RETAIL MARKET OVERVIEW

BULGARIA

H2 | 2018

2H2

201

8 |

Bul

garia

Re

tail

Mar

ket O

verv

iew

| Co

llier

s In

tern

atio

nal FIG. 1: RETAIL SPACE IN

SHOPPING CENTRES PER 1,000 INHABITANTS IN THE BIGGER CITIES

FIG. 2: PRIME RENTAL RATES2 IN SHOPPING CENTRES (EURO/ SQM/ MONTH)

FIG. 3: PRIME RENTAL RATES2 ON HIGH STREETS (EURO/ SQM/ MONTH)

316

254 247

355

261

320

189

250 239

109

0

50

100

150

200

250

300

350

400

So�a

Plovdiv

Varna

Stara Z

agora

Veliko

Tarno

vo

Burgas

Gabrov

oRus

e

Pleven

Total

Bulgari

a

2016 2017 2018

AVERAGE EUROPE

39

25

25

25

39

26

27

25

35

25

26

24

34

25

26

21

So�a

Plovdiv

Varna

Burgas

2018 2017 2016 2015

So�a

Plovdiv

Varna

Burgas

2018 2017 2016 2015

55

23

21

22

49

22

20

21

45

20

18

19

42

20

19

19

Source: Colliers International

H2 2018 | Bulgaria Retail M

arket Overview

| Colliers International 3

DEMAND

• The total supply of modern shopping centres* in the second half of 2018 remained at 400,660 sqm in Sofia but increased to 771,860 sqm at country level. The growth was due to the new shopping centre opening in Plovdiv – Plovdiv Plaza – 35,000 sqm GLA.

• A few retail parks*** started operations during the period – three in Plovdiv (G Centre Plovdiv, Retail Park Raikov, Retail Park Plovdiv – South) and one in Kostinbrod (Billa Park).

• The ratio “leasable retail space in shopping centres per 1,000 inhabitants” at the year–end increased to 109 sqm for Bulgaria,

to 254 sqm for Plovdiv, while in the capital it remained unchanged – 316 sqm. (Fig.1)

• High streets in Sofia recorded a marginal drop in vacancy rates from 8% to 6% while the top three regional cities registered a 1 % growth on annual base. This indicator was 3% for Plovdiv, 6% for Varna and 8% Burgas. High street trends synchronized with those of shopping malls – stable rents, high occupancy levels and low tenant turnover for the better locations.

SUPPLY

• Modern retail space demand in

the capital marked stable levels of

absorption – 5,670 sqm during the

second half of 2018, and

15,100 sqm for the whole year.

This was mainly due to

replacements of existing tenants

and openings of new ones.

Competition between shopping

malls continued, with owners

investing in building and layout

improvements to enhance

customer interest and maintain a

competitive market positioning.

• Shopping centres in the country

registered moderate levels of

absorption. The indicator was

30,760 sqm on an annual basis.

For the well–established projects

the occupancy reached over 90%.

In comparison, the shopping

centres in Sofia kept a

vacancy rate of 5%.

• The modernization and

expansion of existing retail parks

continued. LC Waikiki opened

in Jumbo Plaza and will soon

be joined by CCC and Pepco.

• Food chains maintained their

leading position in terms of new

store openings during the last six

months of 2018. The most active

operators were Billa (4 stores), Lidl

(3), T Market (3) and Fantastico (1).

Billa leased a significant number

of shopping mall locations in Sofia,

previously occupied by Carrefour.

H2 2

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RENTAL LEVELS• Prime rental rates** in shopping

centres and high streets in Sofia and the regional cities remained stable in the second half of 2018. (Fig. 2 & 3)

Definitions:* The overview covers shopping centres 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.

*** A Retail Park is defined as a purpose–built development with at least three units covering 2,000 sqm or more of lettable floorspace, with centralized management and a car park environment with ample free parking.

FORECAST• The primary focus of shopping

malls will continue to be market positioning, likely to lead to tenant mix optimization and building reconstructions. One example of this trend is the absorption of the hypermarket areas in The Mall, Paradise Center and Bulgaria Mall.

