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Shopping centre vacancy keeps falling

Rafał Ostrowski 11 October 2017

Rafał Ostrowski


+48 22 356 25 11

Rafał is a journalist at ‘Eurobuild CEE’. Previously he worked for Wydawnictwo Murator and for Shopping Centre Magazine, as well as for retailnet.pl. He has also written for many newspapers and magazines as a freelancer and published photo-reportages from his travels to Asia, where lived and worked for some time. Rafał graduated from the University of Warsaw in philosophy. He also completed postgraduate studies in text editing. He enjoys sailing, travelling and family life. For ‘Eurobuild CEE’ he specialises in eastern European markets and is responsible for the film direction of Eurobuild TV.

Shopping centre vacancy keeps falling
In Q3 2017, the vacancy rate fell to 6 pct

RUSSIA With only one shopping centre entering the Moscow market in Q3 2017 and growing retailer demand, the vacancy rate fell to 6 pct, down by 2.5 ppt y-o-y.

“The Moscow market is showing signs of a lack of quality retail premises. With a record low volume of new construction, the vast majority of professional operators are being forced to develop their chains in existing shopping centres. The situation is completely different from that of one or two years ago. During that period developer activity was high and between 2014-2015 there was an economic downturn and shopping centres were opened with an occupancy level of 40-50 pct of gla. Now, there is a shortage of new retail premises to meet the growing retailer demand. As a result, even in the shopping centres are expected to open next year – for example, the ENKA TC project on Kashirskoye Highway – the occupancy rate already exceeds 80 pct of gla,” said Ekaterina Zemskaya, regional director, head of retail group, JLL, Russia and CIS.

Taking into account the lack of new retail supply, JLL expects the vacancy rate to decline further to 5.7 pct by the end of the year, the lowest level since the beginning of 2015. The prime vacancy rate, that is in the most successful shopping centres with high footfall and conversion rates, has remained close to zero for over a year.

Only one shopping centre with a gla of 125,400 sqm entered the Moscow market in Q3 2017 – Vegas Kuntsevo. With no deliveries in H1 2017, this represents the total completions for the first nine months of 2017, two-thirds lower than in the same period of the previous year. Vidnoe Park (45,000 sq m), Milya (21,000 sqm) and Petrovskiy (8,500 sqm) as well as the retail part of Fili Grad mixed use complex (12,000 sqm) have been announced for delivery in Q4 2017. Annual Moscow completions will be at about 200,000 sqm, the lowest level for the past four years, and 62 pct down on 2016. Arena Plaza (20,000 sqm) and Galeon (14,000 sqm) are among projects expected later this year but rescheduled for 2018.

The number of entries of new international retailers over the first three quarters (31) is comparable to the level of the first nine months of 2016, when 37 new brands entered the Russian market. Six international retailers left the market in Q3 2017: Debenhams, Mamas&Papas, LeEco, C&A, Mexx, and Accessorize.

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