According to JLL analysts, in 2016 the overall Moscow quality shopping centre stock increased by 455,500 sq m. As a result, the stock exceeded 5m sq m and its density reached 407 sq m per 1,000 inhabitants.

In Q4 2016, completions declined by half compared to the same period last year, to 85,300 sq m. Butovo Mall (54,900 sq m), Kievsky TGK (20,000 sq m), Vnukovo Outlet Village, 3rd phase (5,900 sq m) and Fashion House Outlet Centre, 2nd phase (4,500 sq m) entered the market. Over the course of the year, the volume of new retail supply declined by 16%.

JLL expects further completion deceleration in 2017. Only 227,000 sq m of new quality shopping centres were announced, which will be 39% lower than the 2016 volume. The main properties are Vegas Kuntsevo (113,400 sq m), ENKA TC project on Kashirskoe Highway (71,000 sq m), Vidnoe Park (27,500 sq m).

According to JLL estimates, the overall vacancy rate in Moscow shopping centres decreased from 8.5% to 7.5% in Q4 2016. This is primarily driven by a select group of shopping centres that were completed in the last three years and had recently improved their performance, in particular, footfall and turnover. Due to the low volume of new retail supply and increasing tenant activity, JLL analysts anticipate a drop in vacancy rates in 2017, to 7% by the end of the year.

“Nowadays we observe a significant differentiation of retail market properties.” – Ekaterina Zemskaya, Regional Director, Head of Retail Group, JLL, Russia & CIS, comments. – “Although there was a considerable volume of vacant premises even in prime shopping centres during 2014-2015, the vacancy rate in high quality shopping centres, characterized by a strong tenants mix and professional team, dropped as low as 1-2% in 2016. It is worth mentioning that this trend was typical not only for long-standing shopping centres but also for recently opened ones.”

“In 2016, especially in the second half, the Moscow retail market showed signs of recovery. Most professional operators who were involved in the restructuring and optimization of their networks in the last couple of years, approved plans for further action and resumed their development.” – Polina Zhilkina, National Director, Head of Retail Advisory, JLL, Russia & CIS, notes. – “Subject to further economic stabilization and gradual occupancy of vacant space in quality shopping centers, we will observe growth of developer activity, and resumption of previously suspended new projects.”

According to JLL estimates, 47 international brands entered the Russian market last year compared to 39 in 2015. Among notable openings were American underwear retailer Victoria’s Secret, Mexican entertainment park KidZania, American cosmetics brand Urban Decay, iconic French Ladurée café, English clothes brand Superdry. Fashion retailers were the most active on the market, accounting for half of débuts.

Rents in shopping centres remained stable during the entire year: prime rent at RUB 195,000 per sq m per year, average rent at RUB 74,000 per sq m per year.

Source: JLL

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