shopping centers are quite bustling with activity, we view these as serious arguments in favour of much more upside room for the country’s current 4.6 million sqm of modern leasable shopping centers.

2025 should see the addition of over 200,000 sqm of new leasable retail areas, if current developer promises are met. The year’s biggest addition, accounting for nearly one third of the total, is that of Prime Kapital/MAS REI’s 62,000 sqm expansion of the Mall of Moldova in Iasi, which included a wider rebranding and refurbishment of the older shopping center’s existing areas as well. Another 35,000 sqm previously closed mall in Arad (now rebranded as Agora) is set to reopen after going through an extensive refurbishment. These two schemes add up to almost half of the total new supply. The rest of the new stock is comprised of mid-to-small sized schemes in various towns throughout the country, with the list including older established developers like Iulius or Ceetrus, but also names that have been active rather recently (say, over the last 5- years), like Cometex, Scallier or RC Europe. We want to also point out that local capital is increasingly more active on the local scene than in the past, delivering successful projects in towns with limited or no competition.

The medium-term outlook is set to bring further deliveries, but, as noted in the past, large-scale dominant shopping centers are also back on the menu for developers, with NEPI Rockcastle, Iulius and Prime Kapital/MAS REI being responsible for this shift. Some schemes are upwards of 100,000 sqm in GLA, attesting to the significant shift in developer mentality after many years of focusing on retail parks.