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News Release

Moscow

The vacancy rate in top shopping malls of Moscow has decreased to 1%

​Meanwhile, overall SC vacancy rate has maintained the previous quarter result at 7.5%


​​Moscow, 12 October, 2015 – In Q3 the vacancy rate in Moscow shopping centres remained at the level of last quarter at 7.5%. Taking into account the ongoing rotation of tenants as well as a number of projects forecasted in Q4, JLL analysts expect the overall vacancy rate to reach about 8% by the end of 2015.

“The estimated vacancy rate is much lower than the record level of 11% registered on the Moscow retail market in 2010. We do not expect either a significant vacancy rate orb exceeding of this record in the near future due to the gradual absorption of recently opened shopping centres by tenants and decrease in coming new supply.”– Tatyana Kluchinskaya, National Director, Head of Retail Department, JLL, Russia & CIS, explains. – “It’s also important to note that the dialog between landlords and tenants has changed with the increased shopping centres’ competition. Nowadays developers are more flexible in negotiations and try to achieve the minimal vacancy rate in their objects in order to save and boost their attractiveness for consumers.”

At the same time, positive dynamics were observed in key shopping centers*: the vacancy rate has decreased since the beginning of the year by 50 bps - up to 1%, returning to the level of last year. It should be noticed that before the economic downturn in the country leading to fall in consumer demand, the rotation in key shopping malls was minimal, and the amount of vacant space was close to zero.

“At the present, an active tenant rotation and exhibited spaces have been seen in top objects as well. It provides an opportunity for retailers which are currently expanding. At the same time, landlords of even most demanded objects are forced to renegotiate the terms with tenants,” - Maria Shpakova, Retail Market Analyst, JLL, Russia & CIS, notes.

According to JLL, the volume of new retail supply in Moscow for 9M 2015 comes to 387,500 sq m**, which is 36% higher than the same period last year. As a result, Moscow overall retail stock has reached 4.57m sq m. In Q3 2015 only RIO on Kievskoye Highway was delivered in Moscow with 45,300 sq m, grew by 5% YoY. Although relatively significant volume of new supply JLL experts anticipate a 25% fall in annual volumes versus 2014 with 450,000 sq m coming to the market.

Moscow retail market balance
Moscow retail market balance_12102015.png

Source: JLL

Despite the economic instability and lower margins of retailers on the back of ruble depreciation, new players still come to the market. Some of them placed their stores in newly opened shopping centres. For instance, several brands such as H&M Kids and Silver Cross – British manufacturer of pushchairs and prams – set up their first stores at Centralny Detsky Magazin on Lubyanka. Japanese watches brand Orient has chosen Aviapark SC to be the first location, while Italian children clothes brand Original Marines opted for Columbus SC.

“However, these openings can’t be regarded as a background for substantial demand increase on retail premises. Overall activity trend of international retailers on the Russian market went down; some brands left the market, and the new ones rarely open their stores directly. Almost 70% of newcomers that entered the market for the last 12 months opened just a single store, basically interested in small premises. It has to be mentioned that the resting 30% of new entrants opened 3 stores in average, includes openings in Russian regions.” - Elena Zadorozhnaya, Head of Retail Tenant Representation, JLL, Russia & CIS, comments. – “That confirms that retailers are capable and willing to develop on the Russian market even in current circumstances, with favorable conditions and minimal risks.”

New retailers on the Russian market: entries and exits dynamicsNew retailers on the Russian market entries and exits dynamics_12102015.png

​​Source: JLL


​* The data based on the basket of 7 most successful shopping centres with high footfall and conversion rates

** Hereinafter we use gross leasing area (GLA)



About JLL

JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316.0 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $56 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.

In Russia and CIS JLL has offices in Moscow, St. Petersburg and Kiev. JLL, Russia & CIS was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014  and 2015 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg; Consultant of the Year at the RCSC Awards in 2015, and The Best Real Estate Consultancy in Ukraine at the Ukrainian Property Awards in 2013.