Research & forecast report
Bulgaria | Retail Real Estate Market H1 2017
Strong investment interest towards shopping centers in Bulgaria Ownership restructuring in projects with over five years market presence Stable retail space absorption in shopping centers* and on Sofia high-streets Increased occupancy levels in leading modern shopping centers in cities above 120,000 inhabitants
Boryana Peneva
Stable development of retail parks
Manager Retail Services boryana.peneva@colliers.com
New international food chain brands on Sofia high-streets
Supply Retail space in modern shopping centers* (sqm) 795 000
791 760
791 760
791 760
H2 2016
H1 2017
H2 2017
790 000 785 000
783 260
780 000
777 260
775 000
Modern shopping centers retail space supply stood at its previous levels - 791,760 sqm in the country and 406,660 sqm in Sofia. This will remain unchanged in the course of the year.
forecast
771 260
770 000 765 000 760 000
H1 2015
H2 2015
H1 2016
Average shopping center occupancy in cities above 120,000 inhabitants****
97 %
90 %
PLOVDIV
VARNA
ST. ZAGORA
90 %
88 %
70 %
SOFIA
RUSE
BURGAS
2
92 %
Retail Market Overview | H1 2017 | Colliers International
The average occupancy levels of the established projects in Plovdiv, Varna, Burgas and Stara Zagora was 92%. Retail space supply is forecasted to increase considerably with the openings of Plovdiv Plaza and Shopping Arena Ruse.
Demand Retail space absorption in Sofia (sqm) 20000
16 375
Shopping center retail space absorption recorded a minor increase by 11%, reaching 16,321 sqm.
16 321 14 835
15000
14 689
The share of the space, leased during the period, in the well-established shopping centers in Sofia was approximately 5% from the gross leasable area. Some of these projects had 100% occupancy rate.
9 790
10000
5000
The largest number of new openings was registered in Paradise Center (27), Park Center (10), Serdika Center (8) and The Mall (8).
0 H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
Changes in the tenant mix in shopping centers in Sofia
20
Supermarkets and food chains, followed by fashion operators continued to be at the top of the list in terms of new openings.
15
Supermarkets and food chains
25
Fashion goods 10
Electronics Shoes and leather goods
5
Services Sport goods
0 26%
23%
14%
9%
7%
5%
4%
4%
2%
2%
1%
1%
Furniture and DIY Cafes, restaurants, fast food Health and beauty Home décor and housewares Kids’ fashion Accessories and jewelery
Retail parks in Bulgaria Retail parks development activity, related to leasing and tenant mix enhancement, remained as a trend. Vacancy rates were in the range 3% - 15%. JYSK became a tenant in Jumbo Plaza, the furniture retailer Yavor and the toy chain Komsed – in Retail Park Veliko Tarnovo. Retail Park Sredets 37,000 sqm
Jumbo Plaza 30,000 sqm
Retail Park Veliko Tarnovo 19,500 sqm
Retail Park Plovdiv 21,000 sqm
Retail Park Varna 14,870 sqm
“GLA”
Retail Market Overview | H1 2017 | Colliers International
3
Sofia high-streets There was a slight decline from 5% to 3% in tenant movement dynamics on Sofia highstreets, with the exception of Vitosha Blvd. where it kept its previous levels – 3%.
TENANT MOVEMENT ON SOFIA HIGH-STREETS
High vacancy was recorded on Graf Ignatiev Street, as a result to the construction works for the new underground line.
6%
5%
3%
H1 2016
H2 2016
H1 2017
Food chain operators had a considerable number of new openings. Wagamama and the Spanish Hamburguesa Nostra entered the Bulgarian market. The Finnish fast food chain Hesburger expanded to Sofia.
