"Outlet" Type Commerce Migrates Towards the Highway

By: Oleg Cojocaru - Romanian Version

March 17, 2008 - Saptamana Financiara

Investors in commercial spaces from outside the city follow the industrial developers

The concept of “factory outlet center” is a 100% American invention. During the '70s several entrepreneurs from Pennsylvania had the idea to open a commercial center that was supposed to unite all the stores they owned so they can sell the remaining stock of goods they still owned. Shortly after that the concept spread around the world. Nowadays the majority of the designers of clothing, shoes and accessories opted for such a system.

If Factory Outlet Center is the new trend in the retail business, developing such retail centers t is the new trend on the real estate market. As of now, announcements for three such centers were made, all of them located West of Bucharest, more precisely on the A1 highway. The location is not arbitrary, A1 being for years the location of choice for the investors in industrial and logistical area. This was reason enough for those developers who want to enter the distribution area, specifically factory outlet centers.

HIGH DEMAND FOR THE OUTLET SEGMENT

The three proposed outlet projects are Mega Designer Outlets, initiated by the Mega Company, American Outlets – a project from American Outlets Overseas and Fashion House, a center built by the Belgians from Liebrecht and wood.

With these three centers Romania enters the new wave of the European expansion of the outlet-type commerce. In Romania as well as in the rest of Europe such stores at located at the outskirts of the city where the land is cheaper, but also not to perturb the traditional forms of commerce. Also an outlet center has to have access to a highway otherwise it may be avoided by potential clients. With these type of centers the bigger the better. Such outlets may house 30 to 80 stores, and more then half will be clothing and shoes. Also another important aspect is the price. As a general rule in outlets the price is 25 to 70 percent lower then the stores situated in the downtown area.

Monica Barbu, director of Retail Division Colliers International explains that in Romania the concept of retail outlets has been long expected. “In a period with so many announcements for shopping malls, the need for outlet malls is high, not only for retailers but for customers, especially since Romanians were always looking for new shopping options”.

WHO ARE THE OPERATORS

The last entrant on the outlet type commerce market is Mega Company. The company has been active on the Romanian market for more than 17 years, being specialized in building large size commercial and industrial projects. By 2007 the company already developed more than 164,000 square meters of commercial and industrial space and managed the majority of it.

The outlet center that the company wants to build will be named Mega Designers Outlet. The project is worth 80 million Euro and it will be developed in two phases. The first phase will be finished this fall and it will bring on the market 16,000 sqm of the 38,600 sqm of comm highway close to the ring road. The developer is counting on a catchment area of 3.5 million people from Bucharest and the surrounding areas.

Another project is the one that was announced last year by American Outlets Overseas SRL. Market sources state that this development is presently on standby because the other two projects are fairly advanced. In addition the American Outlets is situated further away from the city, at the kilometer 21 and it will have between 55 and 75 stores. This is the first project introduced by American Outlet Overseas ( Of which Sigma and Kappa Oversea owns 51%). Initial investment will be around 30 million Euro. The project is supposed to use around 10 hectares for shopping, entertainment and recreation. In addition spaces for offices, events and lodging will be added. The project has three phases. The first step is the development of the outlet park on an area of 40,000 (American Outlets). In the second phase the developer will invest in a Multiplex, a movie theater with 6 screens ranging from 125 to 160 seats each and a private screen room for 30 people. In addition in this stage an Aqua Park will be built.

As the last stage comes into play American Outlets Overseas will deliver all the services expected in a housing project. During the last stage a conference center, offices and retail spaces for major brands will be developed.

FASHION HOUSE, UNDER CONSTRUCTION

The Belgian project developed by Liebrecht & wooD is the one that is in the farthest along. Late last year the company started the works at West Park, one of the largest commercial parks in Bucharest. The park will also include an outlet center that will operate under the name of Fashion House. The total development area for West Park will be 250,000 sqm, out of which 86,000 sqm will be reserved for commercial areas. Same like the other two commercial centers, West Park will also be located on the A1 highway.

The Fashion House Outlet Center will cover 27,000 sqm and it will house over 100 stores with both international and domestic brands, a food court and a playground. According to the developer, the retailers will offer discounts of 30 to 70% throughout the year. The architectural style is inspired by the old Bucharest and will include elegant buildings and illuminated water fountains.

West Park will also include an area designated to the large international retailers. The park will host the second Hornbach store in the country, a German chain of home and gardening, the Austrian Kika, a competitor of IKEA and Technomarket, a distributor of electronics headquartered in Bulgaria. All three stores as well as Fashion House are expected to be open and operational by fall.

INDUSTRIAL SUPPORT FOR THE COMMERCIAL DEVELOPMENT

With all the new commercial development that is taking place in the outlet segment the infrastructure development will have to follow. That is why the site selection on the A1 highway was a wise one.

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