Tuesday, July 24, 2007
Jul. 24, 2007 (McClatchy-Tribune Regional News delivered by Newstex) --
In a move to capitalize on growing retail opportunities in Romania, Long Island-based developer Vincent Polimeni signed contracts last week for two parcels of land outside Bucharest that he said are ripe for retail development.
Although these will be his first projects in the newly minted European Union state, Polimeni is confident they will be as successful as the extensive holdings in Poland he has developed in the past seven years.
'We know how to develop shopping centers, which [Eastern European developers] don't,' he said. 'Tenant mix is critical, and then there's design.'
Polimeni, who is president and chief executive of Garden City-based Polimeni International Llc, said strip malls as Americans know them simply don't exist in Romania, which joined the European Union this year.
When Poland made the same move in 2004, he said, the economic boom was 'incredible.' And because he had started developing centers there a few years earlier, he was positioned perfectly to ride the wave of emergent-middle-class spending.
Polimeni is working to repeat that success in Romania: He plans to anchor his stores with 'hypermarkets,' the European equivalents of Wal-Mart (NYSE:WMT) or Target stores. (NYSE:TGT) And Romania's hypermarket sector 'is predicted to boom' this year, according to the Growth Opportunities for Global Retailers report, an annual publication released last month by Chicago-based consulting company A.T. Kearney Inc.
The report also underscores Polimeni's belief that EU membership could lead to Polish-paced retail growth.
Polimeni's new properties -- one in Galti, one in Satur Mare -- weren't cheap: They cost $26.9 million for 25 acres and $9.4 million for 5 acres, respectively. That's about five times what Polimeni said he would pay for comparable parcels in Poland.
But the larger site, which will house 550,000 square feet of retail, should be worth the $50-per-developed-square-foot purchase price: It will house the only shopping center in a suburb with 500,000 residents within striking distance -- and it's the only such site available.
The smaller development, which is in 'a downtown location' will house about 150,000 square feet of retail space, which works out to $63 per developed square foot.
Even with the high land prices, he said, 'tenants are willing to pay the price to make it work.'
Polimeni International's ex-Soviet bloc expansion isn't limited to these two developments: Polimeni said he is preparing to do 10 more deals in Poland, including a residential project for up-and-comers who want to escape their Soviet-era apartments. He is also eyeing potential projects in Ukraine, which is 'much poorer' but is likely to join the EU in the coming years.
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