Segments
111 120
120
84
100
100
56
80 60
60
40
40
20
20
0
0 BILLA
LIDL
69
80
KAUFLAND
DM
61
LILLY
Number of operational stores
Supermarkets
Drugstores
Furniture and DIY
The supermarket segment restructuring continued, leading to a still wide range of vacancy levels in Sofia shopping centers – 2%-23%. Kaufland, BIlla and Lidl kept expanding, a trend also valid for domestic retailers. Billa selected Serdika Center for its second shopping center location and announced openings in Park Center and Mall of Sofia.
The drugstores Lilly and dm expanded with five and three stores respectively.
The newest locations of Praktiker are in Burgas and Yambol, and of JYSK in Sofia and Pazardjik.
Fashion
Online trading
The international fashion operators with new locations were LC Waikiki - in Bulgaria Mall, Mega Mall and S mall Sliven, as well as Forever 21 – in Serdika Center.
Online trading continued developing with another retailer – Deichmann, starting a platform in Bulgarian language, following those of Decathlon, H&M, Zara and CCC.
Carrefour was replaced by ABO Market – a shop-in-shop concept. As for the big-box operators, Lidl opened a store in Balchik, Kaufland in Sofia, Fantastiko in Elin Pelin.
4
Electronics Technomarket expanded further in Sofia and Zora in Veliko Tarnovo.
Retail Market Overview | H1 2017 | Colliers International
Retail Market Overview | H1 2017 | Colliers International
5
6
Retail Market Overview | H1 2017 | Colliers International
Rents Bulgarian shopping centers rents (eur/sqm)
Prime shopping center rents** registered a slight growth.
38 30
35
26 25
15
27 26
Retail parks rental rates were between 7-10 eur/sqm.***
25 24
18
19
RUSE
ST. ZAGORA
0 SOFIA
PLOVDIV
VARNA
BURGAS
2016
2017
Outlook
Strong investment interest towards shopping centers in Bulgaria to remain - new investment deals and change of ownership is expected to be seen. Active management and different business development strategies to be implemented by the new retail property owners. Stable demand to balance supply. Retailer expansion dynamics, based on well-informed decisions, to continue.
Definitions * The overview covers shopping centers above 10,000 sqm. **Prime rent - the average top open-market rent estimated to be achievable for a new lease of a 100 sqm (net internal area) unit of the highest quality and specification in the best location, excluding service charges and taxes and not reflecting tenant incentives.
***Prime rent in retail parks - the average top open-market rent estimated to be achievable for a new lease of a 1 000 sqm (net internal area) unit of the highest quality and specification in the best location, excluding service charges and taxes and not reflecting tenant incentives.
****Plovdiv Plaza and Shopping Arena Ruse were not considered in the analysis.
Retail Market Overview | H1 2017 | Colliers International
7
554 offices in 68 countries on 6 continents €2.3
billion in annual revenue
Boryana Peneva Manager | Retail Services +359 2 976 9 976 boryana.peneva@colliers.com Kamelia Radova Market Researcher +359 2 976 9 976 kamelia.radova@colliers.com
Colliers International | Sofia European Trade Center 115K Tsarigradsko Shose Blvd. Build. B, 7th floor 1784 Sofia | Bulgaria +359 2 976 9 976
180
million square meters under management
15,000
professionals and staff
About Colliers International Colliers International is a global leader in commercial real estate services, with over 15,000 professionals operating out of more than 554 offices in 68 countries. The company operates in Bulgaria since 1991 and delivers a full range of services to real estate users, owners and investors worldwide. Presently Colliers represents some of the most innovative and professionally planned projects in all market segments, including office, retail, logistics, industrial and residential. As of June 2015, Colliers is an independently owned company. The common shares of Colliers International Group Inc. trade on the NASDAQ under the symbol “CIGI” and on the Toronto Stock Exchange under the symbol “CIG”. As part of the CEE Quality Awards 2016 Colliers won for the fifth time in a row the Industrial agent of the year award. The latest annual survey by the Lipsey Company ranked Colliers International as the third-most recognized commercial real estate firm in the world.
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