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The growth of vacancies in the center of Moscow caused by three stages of demolition of self-built facilities, reconstruction of streets and the opening of new pedestrian zones, aggressive development of catering operators (the share reaches 40%), food discounters and shops of the fix price concept became the main results of the year for the capital's street retail.

"In 2016, a number of events occurred that determined the further development of the street retail market in Moscow," shares Ekaterina Podlesnykh, head of the street retail department in Russia Colliers International. The key ones include the change in the profile of some shopping streets, which occurred largely due to the reconstruction of streets carried out by the city authorities and the reduction of parking. Over the past year, a large number of high-quality premises with effective planning solutions have been vacated in a winning location. Subsequently, in most cases, grocery store operators began to occupy them, creating new formats of express supermarkets with the concept of a "store at home", for example, mini-markets "Crossroads Express", AV Daily, "Bahetle" with an area of 150 to 300 m²».

In addition, according to Ms. Podlesnykh, there was an active development of hardware stores with household and garden goods on the central streets of the city, drogeri stores, as well as the expansion of brands of Russian designers (Ordynka17, Plohoi Concept Store, Black Star Wear). Another news for the market was the manifestation of interest in premises in the central shopping corridors of the capital from tenants, previously mainly housed in professional shopping centers, according to Colliers International.

CBRE estimates the growth of vacant space in 2016, caused by the reconstruction of key shopping streets in Moscow, from 5.4 to 6.3%. However, according to the results of the first quarter of 2017, the number of vacant spaces decreased to 5%. According to JLL, most of the requests from tenants are now for Novy Arbat. After the reconstruction, the street has firmly taken a leading position in the top 10 street retail. "The growth of interest is promoted by a convenient wide sidewalk, the presence of Parking, the proximity of several metro stations, the central location," lists Natalia Ozernaya, Deputy Head of the Street retail Department at JLL in Moscow. – Tenants choose this street because it has excellent view characteristics – visibility from the roadway – and pedestrian traffic ».

Another «radically changed » experts call Tverskaya, which has finally lost the status of the main fashionable street of the country. "But Tverskaya, like Arbat, Myasnitskaya, Maroseyka, Kuznetsky Bridge, Tsvetnoy Boulevard, Rozhdestvenka, is still in high demand," reports Ekaterina Podlesnykh from Colliers International. The vacancy rate on these streets does not exceed 10%. The completed reconstruction of the Garden Ring with the expansion of pedestrian zones has increased traffic, but restaurants and grocery stores are replacing banks here, and not fashion at all. "We predict that cafes and restaurants will continue to occupy premises that previously housed banks and fashion boutiques," says Ekaterina Podlesnykh.

Anush Gasparyan, Commercial Director of Fashion Consulting Group, also reports positive expectations related to the reconstruction of several sections of the Garden Ring. "If retail premises located near metro stations and designed mainly for pedestrian traffic are in demand here now, then the appearance of parking pockets can probably revive interest in more remote sections of the ring from the metro," says Ms. Gasparyan.

The list of "the most fashionable" streets in Moscow, according to FCG estimates, has been formed for a long time and has not changed: Stoleshnikov Lane, Petrovka, Bolshaya Dmitrovka, Kuznetsky Bridge, etc. Most of the brands that are located here belong to the premium and luxury segment, and new boutiques continue to open. So, in December last year, a Podium Concept boutique opened on Petrovka, a Tiffany & Co. boutique is expected to open, and Fendi, Herno and Giuseppe Zanotti monobrands started working in Stoleshnikov Lane. « And yet luxury and premium stores in street retail are seriously tied up in the parking lot, since shopping this segment in Moscow and St. Petersburg is focused primarily on the local public, no matter what they say about Chinese tourists. For example, TSUM owes much of its success to the presence of underground parking," says Anush Gasparyan. Therefore, it is impossible to draw an analogy with luxury boutiques in Paris and Milan, there is also no parking on shopping streets, but they are mainly designed for tourists who move on foot and leave for the hotel by taxi, only after finishing shopping. 

Some numbers

 

The rate on the most expensive central street of Paris – Champs-Elysees – is $23,000 per m2 per year, in London on New Bond Street – $18,000, in Milan on Via Montenapoleone – €10,000. For comparison, in Moscow the rental price is $4,500 per m2 per year, and in St. Petersburg $2,300.

Source: Avica

 

In the central shopping corridors, as well as on pedestrian streets, the presence of operators of the profiles "clothing" and "shoes" is becoming more noticeable "the volume of rented space increased by 0.4% in 2016 and amounted to 6.1% (fifth in volume after catering, leisure, banks and products).

Source: Knight Frank

 

The most pronounced trend in the ten-year development of the segment under consideration was a gradual reduction in the share of space occupied by banking and financial organizations (from 20% in 2007 to 13.9% in 2016) and operators of the profiles "clothing" and "footwear" (from 17.5% in 2008 to 10.6% in 2016) against the background of the active development of catering enterprises and grocery stores.

Source: Knight Frank

To be continued.

Author: Ekaterina Reutskaya

Photo: Shutterstock.com