• Investment interest towards shopping centres is anticipated to continue in the first half of 2019.

• A new shopping centre is expected to open in Varna (Delta Planet Mall). The repositioning of the first mall in the city (owned by Mall Varna EAD) will be finalized by the end of 2019.

• Retail parks will grow in popularity as a retail format, especially in cities under 100,000 inhabitants, where modern shopping centres are usually missing. In addition to their footprint in the bigger cities, local and international brands

from the fashion, shoes and home accessories sectors will consider parks as expansion opportunity. This tendency will trigger investment interest toward retail parks.

• New brands in the low–priced segment (KiK and Pepco) are expected to open their flagship shops, which will further enhance the development of retail parks and retail formats in general in the smaller cities.

• High streets will continue to attract strong retailer interest, evident from the high demand level. The reconstruction of Graf Ignatiev Str. is due for completion in the spring of 2019. This will create a new look and feel and will increase its appeal to potential tenants.

• Significant change in prime rental rates in shopping centres and high streets is unlikely.

Since 2018 the shopping center of Varna Mall has been changing:

its architecture towards a modern, state-of-the art building

its concept to evolve into a COMMUNITY CENTER. THE PLACE PEOPLE WANT TO BE.

Varna Mall was opened in 2008 and is known as one of the most popular shopping centers and entertainment destinations in Varna city and the region. The project features an excellent location, space, visibility and accessibility by both public and private transportation. It is part of an established shopping zone of the city, which includes a Kaufland hypermarket.

In 2018 Varna Mall started a large-scale repositioning and renovation process which will entirely modernize the shopping center in terms of design and architecture, overall atmosphere and tenant mix. The new concept of Varna Mall will offer to the citizens and guests of Varna the coolest place to be, where people meet, eat, relax, work, rest, play…and shop… A community venue full of services, new shops and offices in order to promote wellbeing and lifestyle activities.

retail.bulgaria@colliers.com +359 2 976 9 976 To rent space

The place whereyou will want to be

Since 2018 the shopping center of Varna Mall has been changing:

its architecture towards a modern, state-of-the art building

its concept to evolve into a COMMUNITY CENTER. THE PLACE PEOPLE WANT TO BE.

Varna Mall was opened in 2008 and is known as one of the most popular shopping centers and entertainment destinations in Varna city and the region. The project features an excellent location, space, visibility and accessibility by both public and private transportation. It is part of an established shopping zone of the city, which includes a Kaufland hypermarket.

In 2018 Varna Mall started a large-scale repositioning and renovation process which will entirely modernize the shopping center in terms of design and architecture, overall atmosphere and tenant mix. The new concept of Varna Mall will offer to the citizens and guests of Varna the coolest place to be, where people meet, eat, relax, work, rest, play…and shop… A community venue full of services, new shops and offices in order to promote wellbeing and lifestyle activities.

retail.bulgaria@colliers.com +359 2 976 9 976 To rent space

The place whereyou will want to be

Exclusive Agent

Colliers InternationalEuropean Trade Center, Build. B, VII 115K Tsarigradsko Shose Blvd.1784 Sofia, BulgariaMobile: +359 2 976 9 976

GLA – 31,000 sqm

TBA - 65,470 sqm

5 floors retail, entertainment & office

3 underground levels

600 parking spaces

Overpass with hypermarket Kaufland, having 5,000 sqmsales area and 300 own parking spaces

Catchment area – above 475,000 residents

More than 2 mln tourists every year (Varna)

Registered traffic at the shopping center cross road of 20 mln cars per year

FACTS & FIGURES

The place whereyou will want to be

FOR MORE INFORMATION

Colliers International | SofiaEuropean Trade Center115K Tsarigradsko Shose Blvd.Build. B, 7th floor | 1784 Sofiaphone: +359 2 976 9 976

colliers.com

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Copyright © 2019 Colliers International. Colliers International | Bulgaria

Dimitrinka RakovskaManager | Retail Servicesphone: +359 2 976 9 976dimitrinka.rakovska@colliers.com

Adriana TonchevaSenior Market Researcher phone: +359 2 976 9 976adriana.toncheva@colliers.com