- RETAIL SPACE VACANCY STANDS AT 6 PER CENT
- PRIME RENTS UP 10 PER CENT YEAR ON YEAR
Sofia’s Vitosha Blvd. is the next step in the expansion of large international and domestic retailers, according to real estate consultants Cushman & Wakefield / Forton.
According to a special research on Vitosha Blvd., the absence of a number of brands from the main shopping street and the expected slowdown of shopping center development are the main reasons behind the renewed focus on the high street. "With the opening of only one shopping mall in Sofia in 2015, retailers will have to look again at the opportunities to position in locations with a steady stream of consumers and lower levels of competition," said Michaela Lashova, MRICS, Managing Partner, Cushman & Wakefield / Forton. "Retail in Sofia’s center is going to be ever more corporate and dominated by the leading global brands – just as it is in most European countries."
Presently organized retail represented by large multinational and domestic-grown concepts is equally presented compared to the independent retailers on the boulevard, according to the research. Small and medium-sized independent brands occupy 46% of all retail units against 44% for retail chains. Yet, as regards size, the big players prevail with 54% of the total retail space against 35% for independent shops and 5% for corporate tenants such as retail banks and telecom points of sale.
"The picture will change in favor of the big international brands - as it happened in the shopping center segment," said Rosen Genev, Partner and Head of Retail at Forton. "In the period between 2006-2008 many new brands and concepts were introduced and tested with the independent local players leading the way. After 2008, however, the profile of the leading shopping centers has been defined by names such as Zara, H&M, LC Waikiki, Reserved, NewYorker, Humanic, Deichmann and others. Of these, only the first two brands are present on the main shopping street."
Over the past year the internationalization of the market continued with new entrants such as Spanish brands Cortefiel and Mango. They amplify the competition in shopping centers, which in turn makes the main street more attractive for business, according to Forton.
Vitosha Blvd.’s retail mix offers substantial level of diversity to consumers – a total of 180 retail units which have almost 22,000 sqm retail space, according to Forton’s estimations. “In terms of the number of stores, the boulevard compares well with the largest shopping centers in Sofia,” said Genev.
It is characterized by a pronounced dominance of fashion and footwear stores, sports incuded – 41 per cent of the count and 54 per cent of the total retail space. "However, whole retail categories are absent at all or underrepresented,” said Rosen Genev. Examples include supermarkets, consumer electronics and children's shops, and to some extent sports stores.
At the same time, retail expansion opportunities remain limited. Units that offer sufficient size for the leading retail brands (over 500 sqm) are 4% of all, although constituting 39% of the total retail area. The vacancy rate is only 6%. "The opportunities for development are associated with large single properties that are vacated by their tenants or with the extensions of existing premises in basements or above-ground floors as seen with H&M and Zara", said Rosen Genev. "The only large vacant store at the moment is the one at number 16, which has 1000 sqm on three levels."
The low vacancy rate and stable demand led to 10% annual rental growth for the most common type of units - on the ground floor, with a large window and areas of 100-150 m - to € 44 per sqm per month. "I do not think that growth is guaranteed for all properties. But surely the biggest and well-located shops will enjoy strong interest from leading retailers in the next 12 to 24 months," said Rosen Genev.
In Bulgaria and Macedonia Forton is leading provider of commercial real estate services for investors, corporates and banks. Forton is an independently owned and operated member of the Cushman & Wakefield Alliance in the two countries and part of AG Capital, the largest Bulgarian real estate service group which also includes Address, Facility Optimum, BLD and Unique Estates, among others. Forton offers end to end solutions for office, retail and logistics developments, hotels, resorts, residential and specialized projects and properties. Its experts can help with investment planning and consultancy, leasing of office, retail and industrial space, sales and acquisitions, business consulting, valuation, property and asset management. As a company regulated by the Royal Institution of Chartered Surveyors, Forton works in accordance with the highest international real estate service standards. Its partnership with Cushman & Wakefield allows it to serve as a gateway between the Bulgarian and the global economy.