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News Release

Moscow

The vacancy rate in main Moscow retail corridors approaches a pre-crisis level of 8%


​Moscow, 15 May, 2017 – According to JLL, the vacancy rate in main Moscow high street corridors reached 8.4% in Q1 2017, down by 1.2 ppt from Q4 2016 and by 4.1 ppt from Q1 2016. 

This has extended the decline of the vacancy rate to four quarters. Premises vacated during the recession are gradually filling up, bringing the vacancy rate to the levels last seen in the beginning of 2014.

“Improving consumer sentiment is positively reflected in the retail turnover dynamics, which, in turn, affects the occupancy of main Moscow retail streets,” – Natalia Ozernaya, Deputy Head of Street Retail, JLL, Russia & CIS, comments. – “A slight correction over the summer is possible on the central streets currently under reconstruction. But overall, we expect the vacancy to continue declining on the back of economic recovery and completions of the renovation of Garden Ring, Tverskaya and Petrovka streets.”

Vacancy rate in the Moscow high street retail

Vacancy rate in the Moscow high street retail.png

Source: JLL

The first months of 2017 were marked by new openings on the central streets, which lowered vacancies in all locations. The largest drop was observed on B. Dmitrovka Street, where the vacancy rate halved in Q1, followed by Pyatnitskaya (down by 4.3 ppt) and Petrovka streets (-2.9 ppt). As a result, these streets became the most occupied in Q1, with only 4.3% of premises vacant on B. Dmitrovka, 4.5% on Myasnitskaya and 5.0% on Pyatnitskaya streets. Tverskaya Street remained the fourth most occupied at 6.4%, which was 1.3 ppt less than in Q4 2016.

On the demand side, Restaurants & Cafés remained the leaders on the central corridors, with a 38% share of all leasing requests. Representatives of the Health & Beauty segment climbed to the second place, with 16% of all requests in Q1 2017 vs 11% in Q4 2016. The tenants in this category also expanded their presence on high streets by 2 ppt to 12% in Q1 2017. The improvements indicate that market participants have adjusted to new economic conditions.

Demand structure in Moscow sigh street retailDemand structure in Moscow sigh street retail.png


 

Source: JLL

The rotation  declined further in Moscow retail corridors, by 1 ppt to 5% in Q1 2017 compared to the previous quarter. The largest share of new tenants appeared on Nikolskaya (11%) and Petrovka (9%) streets, while the lowest indicator was seen on 1st Tverskaya-Yamskaya Street and in Patriarshie Prudy district , with 1% and 2% respectively. 

“The most active tenants were Restaurants & Cafes (29%), Banks & Services (13%), and Health & Beauty (10%). Representatives of the first and the third groups opened their doors primarily on the central streets, while banks preferred locations on the Garden Ring.” – Ekaterina Andreeva, Retail and Investment Markets Analyst, JLL, Russia & CIS, notes. – “In the Household segment, the most active player was the Moskhoztorg chain, which currently operates 24% of all Household category stores on the Moscow street retail market.”

Rental rate growth was observed on Novy Arbat (from RUB95,000  in Q1 2016 to RUB115,000 per sq m per year in Q1 2017) and Tverskaya (from RUB100,000 to RUB115,000 per sq m per year) streets. This trend indicates that the further rise in occupancy on the Moscow street retail market is expected in 2017 and shows tenants’ interest in recently renovated retail corridors. 

​*Rotation includes changes in tenant mix, vacating and occupying premises.
**We use here expanded Patriarshie prudy district: the area between Yermolayevsky Lane, Maly Patriarshy Lane, Spiridonyevsky Lane, Trekhprudny Lane and Bolshaya Bronnaya Street.
***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 leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and on behalf of its clients managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the first quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 78,000. As of March 31, 2017, LaSalle Investment Management had $58.0 billion of real estate under asset 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, 2006-2017 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, 2016, St. Petersburg; Consultant of the Year at the RCSC Awards in 2015.​