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Real estate experts expect little improvement in the retail segment

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Claudia Ariton
While the much-debated financial crisis has had a negative impact on the entire real estate industry and demand has increasingly focused on low cost retail spaces, analysts expect 2012 to be a difficult year for retailers. Twelve new commercial centers have been slated for completion in 2012, but real estate agents remain skeptical whether all of them will be ready by the end of the year.
In spite of the lingering financial difficulties in the real estate sector, the retail segment remains an active one, powered by a strong demand. According to Costel Alecu, Retail & Warehouses Department manager with Regatta, there are retailers who can offer guarantees for steady, long-term operations. At the same time, he pointed out that the demand is focused on small rental spaces, with prices as low as possible. 
Generally, the trends in the commercial space segment will remain largely unchanged this year, which will be reflected in a marginal variation in rent prices, capitalization rates and a modest growth in the volume of new modern commercial spaces, according to Catalin Mruntelu, valuer for BNP Paribas Real Estate. The situation could change rapidly however if there are new developments in the economic environment, be they positive or negative.
The retail segment was greatly influenced by the general volume of consumption in the local market last year, according to Titel Folea, marketing manager for Euroest. The demand for commercial spaces was mainly buoyed by relocations, as companies looked for lower rent facilities, and by small businesses in need of small spaces in areas of busy foot traffic. “Last year, Euroest had rental demand for small and medium retail spaces for the food sector, with businesses such as restaurants, cafes and pastry shops, for the fast moving consumer goods sector, and for the tourism service sector. The most sought after locations were those in central areas, more precisely in large office buildings and in the historic center of Bucharest,” said Folea. He believes that 2012 will be rather unpredictable in terms of retail segment development, as Romania’s economic instability will not make the situation any easier.
Other analysts are even more pessimistic. “2012 will be quite slow in terms of new modern retail space delivery”, said Razvan Sin, head of retail department with DTZ Echinox. “This trend will mostly favor the existing projects, considering that retailers will not have new options for opening new facilities, therefore focusing on the commercial centers that are already in operation,” he added. Sin also estimated that the absence of new projects will trigger a slight increase in rents and a decrease in the vacancy rates at the existing projects.

Rent levles favor dominant commercial centers

Real estate analysts agree that the medium rent value for street-level retail spaces has dropped by 10 - 15 per cent since 2010, following the same downward trend recorded in the second half of 2009. The rate of rent decrease for commercial spaces was lower in the large shopping centers. “Rent levels generally decreased in Bucharest last year, except for the best performing commercial centers, where we saw a slight increase due to their low vacancy rate and increased demand from retailers,” said Razvan Sin of DTZ Echinox.


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