Biggest rent cuts in malls: Zero rent in Grand Arena and Galleria Piatra Neamt

Most shopping centre owners have offered discounts to clients in order to keep them in the mall, help them get through this time of weak sales, as well as to keep their own businesses afloat. How far have some of the owners gone?

"I have heard of fabulous offers on the market, which include paying no rent at all in the first year, support offered for setting up the store and rent calculated as a percentage of the turnover starting in the second year of tenancy," says a real estate consultant commenting on the situation of shopping centre owners.

Recently, Dorin Catana, general manager of Centrofarm drugstore chain, told ZF there were mall owners who agreed that the chain not pay rent in the next few months just so it could be kept within the mall. Octavian Radu, owner of the RTC group, managed to secure an up to 70% rent cut for some of his Diverta stores located in shopping centres. Dragos Petrescu, with a 15 million-euro business in the restaurant sector, was uncompromising, saying he would no longer open restaurants in shopping centres, not even for free.

The biggest cost cuts are made primarily by owners of shopping centres opened in the past year, which saw most retailers freeze expansion, resulting in an unsatisfactory occupancy rate.

"We charge zero rent for a fixed period, with figures reviewed every three months. On the ground floor, where the occupancy rate is 90%, rent cuts amount to 20-25%. The first-floor occupancy rate is of 33%," specified Mikael Harfi, manager of the Grand Arena mall in Bucharest, and son of one of the owners.

The project, located in southern Bucharest, was opened this spring, with a significant share of the tenants that had signed rental contracts deciding not to open the stores after all, with the occupancy degree cut from the very start.

"It has been six months since our opening. We cannot compare with shopping centres that opened four or five years ago. We have stores with very good sales, footwear stores, for instance, and others that don't sell much at all, which we blame on prices. Our job, as owners, is to bring as many people into the mall as possible," Harfi explained.

As a result of lower interest from tenants, the number of new openings made this year is down by more than 50% against last year.

Another mall opened this year is Galleria Piatra Neamt, where some of the tenants are not paying any rent for a specified period of time.