Vacancy rates contract in Moscow retail, delivery sluggish - JLL

Average vacancy rates for shopping centres in Moscow declined from 6.2% to 6% in the first quarter of this year, reflecting the fact that only one new retail scheme was delivered, according to new research from JLL.

Milya in Zhulebino covering 19,000 m2 launched in March, the advisor reported, while noting that no shopping centres opened in the first quarters of 2016 and 2017 respectively.

'Low retail completions have reduced the vacant space and shortened typical downtime,' said Ekaterina Zemskaya, head of JLL's retail team, Russia & CIS. 'The best occupancy dynamics are seen in new projects.'

Zemskaya added: 'Typically, the shopping centres that opened in 2014-2015 had vacancy rates of 25-30%. It has taken two years for the projects to stabilise, with vacancy rates halving. In 2016-2017, shopping centres opened with similar vacancies but have been quicker to fill empty spaces.' 

Delivery contracting
A particularly large reduction was recorded 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.

Completions remain low due to a predominance of neighborhood projects (up to 20,000 m2) reaching the market. Another 173,000 m2 us expected 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 m2), JLL said.

Other key schemes set for completion this year include the Rasskazovka TPU centre(19,000 m2), the 2nd phase of the Smolensky Passage multifunctional complex (18,000 m2), Arena Plaza (17,000 m2), and Galeon (14,000 m2). ADG Group is also expected to finish its first neighbourhood cinema conversion project (7,000 m2) later this year.

Completions are tipped to increase to 486,000 m2 in 2019.

New fashion brands
Eleven new brands entered the Russian market in Q1 2018, comparable to the same period last year, which registered 10 newcomers. The majority of new retailers are fashion brands (73%). Key names include monobrand boutiques from premium labels Coach and Karl Lagerfeld, the report said.


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