Delayed projects, low occupational demand, rents at rock bottom and shopping centers that deferred payment of rent – is what describes the real estate market after first nine months, Jones Lang LaSalle consultant said in a report.
30% of the announced retail area has been completed
In shopping center market, nine new projects have been completed in the first three quarters that total 260,000 square meters, 60% of it being built in Bucharest.
Earlier this year, some 600,000 were announced for delivery in 2009, which means that approaching the end of 2009 shows that only 30% of those announced projects were actually delivered.
“We estimate that at the end of 2009 the modern retail supply will reach 1.3 million sqm (represented by shopping centers and shopping galleries, excluding boxes). Bucharest’s retail supply is estimated at 500,000 sqm and includes the opening of AFI Palace Cotroceni, (photo) with a gross leasable area of 76,000 sqm”, Jones Lang LaSalle said.
Across Romania, 15 projects have been announced for 2010, which would deliver to the market another 440,000 sqm. However, consultants expect major delays in delivering the projects, due to financing constraints and low occupational demand.
30% decline in rental values
Rental negotiations concessions are widespread, although these appear to be leveling. Most developers have already agreed to temporary rental reductions of 20-30% off the contracted levels. Some developers have even granted temporary rent-free periods to retain occupancy levels.
Prime office rents across Bucharest vary between €70-90/sqm/month, while the rents for storefronts on high streets stand between €60-80/sqm/month.
“Some well-established retailers have succeeded to renegotiate existing lease contracts, but the most substantial negotiations are carried out in secondary cities where rent
