10 new retail centres in Moscow in 2009

2010-02-22



In 2009, 10 new retail centres, including major enterprises such as Metropolis, Zolotoy Vavilon Rostokino and Gorod, opened in Moscow, according to a NAI Becar report. As a result, Moscow’s superior quality shopping space market was boosted by almost 1 million m².
At the end of 2009 the total area of all shopping centres operating in the capital came to 5.6 million m², or 260 m² of shopping space per 1,000 inhabitants.
The shopping centre vacancy rate in Moscow stood at 8-12% at the end of 2009. As a result of the economic crisis rents in the city fell in 2009 by 25-40% in comparison with mid-2008. Currently, in Moscow annual rents range from $3,000 per m² in residential districts to $15,000 per m² in the centre of the city.
There are plans for 1.3 million m² of shopping space to be brought into the commercial property market in Moscow in 2010. However, the actual amount will probably be 900,000 m², according to NAI Becar experts. The largest retail centres due to open this year include Vegas (398,000 m²), Gagarinsky (200,000 m²) and Mall of Russia (180, 000 m²).


We expect the Russia's retail commercial space market to recover more rapidly than its office or industrial counterparts. Unlike the office market, demand for retail space is not directly linked to employment levels. On the contrary, there is more of a correlation with demand for retail goods, which is expected to recover in step with the overall Russian economy. Discount shops and fast food restaurants are expected to see their market shares grow, and to account for a greater proportion of demand for street retail premises. During the course of 2010, we should see retailers coming back to the market, but probably not expanding noticeably before 2011 or 2012.
The rents of prime properties which still have the potential to attract large numbers of shoppers are expected to increase steadily over the next 24 months. Meanwhile, the gap between these and the less attractive assets, which are less desirable for tenants at a time of difficulty, is likely to widen. This “run to quality” is expected to last for several years in Moscow and St. Petersburg, resulting in a divided market of, on the one hand, prime shopping centres with low vacancy rates and high rents, and, on the other, shopping centres of lower standard with high vacancy rates and low rents.
The situation is slightly different in the large Russian regional cities. Many of these are still structurally under-supplied in terms of good retail space, and they are more primed for a relatively faster recovery, back to pre-crisis rent levels. For this reason, and also because of the lower costs, retail developers may decide to shift more extensively to the regional markets over the next 3 to 4 years.

David Godchaux
CEO NAI Becar