trade

Over the past five years, the retail space segment has been considered the most dynamically developing segment of the commercial real estate market in Moscow. But at the same time, a paradoxical situation arose on the market: with an acute shortage of retail space in some areas, rental rates began to decline. Experts attribute this to the emergence of large Western companies on the retail real estate market, investing in the construction of their own premises.

In 2003, the number of retail spaces in Moscow increased by 25% compared to 2002, and the share of shopping centers in retail turnover increased to 6%. In 2003, about 300 thousand square meters were put into operation. m of space in shopping, shopping and entertainment centers. The total volume of supply in the city now amounts to more than 1.5 million sq. m. m of premises, the annual increase is estimated at 300-500 thousand square meters. m. According to preliminary estimates, investments in the construction of shopping centers (TCs) by the end of 2004 will exceed $650 million.

Corridor demand

The development of this market sector was caused by an acute shortage of retail space that meets international standards—as of the beginning of 2004, Moscow still remained in last place in the list of large European cities in terms of the number of retail space per capita. “Studying the structure of demand, we can conclude that at least a fivefold increase in the number of retail spaces today would not harm the city,” says Natalia Dereshovskaya, consultant in the owner relations department of ABN Realty. “The level of vacant space today is extremely low and for successful professional shopping centers it is 2-5%."

Now there are about 70 large shopping centers in Moscow. According to forecasts, by 2010 their number will reach 300. In Moscow, location plays a decisive role in the success of a shopping center. For example, in the capital, the so-called shopping corridors are undoubtedly successful - Tverskaya, Arbat, Novy Arbat, Petrovka, Garden Ring, Kutuzovsky Prospekt, Leningradsky Prospekt, Leninsky Prospekt, Boulevard Ring streets. Shops, cafes and restaurants are located here, as a rule, on the first floors of residential buildings, occupying areas of up to 300 square meters. m. The density of retail space is uneven - it reached its highest levels in the central parts of the city, and in areas of mass development there are practically no retail spaces. Nevertheless, market participants argue that there is a tendency to equalize the density of retail facilities within the city limits.

However, even though areas of Moscow previously unattractive for retailers are gradually being built up, the share of vacant space in the city remains very small. For successful shopping centers this figure is 2-5%, and for shopping corridors it is even less - up to 1.5%. Based on the results of 2004, a slight increase in the share of vacant premises is predicted due to the commissioning of new real estate properties, as well as the loss of attractiveness of shopping centers that do not have a unified development concept or professional management.

Overseas peddlers

As Moscow becomes saturated with retail space, the interest of companies in developing new space in the near Moscow region (including construction, purchase and lease) is increasing. According to RCF managing partner Vahan Kazaryan, shopping centers will most likely be built along the Moscow Ring Road. “Medium-sized shopping centers should appear in all cities near Moscow, and they are already gradually being built there. A sign that the niche is not completely filled is a very simple factor - the number of visitors to the shopping center on a weekend. Crowds of people in the shopping center indicate that This market segment has not yet been filled,” says Mr. Ghazaryan.

The shortage of high-quality retail space has determined the attractiveness of the Russian market for well-known international retail operators, which have occupied a significant share of the capital's retail market - Ikea, Auchan, Ramstore, Metro. Among the owners of new complexes in the Moscow region, companies with foreign capital predominate (about 60-65% of the total number of retailers), which can be explained simply - to increase their presence in the Moscow region, they need additional space, which the capital market cannot offer in the required volumes.

According to Mikhail Gets, head of the commercial real estate department at Blackwood, foreigners are occupying an increasingly large share of the Russian retail market, their expansion will only intensify and there are several reasons for this. Firstly, foreign companies are in a more favorable financial position than Russian ones and can attract long-term loans at only 4-5% per annum. Russian companies, as a rule, borrow at 15% and even 20% per annum. “If we consider that the profitability of the shopping center today is about 18%, then the project turns out to be practically unprofitable,” says Mr. Hertz. For the same reason, foreign companies have the opportunity to massively enter the Russian market, announcing the construction of a network of shopping centers of five or even ten supermarkets (or hypermarkets) and, as a rule, implement their applications in accordance with a clearly developed project concept and on time.

