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News Release

Moscow

First Decline in the Vacancy Rate on Main Moscow Retail Corridors Since 2014

​Novy Arbat leads the occupancy growth


​Moscow, 01 November, 2016 – According to JLL, the vacancy rate in main Moscow high-street corridors dropped by 2.8 pp to 10.2% in Q3 2016. Myasnitskaya Street and Patriarshie Prudy stayed at the top, with vacancies at 5.6% and 6.8% respectively. Arbat and Pyatnitskaya streets shared the third place with the vacancy rate at 8.2%.

“This marked the first decline in the vacancy rate in street retail premises since the beginning of 2014,” - Ekaterina Andreeva, Retail and Investment Markets Analyst, JLL, Russia & CIS, notes. – “The consumer sector shows signs of improvement, including recovering retail turnover dynamics from the beginning of the year. Although consumer activity remains subdued, some retailers look beyond the current circumstances. We continue to register entries of new brands, including foreign ones, while some existing brands expand their presence. The reconstruction of Moscow central streets has provided another incentive for consumer and has attracted retailers. We expect positive economic changes and urban policy to continue stimulating tenant and retailer interest in main retail corridors.”

Overall Vacancy Rate for the Moscow Main Retail Corridors
Overall Vacancy Rate for the Moscow Main Retail Corridors_01112016.png

Source: JLL

Significant vacancy reduction was observed on Novy Arbat Street (from 16.2% to 8.5%), Nikolskaya Street (from 25.8% to 15.9%), Bolshaya Dmitrovka (from 23.4% to 14.9%), and on 1st Tverskaya-Yamskaya street (from 14.1% to 9.9%).

“The decrease in vacancy rates is seen among all main Moscow streets. The most impressive dynamics is shown on Novy Arbat, where the indicator has halved to 8.5%. In addition, the average rents* on this street have risen from RUB95,000 to RUB100,000 per sq m, while the rents on the other retail corridors remained the same,” – Natalia Ozernaya, Deputy Head of Street Retail in Moscow, JLL, Russia & CIS, comments. – “It is worth noting that Novy Arbat has always been attractive for tenants. However, still the street reconstruction this summer has stimulated additional retailer interest, primarily from restaurants, cafés and fast food units. The share of the Food & Beverage segment on the street has reached 37% in Q3 2016.”

Restaurants continue to dominate on Moscow high streets, accounting for 31.3% of the tenant structure. In Q3 2016, notable openings in this category are Zakusochnaya Voronezh and Tekhnikum on Bolshaya Dmitrovka, Wine & Crab on Nikolskaya, and Black Star Burger on Novy Arbat. Moscow streets have also seen fashion retailers opened their doors, including French Cristian Louboutin on Bolshaya Dmitrovka and Italian Loro Piana on Tretyakovsky Lane. An adidas Originals flagship store appeared on Kuznetsky Most, where the other sportswear brand Nike intends to open its flagship store next year.

Since the beginning of 2016, rotation on main Moscow retail corridors remains roughly stable, at 8% in Q3. The largest share of new tenants appeared on Kuznetsky Most and Bolshaya Dmitrovka – 21% on each street. As a result, vacancy rates there has declined by 6.2 p.p. and 8.5 p.p. respectively compared to the previous quarter. On Kuznetsky Most, about one-third of new openings has represented fashion retailers, while on Bolshaya Dmitrovka about 70% of newcomers have been Restaurants and Cafés.

Tenant Rotation on Moscow High Street Retail
Tenant Rotation on Moscow High Street Retail_01112016.png

Source: JLL



* Rents are given for premises of 100-300 sq m with a separate entrance and a showcase on the first floor inside the Third Ring Road.



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 $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $59.1 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, 2006-2016 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.