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The best occupancy dynamics was observed in recently constructed projects
Moscow, April 04, 2018 – According to JLL, the average vacancy rate in Moscow shopping centres declined from 6.2% to 6.0% in Q1 2018. A particularly large correction was observed in shopping centres delivered to the market in 2016-2017, from 14% to 12.6%. These projects accounted for a half of newly occupied retail space in Q1 2018.
“Although retail operators keep their focus on operational shopping centres with stabilised footfall, the best occupancy dynamics is shown by new projects.” –
says Ekaterina Zemskaya, Head of Retail Group, JLL, Russia & CIS. – “Typically, shopping centres have opened in 2014-2015 with the vacancy rate of 25-30%. It has taken two years for the projects to stabilize, with vacancy rates halving. The shopping centres of 2016-2017 have opened with similar vacancies but have been quicker to fill empty spaces. The volume of vacant premises in them has halved in one year. Thus, recently low retail completions have reduced the vacant space and shortened typical downtime.”
Vacancy rate in new shopping centres and completions
The volume of new retail supply in Q1 2018 amounted to 19,000 sq m*. Only one quality shopping centre, Milya in Zhulebino, was launched. It is worth mentioning that there were no deliveries during the first three months of 2016 and 2017.
New retail completions remain low due to a predominance of neighborhood projects (up to 20,000 sq m) in retail supply. Some 173,000 sq m are announced for delivery by the end of the year, which will result in a total annual completion growth of 12%. Meanwhile, 41% of 2018 completions will come from a single project, Kashirskaya Plaza SEC (71,000 sq m). SC within Rasskazovka TPU (19,000 sq m), the 2nd phase of Smolensky Passage multifunctional complex (18,000 sq m), Arena Plaza (17,000 sq m), and Galeon (14,000 sq m) are also among projects announced for delivery in 2018. Moreover, the opening of the first neighbourhood SC through a reconstruction of Angara cinema (7,000 sq m) by ADG group is expected later this year.
Completions may increase to 486,000 sq m in 2019. The largest projects announced for next year are Salaris SEC and Dream Island SC. ADG group projects represent almost a half of the announced retail volume. The company plans to complete reconstructions of many Soviet era cinemas over the course of next year.
Shopping centre completions and vacancy rate in Moscow
The Russian market continues to attract new international retailers, which prefer stabilised shopping centres to minimise risks. Some 11 new brands have appeared on the Russian market in Q1 2018, which is comparable to the same period last year, with 10 newcomers. The majority of new retailers are fashion brands (73%). Among the prominent debuts are monobrand boutiques of premium brands Coach and Karl Lagerfeld by BNS Group.
Retailers on the Russian market: entries and exits
* This and other figures refer to gross leasable area (GLA).
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 2017, JLL had revenue of $7.9 billion; managed 4.6 billion square feet, or 423 million square meters; and completed investment sales, acquisitions and finance transactions of approximately $170 billion. At the end of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of 82,000. As of December 31, 2017, LaSalle had $58.1 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, 2006-2017 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.
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