Six months with no completions: no new quality shopping centres enter the Moscow market for the second quarter in a row
According to JLL, the vacancy rate in existing shopping centres in Moscow declined from 7.2 percent to 6.4 percent in Q2 2017. JLL analysts expect this indicator to decline further, to 6 percent by the end of the year, the lowest level since the beginning of 2015.
Some 236,700 sqm of new quality shopping centres are announced for delivery in H2 2017. The annual figure will be the lowest for the last four years, down 46 percent from 2016. The main projects expected later this year are Vegas Kuntsevo (113,400 sqm),Vidnoe Park (45,000 sqm) and Arena Plaza (20,000 sqm).
“The lack of recent completions and significant new retail volume delivered to the market over the past three years (about 1.6 million sq m) encouraged retailers to expand their presence in Moscow shopping centres opened in 2014-2016. This reduces the vacancy which has spiked in the recent period of active construction,” said Ekaterina Zemskaya, Regional Director, Head of Retail Group, JLL, Russia & CIS. – “In H1, several SCs experiencing stabilization and improvement of their operational indicators have attracted new operators. This has increased the appeal of new projects to consumers. Approximately 65 percent of leased areas were absorbed in projects delivered in 2014-2016.”
The Russian market continues to attract new international retailers, with 24 players opening their first stores in H1 2017. Half of these have been fashion retailers. The activity of new international retailers is comparable to H1 2016, when 26 new brands entered the Russian market. Nearly all international operators chose Moscow as their preferred location, except for one new opening in St. Petersburg. Most of the newcomers represent premium and luxury segments.
“Most retail chains started their operations in Russia in shopping centres – 71 percent of the total number of H1 2017 openings (17 of 24 newcomers). Meanwhile, premium and luxury retailers prefer to open their first stores in street-retail (six of seven retailers opened stores in the main Moscow retail corridors)," noted Oksana Kopylova, Head of Retail and Warehouse Research, JLL, Russia & CIS. “European retailers were the most active in the past six months, accounting for about 80 percent of new openings. Italy traditionally leads among the debutants on the Russian market: every fourth newcomer in the last five years has been Italian.”
Among notable débuts was Eataly, the first such store in Russia and the second largest Italian marketplace in the world. Another was the opening of French Jewellery retailer Mauboussin on Nikolskaya Street. A premium Bags & Accessories brand Mandarina Duck returned to the market with a store in Metropolis. Three foreign retailers left the market over the past six months: Finlayson, Takko Fashion, and Kipling.
Rents for a single retail gallery unit of 100 sqm in shopping centres remained stable during the first half of the year: prime rent at RUB 195,000 per sqm per year, average rent at RUB74,000 per sqm per year.