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The sunset of the malls in Bulgaria

31.03.2020

 

For the last 24 years, newly open market areas in Europe have reached their lowest level. Only 2.6 million sq. m. This is a 28% decrease compared to an earlier year. The new areas were comparable to the beginning of the 90ies when they opened the first shopping malls in Central and Eastern Europe. Bulgaria is no exception to this trend. In recent years, frozen projects have been completed and the area has been reopened after modernization. The market enters the maturity phase and no new projects are expected for the classic shopping malls. More flexible concepts are expected to be tailored to market trends in the future. Total supply amounts to 168.1 million square meters, which creates a highly competitive environment for investors, to focus their efforts on redeployments and new internal allocations to transform projects into modern shopping and entertainment centers. The development of multifunctional projects rather than traditional shopping centers is expected to grow more often. There are more and more hybrids in Europe that have been combining commercial areas with offices, hotels and residential areas and mainly the interest in retail Parks.

In 2019 and 2020 4.4. million square m2 shopping malls are expected to be completed in central and eastern Europe. In the more developed markets in western Europe, the volume is only half 2.1 million square. m2.

In Central and Eastern Europe, including Bulgaria, the development of retail parks is aimed at smaller district towns, where there was no opportunity for expansion. Investment in the construction and supply of retail Parks is a key market trend in retail areas during 2019. Without major differences, the Bulgarian market regarding retail space also enters a more mature stage with a more moderate supply rate, a more competitive environment, and clear segmentation. The first half of 2019 ended with a slight predominance of the commercial space offered outside Sofia.

The trend is dictated by the trader's demand for the presence within the markets outside Sofia. This allows for the development of retail parks with a GLA in the settlements where there are no shopping centers and the population is under 100 000 people.

These projects give advantages to both buyers and tenants. The projects are particularly successful in markets price sensitive as it is in our country.

 the construction of such commercial areas has already started on the country's territory, and by the end of 2019 will appear on the market. The Construction of such a project takes from 6 to 12 months. The development of retail Parks in Bulgaria is already gaining momentum, at the moment construction is occurring for several of them on the background of frozen projects for large shopping centers. These are projects with a rented area of 4-5 000 sq. m2 Forming around an already existing food hypermarket or the DIY shop. The advantage of these projects is the saving of time for the buyers as several large shops are located in one place, most often they are a grocery hypermarket, a shop for furniture and furnishing for electronics, and chains of the type "Do it yourself”. They are located at good locations, on key roads in the area or outside the park, and have a large and easily accessible above-ground parking. Another advantage for them is the lower rental levels.

 

In the segment of shopping centers, new projects are not expected, the total supply in Sofia and the big cities are already saturated. In the middle of 2019, the total offering of areas in malls within the country is expected to exceed 810 000 sq. m2. By the end of 2019, the share of unoccupied areas in Sofia is expected to decrease significantly from 9% to the healthy for the market 5 %. Rents in malls and central shopping streets will continue to grow steadily during the year. The period is characterized by the expansion of new to the market brands such as Pepco, KiK Textilien and others. Great progress has emerged in the segment of affordable fashion.

 

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