NEPI Rockcastle’s €136 million Promenada Craiova development in central southern Romania officially opens its doors today. The retail scheme has attracted a host of international brands and is the largest retail development by size and investment value opening in Central and Eastern Europe in 2023, according to CBRE.
Rüdiger Dany, NEPI Rockcastle’s CEO, said: “The multitude of international retailers opening at NEPI Rockcastle’s Promenada Craiova is indicative of the market trends we are seeing across our portfolio of shopping centres in Central and Eastern Europe. International retailers increasingly recognise that the pace of economic and retail market growth and rise in household incomes across the region, combined with lower operating costs and higher margins, present a far more compelling opportunity than what is generally on offer in more mature and saturated Western European retail markets. This is helping drive NEPI Rockcastle’s strong growth and the continued outperformance of CEE retail real estate we see across our business.”
Inditex, the world’s biggest fashion retailer by sales, has selected Craiova for the launch of its fast-growing Lefties value retail brand in CEE markets, the first venture for the store chain outside Spain.
The overall retail scheme has a total gross lettable area (GLA) of approximately 80,000 sqm, larger than originally planned due to strong retailer demand for space exceeding the initial projected supply. The scheme comprises a 53,300 sqm GLA shopping centre and a 10,400 sqm GLA retail park, both owned by NEPI Rockcastle. In addition, the retail scheme incorporates a 16,000 sqm GLA DIY store, owned by Dedeman. The shopping centre is 99.9% let and offers over 100 stores, among them international brands such as Bershka, Calvin Klein, Enzo Bertini, Mohito, Nike, Peek & Cloppenburg, Stradivarius, Tommy Hilfiger, Under Armour and Zara, as well as a Cineplexx cinema. It also boasts Craiova’s largest outdoor panoramic terrace, which is surrounded by restaurants and cafes.
The retail park has leases agreed and signed for 85% of its space. Its retailer line-up includes Adidas Outlet, Altex, Flanco, Hervis, Nurvil, Pepco and Sportisimo.
There is parking for over 2,800 cars, and drive-through food outlets such as KFC and Burger King.
The development’s photovoltaic plant design capacity is about 6 MWp (Megawatt peak) of energy, installed mainly over the parking area, generating around 70% of the shopping centre and its tenants’ requirements. It is the first time NEPI Rockcastle has integrated renewable energy production over the parking areas of one of its developments. The PV project will start operating at the beginning of 2024. This installation is part of a larger programme across Romania where the Group’s portfolio is being fitted with photovoltaic panels, which will result in NEPI Rockcastle producing sufficient green energy on site to satisfy 25-30% of its energy consumption needs.
Craiova is the sixth-largest city in Romania, with a population of around 270,000 and a further 340,000 people living within a 30-minute drive of NEPI Rockcastle’s Promenada Craiova. The city, which is 230 kms from the capital Bucharest and 80 kms from the southern border with Bulgaria, is the economic and cultural centre of the Oltenia region. Promenada Craiova is creating 1,500 new local jobs, providing a major economic boost for the city and Oltenia region.
Romania is the second largest EU country in CEE by population after Poland. Economic growth and stability helped drive a year-on-year rise in consumer spending of 21% in 2022, according to CBRE’s Romania Turnover Retail H1 2023 research report.
NEPI Rockcastle’s Group Asset Director, Marius Barbu, said: “Promenada Craiova demonstrates one of the fundamentals of the CEE retail markets, where ultra-modern and attractive shopping centres play a central role in local economies and communities, mainly because shopping high streets didn’t develop in the post-war socialist era in these countries as they did in the West.”
NEPI Rockcastle continued to see strong tenant demand for space in its CEE shopping centres in the first half of 2023, following a significant rebound in 2022. The company signed 534 new leases and lease extensions for a total area of 123,600 sqm, of which 228 were new leases. International retailers, some of them entering the CEE markets for the first time, accounted for 62% of the leasing activity. Asset management initiatives (e.g. re-sizing, merging of units, etc.) helped drive a base rental uplift of 9.5% on top of indexation, with renewals and reletting on a like-for-like basis achieving an increase of 7.3%, generating an average 7.5% increase in rents. This, together with robust consumer demand, helped drive a €104 million valuation uplift in the investment portfolio.