Secondly, international companies, unlike Russian ones, pay more attention to developing the concept of a shopping center: what kind of trade structure has developed in the area where it is planned to build a shopping center, what kind of competition, transport infrastructure, etc. A considerable part of the financial resources is allocated to promotion already operating shopping center. According to Mikhail Gerts, “if a shopping center was quite successful in 2002, then in a few years the situation may change to the opposite. However, Russian companies in half the cases prefer not to turn to consultants for help in conducting marketing research, believing that they themselves know everything and they can."

Foreigners also have a somewhat different attitude towards the selection of land plots for the construction of shopping centers. Most international companies strive to implement their projects outside the Moscow Ring Road, despite the success of retail space in the very center of the city. The explanation for this is simple - the authorities of the Moscow region provide investors with land plots for ownership, and not for rent, as in Moscow, even if the lease period is 49 years. “Building a shopping center outside the city is undoubtedly very profitable. Firstly, land outside the Moscow Ring Road is cheaper than within the city. Secondly, it is much easier to find a large amount of free space for construction. As a result, the rent in such shopping centers is lower, than in the city, accordingly, prices for goods are more attractive for the buyer. Larger sizes make it possible to turn a shopping center into not just a store, but a leisure and recreation center where a person can and, most importantly, wants to spend the whole day. As the experience of developed countries shows, such shopping centers. are always very popular,” says Vahan Ghazaryan.

By the end of 2004, it is planned to complete 15 retail projects with a total area of 450 thousand square meters. m, the most significant of which will be Ikea, Khimki Mall, Liga on Leningradskoye Shosse, Ramstore-6, Weimart-2 (74th km of the Moscow Ring Road), Cheryomushki shopping center, Mosmart-2, "Novinsky, 31", Tobtim. It is worth noting that the example of foreigners was followed by Russian companies specializing in the development of large retail chains - Seventh Continent, Perekrestok, Mosmart, Weimart, Pyaterochka.

Rates reduced

Despite the fact that competition between domestic and foreign companies is intensifying, and there is still a shortage of retail space, rental rates in shopping centers have begun to decline. According to Yulia Dalnova, director of the retail real estate department at Knight Frank, the appearance of large Western companies on the retail real estate market, which are actively investing in the construction of their own premises, caused a decrease in rental rates for retail premises by an average of 3% compared to the third quarter of last year. Rental rates in shopping centers located in the Central District of Moscow decreased by 0.78% compared to the previous month. And rates for shopping centers outside the Garden Ring decreased by 5% compared to the previous quarter. According to experts, the downward trend in rental rates in large shopping centers in Moscow will continue.

However, from a seemingly paradoxical situation, when, with a general shortage of retail space, rental rates are falling and payback periods are increasing, retailers will still derive some benefit for the development of their business. The fact is that with high competition in the construction and development of large shopping centers in Moscow, an investor is unlikely to be satisfied with the conditions and set of land plots that the capital’s government will offer him. Previously, the Moscow authorities offered investors mainly sites with a number of encumbrances for the construction of shopping centers, for example, in industrial zones (in order to use investments to remove the enterprise from the central part of the city). Now, according to Mikhail Herts, companies are beginning to determine the conditions for investing their funds themselves and select the areas that are most interesting to them. So Moscow will have to take into account the wishes of investors when allocating plots (for example, with fewer encumbrances) and even when determining the rental rate for a particular land plot. And the more famous the investor company, the easier it will be for it to get the Moscow authorities to conclude an investment agreement on its terms.

"In 2005, international retail operators such as Wal-Mart will continue to expand into the Moscow retail real estate market. If we consider the conceptual component, an increase in the share of the entertainment part in new projects is predicted due to the fact that shopping as a way of spending leisure time has become familiar to Muscovites and now their preferences have begun to lean towards entertainment,” says Natalia Dereshovskaya from ABN-Realty.

KONSTANTIN ANOKHIN, BELA LYAUV

Moscow in the retail ring