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23.01.2019 | Альбина Весина

Results of the year in the Moscow real estate market

Analysts of CBRE, a leading international real estate consulting company, summed up the results of the year in the Moscow retail real estate market. The main trend of 2018 is a reduction in the growth of high-quality new brands..
2018 "pleased" us with the lowest commissioning of new facilities in the last 6 years, which amounted to only 186,900 sq. m (GLA). Many retailers postponed the opening dates of stores, which was one of the reasons for the postponement of the opening dates of shopping centers: approximately 60 thousand square meters of space were postponed to 2019, that is, almost a quarter of the total volume of new construction.
Many retailers postponed the opening dates of
Online trading is actively, albeit unevenly, developing. Thus, the share of online trade in Moscow significantly exceeds the average in Russia (5%) and accounts for about 11% of retail trade turnover. The development of new formats is particularly noticeable here: FMCG retailers AUCHAN, LENTA, and About KAY, as well as DIY operators IKEA, Leroy Merlin, and OBI has already announced reduced formats and opened the first small stores. Despite the active development of this segment of trade, traditional stores are still relevant and are adapting to increased competition by reducing formats and organizing online order pick-up points. 
In the context of a reduction in real incomes of the population and against the background of the professional "growing up" of the market, the format of discount centers and outlets is actively developing : the share of the areas of such facilities among the retail facilities announced for commissioning in 2019 was 15%. The outlet segment is the fastest growing: by the end of 2019, the number of spaces in this segment will almost double.
The format of discount centers and outlets is actively developing
Foreign brands continue to enter the Moscow market, despite the negative macroeconomic background and the volatility of the national currency: since the beginning of 2018, 27 new foreign brands have entered the Moscow market, 8 have left the market. The increase in the number of new brands in 2018 amounted to 16 brands, which is 54% less than in 2017. This number of new brands is comparable to other Eastern European countries: for example, in Poland in 2018, this figure was 10 brands against 15 in 2017, in Hungary - 13 against 11 in 2018 and 2017, respectively.
Foreign brands continue to enter the Moscow market
According to CBRE analysts, in 2019rental rates in shopping malls will increase after stabilization over the past 3 years. However, the growth will primarily affect premium rates: on premises in the galleries of top shopping centers. The growth for 2019 will be 2–4% (up to 204–208 thousand rubles/sq. m/year), it will be affected by the acceleration of inflation and a low proportion of available space. The dynamics of average rates in 2019 will reflect changes in turnover: we expect that the growth of average rates will be 1% (up to 88 thousand rubles/sq. m./year) and will also be typical only for top-end facilities.
Rental rates in shopping centers will increase
The share of vacant space will continue to decrease. At the end of 2019, this indicator will decrease to 6.5-7.0%, despite a significant number of new facilities under construction.
In 2019, two of the largest shopping malls in recent years are expected to open: Salaris (105 thousand sq. m.), which will form more than 20% of the announced annual offer, and the Island of Dreams (120 thousand sq. m.). At the same time, 16% of the new offer in 2019 will be provided by district shopping centers of a new format, developed by ADG Group, whose concept assumes an emphasis on entertainment, leisure and educational components. In addition to the 5 facilities planned for commissioning in 2019, in total, the project involves the opening of 39 shopping centers with a GLA of 330,000 sq. m. Apart from these giants, the trend for reducing the average rental area of projects continues to decline and amounts to about 20 thousand sq. m. of leasable space.
Opening of new large shopping malls
The east of the capital is still the least saturated with high-quality shopping centers. However, in terms of the number of objects under construction, the share of VAO is above average and is 13% GLA, which indicates a gradual leveling of the geographical distribution of the supply.
Moscow follows the global trend of growth of the Health & Beauty segment.We have completely updated the L'etoile, Rive Gauche formats, continues the development of the Golden Apple, opened the first Sephora, LeLabo stores and other cosmetic monobrands are actively opening.
Health & Beauty segment growth
The coming year will be a record in the number of outlets announced for commissioning . Two projects of this format are planned to open at once on Novorizhskoye Highway alone. The discount formats are not lagging behind – «The Ordzhonikidze Discount Center» plans to open the doors of the second stage with an area of 14 thousand square meters this spring, despite the fact that the project has already been fully leased.
Active development of multifunctional real estate continues: from 2020About half of the input of retail facilities in Moscow will be IFC, including TPU.
Marina Malakhatko, Director of CBRE Retail Premises Department in Moscow
Comments Marina Malakhatko, Director of Retail Premises CBRE in Moscow: «Despite a noticeable decrease in the vacancy rate during 2018, compared with the peak of 2016 (2.5 percentage points), and are still active in the exit of international operators against the background of the rest of Eastern Europe (27 new brands in Moscow against, for example, 10 in Warsaw), the growth of retailers' turnover still leaves much to be desired. In favor of reducing available space, rather, the slowed down commissioning of space (only 187 thousand square meters against 240 thousand square meters in 2017) and adjusted commercial conditions in projects with a large vacancy. Thus, there is an even greater range of rental rates in Moscow, depending on the stage of project implementation. Top projects, such as shopping malls "Atrium", "Metropolis", "European" and "Aviapark", have increased rental rates. Afimall can also boast of a good result of the year, which opened the first COS flagship in Russia, returned Uniqlo to the project and, of course, attracted (back at the end of 2017) the current record holder of turnover in the shopping center "Golden Apple" cosmetics store. Thus, the club of the largest projects where the peak attendance is "over a hundred"* has been joined by "Aviapark" and "Afimall".
*100 thousand people per day
Source: CBRE